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.