Token Value

to be blunt, the narrative that "gas needs to be expensive otherwise the coin is worthless" is Stockholm Syndrome. It's what the community tells itself instead of facing the reality: ETH has and forever will fail to scale, and that will fundamentally limit how much ETH can grow. In my opinion, ETH's pretty closed to maxed out growth wise and ETH2.0 is still a nonsensical fantasy that the ETH holders from genesis tell the masses to keep the price up.

The entire market sector started out in pursuit of creating digital cash. Physical cash is free to use, and still valuable. Why should it be that digital cash must cost money to use? The best explanation I have is a cultural one--demand for coins for gas has been used to justify token value for 3ish years now... which is just long enough for people to think that the concept is fundamental to crypto (vs something new thats quite unproven in practice).

The coin itself has limited supply. The coin is a scarce resource which drives the price of the coin -- assuming sufficient demand. Transactions are not supposed to be scarce and there's no need to limit the supply by more than covering operational costs of transactions -- which should be low and even go down if demand increases, because of economy of scale.

I don't think that it was the original purpose of Bitcoin and Ethereum to not be useful as a money. I think, those coins just failed to serve their purpose. We'll see what happens if more scaleable alternatives become more widely available

If what you say is true, then the US dollar would have fallen out of use after we dropped the gold standard. It didn't. Your hypothetical model of what drives value simply doesn't line up with what we have seen in the real world.

USD has value because it is the native currency of the most influential country in the world. KDA has value because it is the native currency of the only blockchain in existence right now that can scale to meet worldwide demand.

I understand where you're coming from in this, because the logic of "tokens are needed to pay gas, and thus that need drives the value of the token" is a self consistent logical statement. My reply was to point out that, outside of crypto, financial layer-1 systems that are/near frictionless tend to accrue value/users/ecosystems very quickly. Paper money is one example, while the movement from PayPal -> Venmo (and why PayPal bought them) is another wholly different example of a similar flavor.

While tokens needed for gas is self-consistent, I'd argue the logic is limited in how important it is. For example, does ETH's or BTC's high fees really drive up the token value beyond 5% of total value? Moreover, and I suspect this is the true state of affairs: it's possible that high fees can simultaneously drive a token's value up AND limit a token's value by limited usage/adoption. Then the question is what is the net impact of high gas fees?

I'd argue that the net impact varies on token value/market cap. For sub-$100MM market cap layer-1 tokens, and for many/most dapps, the net benefit of high fees may outweigh the retarding effects on growth/usage. Past that point though, it's hard to see how a $5 per tx gas fee is anything other than a net negative.

NB: when constrained to the aforementioned discussion's conceptual framework, there's noteworthy difference between PayPal vs ETH/BTC in that while PayPal can continue to grow through acquisition... ETH/BTC cannot. This is a feature, not a bug, of crypto and yet it still has large implications when we consider the historic patterns of value-accruing monetary systems and how they navigate migrations to lower-cost alternatives.

I think, this is what makes the difference between a casino and a market place. In a casino you don't expect transactions to be efficient. You want to spent time loosing your money. Transactions are made inefficient by means of rolling dices, throwing marbles, shuffling cards, and you also pay for a red carpet. In contrast, a market places are supposed to be efficient. You don't chose an exchange because they have they highest transaction fees.

Someone who is in crypto only for having fun gambling may want precisely the casino aspect. They might enjoy the high fees of Bitcoin and Ethereum, the suspense while waiting for a transaction to finally settle, and highly complex and economically risky algorithms around POS. And there's certainly some thrill in the drama around Eth2 :-)

But that's not what one would expect from a market place. Many people are in crypto because they think that it can replace existing market places by facilitating more efficient trading. One wouldn't blame a trading system for being too efficient in processing transactions.