# Global Space Scarcity

Ethereum inherits a similar economic model to Bitcoin but abstracts computational consumption into Gas fees. Unlike Bitcoin, Ethereum thrives on on-chain activity since its smart contract ecosystem depends on frequent transactions and interactions. However, Ethereum is also subject to the **Bitcoin Paradox**: as ETH prices rise, Gas fees increase, making transactions more expensive and discouraging on-chain activity. This economic mechanism makes it difficult for Ethereum to maintain its desired level of network activity during price surges.

In addition, Ethereum suffers from the **global state explosion** problem:

* Since there is no mechanism to limit the growth of global state, nodes must store an ever-increasing amount of data, leading to higher disk space requirements.
* This raises the cost of running full nodes, potentially leading to network centralization as only well-resourced entities can afford to maintain full blockchain data.

**Global state should be treated as a scarce resource**, much like Bitcoin’s UTXO model or Ethereum’s Gas fees. By **combining global state scarcity with tokenomics**, we can introduce economic incentives to manage storage more efficiently.

By integrating **global state scarcity** with **token economics**, we can optimize blockchain resource allocation, ensuring scalability while preserving decentralization.