TLDR; Vitalink says he doesn't care much about price but the current roadmap certainly seems designed to increase the value of ETH.
1) Eth price is driven by supply. At least for ETH/BTC, current supply/demand seems to be a very good predictor of price. This is seen very clearly on the halvings impact on bitcoin price. Predictable events drive up bitcoins price, simply because there is not enough coins to meet demand.
2) Mining adds a lot of ether to supply. POW mining is a commodity business. These industries tend to have very low margins(because competition is very fierce). This means most miners will have costs(hardware, operations and electricity) very close to the rewards they currently get. I believe most miners sell almost all of their mining rewards to cover these costs – adding supply. Currently adding ~4.6 million ether per year(ETH inflation is 4%).
3) The merge will stop this supply As the merge happens, mining will suddenly stop. Thus removing the biggest contributor to ether supply,
3.1) Another way to think of this is, Ether is currently paying for POW, once this is no longer needed, this value will instead contribute to ethers price.
4) Ether is going to become a better store of value. If ether goes deflationary due to high burn-rates, this will make ether a more interesting asset to hold. Further reducing supply in circulation.
5) A lot more ether will be taken out of supply as trust in staking increases. Since staking generates returns, I believe more ether will go in to staking over time. This may increase inflation of ether, but also removing ether from circulation. According to this article, 100 million ether staked would still generate 1.8% yearly returns to stakers. The central banks are starting to warm up to higher interest rates, but right now, this kind of ROI is not that easy to come by for liquid assets. If 100 million ether are staked, that would be 85% of all ether in existence.
7) Increased costs of transactions will reduce supply. I haven't been able to figure out how this works exactly, but my understanding is, increased transaction costs on the base layer will either be burned – decreasing supply or awarded to stakers –Increasing ROI on staking. This in turn will increase the number of staked coins, and that will also decrease supply.
8) Scaling ether will increase transaction-costs(on the base-layer). Contrary to popular belief, sharding and other scaling solutions will first alleviate congestion on the base-layer. But as transactions get cheaper, more transactions will happen. Currently, we see people are willing to pay 20-60 USD for transactions. Over time, we will see the same thing on layer 2(though possibly a bit lower fees due to price elasticity). 100s of layer 2 transactions can then be bundled and all their fees will be used to create a single transaction on the base-layer.
I've been struggling find good data on amongst others, daily burn rate, staking rewards and mining rewards. If someone can share that with me, I could quantify some of these statements better. I'd also love to know what i've gotten wrong here.
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