International Mixtape

Justin Drake is a researcher at the Ethereum Foundation and is leading the charge of applied cryptography to the Ethereum network. This is the third time Justin has come on the podcast.

If you haven’t yet, dive into our first two episodes with Justin, ‘The Bull Case for Cryptography’ and ‘Ultra Sound Money.’ This episode rolls out how we can understand Ultra Sound Money using data-driven models.






📣 DHARMA | From Dollars to DeFi in a Tap!
State of the Nation #44: Modeling Ultra Sound Money
Guest: Justin Drake

This is Justin’s third appearance on Bankless. His first, The Bull Case for Cryptography, went in-depth into cryptographic hashes and digital signatures, the basic tools used to build blockchains. The second, Ultra Sound Money, presented a thematic overview for the Ethereum economic engine. In this episode, we model Ultra Sound Money and what upcoming upgrades to Ethereum mean for issuance, supply, and staking vs. mining.

Justin recently released four models cover the granular data-driven details of what Ultra Sound Money Means. These models deal with Ether’s three main cashflows: Issuance, Supply, and Collateral. Justin argues that with the massive efficiency improvements to the Ethereum Network with Proof-of-Stake, Ether issuance will decrease by upwards of 90% and will proportionally reduce sell pressure from miners. He posits that ETH’s peak supply will be 120M total Ether, and EIP-1559’s burning mechanism will eventually reduce the total supply of ETH down to 100M.

Justin also expects the APR for staking Ethereum to be 25% following the Ethereum 2 merge. We visualize what these numbers mean by combining the Ethereum Economic Engine metaphor, Triple Point Asset thesis, and viewing capital as having an inherent temperature. Cold ETH means that it is locked up, securing the network and/or reducing total liquid supply. Hotter ETH is that which is actively available for use, but much of this ETH is vaporized through EIP-1559’s fee burn mechanism. Therefore, on both ends of the temperature spectrum, supply & issuance are optimized via staking and fee burn.

Every episode with Justin is a deep exploration of the technicals that back Ethereum’s memes of being a Triple Point Asset and Ultra Sound Money. However, understanding the models Justin lays out is cause for optimism on Ethereum’s future as a vastly improved economic system. The State of the Nation this week is ‘Ultra Bullish’ – dive in to find out why.

Topics Covered:

0:00 Intro
6:30 The Bankless Hat Trick
9:30 Ether the Triple Point Asset
11:45 The Temperature Metaphor
16:45 A Balanced Ecosystem
22:35 A Model for Understanding
24:51 Three Cashflows
27:37 Understanding the States
32:20 The Four Models
38:25 Model 1 – Supply
49:25 Model 2 – 100M Total ETH
55:27 Model 3 – Reducing Sell Pressure
1:05:00 Model 4 – Staking APR
1:17:10 How soon could this happen?
1:22:30 Estimating the Merge
1:26:00 Mach Speed ETH
1:31:40 Closing & Disclaimers


Model #1: ETH peak supply model

Model #2: The road to 100m ETH supply

Model #3: Net buy pressure

Mode #4: staking APR with EVM fee rewards

The Bull Case for Cryptography

Ultra Sound Money

Justin on Twitter

Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research.

Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here:


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