Oddbean new post about login | logout How will a market maker (who you purchase sats from) be able to make a market in bitcoin bids and asks if there is nothing to price/arbitrage bitcoin against? Right now bitcoin is priced against ETH. That's why ETH exists that's why ETH was created and that's why Bitcoin has a market price. ETHs whole purpose and creation is to keep the BTC market liquid. That's ending.
I disagree that BTC is widely price against ETH. I would confidently assert at least 100x more BTC market participants care about the USD denomination rather than the ETH denomination. I agree BTC is the only reason ETH exists. I disagree ETHs ENTIRE purpose is to add liquidity. Market makers are widely supplying liquidity with dollars much more. ETH was created because people wanted a token attached to a blockchain with much more computation and smart contract features than BTC offers. Also they likely wanted to stack more USD with their pre mined allocations.
BTC is 100% priced against ETH. That's why the BTC-ETH spread exists and the ETH-BTC spread exists. This is how market making is done-this is what I do, bids and asks don't just magically appear. Watch the ETH-BTC spread for a day. It's blatant. ETH was created by Lubin and JPM to control bitcoin.
Obviously the ETHBTC exchange rate exists and does a lot of volume. I’m not denying that. I’m saying that BTC/ALL FIAT or fiat pegged stablecoin combined does MORE volume than the ETH pair. I don’t have data in front of me but I’d bet a few million sats on that. The best Lubin and JPM can do is control price temporarily. Obviously they cannot do fuck all controlling the nodes and miners.
Create unlimited ETH create unlimited dollars; you got half the equation solved. Once that spread ceases to exist there will be no way for intermediaries to facilitate transactions in BTC. ETH-BTC spread is a proxy for coins available for purchase.
I’m confused by your application of the word spread. Typically that term is used for the bid ask delta. ETHBTC being 0.03275btc today is more commonly a ratio or exchange rate. I also don’t find value talking about when all ETHBTC market pairs shut down and do zero volume. Again that likely won’t happen in the next 20 yrs.
Sorry I can see how you find that confusing. Market makers "spread" their trading. If you buy bitcoin a market maker sells it to you, that market maker is now short bitcoin. To offset his position he goes and buys ETH (or other shitcoin). That makes him -1BTC +1ETH. To close out that position that market maker goes and sells the ETH-BTC spread. Selling that spread (-1ETH +1BTC) offsets the original -1BTC +1ETH spread. This makes him flat and he nets his dollars profit