I’m tired of tradfi people saying “I’m blockchain, not crypto”. #blockchain doesn’t work without crypto.
Often people who say this are referring to permissioned blockchains. Permissioned blockchains are stupid (unless you are using them as training wheels to migrate to a public chain). You are better off with a database (or an immutable database, which exist outside of blockchain). The whole point of blockchain is to displace trust with truth. You can only do that through decentralization.
To get decentralization to work, you have to have fault tolerance (ability to discern truth when writing a block). In proof of stake, validators put up a native stake that has value, and risk losing that stake if they are not in consensus when a block is written.
To make stake valuable, it needs to yield. Gas fees paid into the chain accrue to those staking. The more gas (and other) fees paid into a chain, the more stakeholders receive for their validation (or delegation) efforts and thus the more valuable the stake.
Could stake be stablecoin like USDC? In theory yes, if the stablecoin is native to that L1 chain. But stake also provides governance and potentially other functions that are specific to the L1 chain. So stake comes in the form of that L1’s native utility token (e.g., crypto).
In thinking about the value of crypto, it’s the value of the present value of gas (and other) fees paid into the L1 chain, plus governance and any other utility that accrues to it.
This has a few implications. First, using Howey as the definition of a security, it requires expectation of profit solely from a third party. But every crypto holder – when staking – is participating in validating (and therefore promoting the decentralization) of the L1 chain. Second, it introduces into question what the value of L2 crypto tokens really are (beyond any specific utility, like rebates on cell minutes, access to artwork, etc.).