Ethereum’s Scalability Paradox and the Forgotten Stakeholders: Investors

Let me just start by saying I am a big believer in the Ethereum ecosystem. I know that this post may be downvoted a lot, but I think it is important to raise these issues and constructively discuss them. That said, I am here to learn and I acknowledge that my understanding might be flawed. If that’s the case, I welcome your insights to help me understand better.

1. Are L2s hurting Ethereum's tokenomics?

Layer-2 solutions are critical for Ethereum's scalability, but they seem to be harming its economic model. L2s inherently designed to reduce Ethereum's base layer (or Layer-1) demand. Lower demand, means lower gas fees and by extension reduced burn rate with EIP-1559. Further limiting Eth's deflationary pressure. This can be visualized on Eth supply chart here.

With reduced demand, ETH’s price could stagnate or decline. This hurts all investors, validators included.

2. Failing to understand that every Validator is Investor first.

Validators are important for maintaining security and decentralization of Ethereum network. However, we fail to understand that every validator is an investor first (in a Proof Of Stake environment), and are only tied to the project until it is profitable for them. If Eth price continues to stagnate eventually they will move to other chains. Ultimately compromising Eth's Security and Decentralization.

3. Not enough focus on investors?

I wholeheartedly agree and encouraged by changes in EF leadership and goals. However, would like to understand what does "having a vested interest" mean? Ethereum is a Proof of Stake network. Every validator, investor, developer and user have vested interest.

I understand that EF is trying to eliminate any influence that large investors (institutional and individual) may have. However, they should be cautious not to ignore the role of the "investor" as an important actor contributing to the Ethereum network.

4. Community being too critical when investors voice their opinion on price movement.

While there is a dedicated sub to discuss price movements r/ethtrader, sometimes it isn't that straight forward. When fundaments are not supporting price movements they should not just be discussed but should be encouraged. Often, people here who discuss price are looked down upon despite having very valid points. Community should understand that Ethereum is Proof of Stake, and "Stake" i.e. Eth as token is integral part of consensus mechanism.

My hope with this post is to spark constructive discussion and, hopefully, bring about necessary changes if/where they are needed.

Edit: The post doesn’t discuss price increase/decrease, but rather discusses how change in fundamentals are affecting investors (i.e. validators, developers and users) in Eth token.