New model: ETH value anchored to adoption, institutional yield from retail utility

A new quantitative finance paper by Mikhail Perepelitsa, submitted to arXiv on June 5, 2026, develops an open-economy macro equilibrium model for Proof-of-Stake (PoS) networks with EIP-1559 fee-burn mechanics. The model captures the strategic interaction between a Kelly-optimizing rational institutional investor and a utility-driven retail consumer. It contrasts two behavioral regimes: The Unbounded Accumulation Model, where consumers only accumulate tokens, fueling speculative bubbles and compounding returns for institutions; and The Utility-Consumption Model, where consumers dynamically buy/sell tokens to balance crypto wealth with fiat consumption.

In the utility-consumption regime, the paper derives an explicit steady-state equilibrium price for ETH, showing token valuation anchors to a fundamental baseline that scales directly with network adoption. Crucially, this baseline completely dissolves any institutional yield premium from staking. Numerical simulations reveal that exogenous TradFi shocks propagate through portfolio rebalancing, driving high token price volatility, yet network inflation remains highly stable. The paper also proves that counter-cyclical consumer behavior insulates network security from institutional monopoly.

The core finding is that institutional excess wealth creation in PoS ecosystems is not native to the staking protocol but is strictly driven by leveraged extraction of retail consumers' continuous demand for transactional utility. This challenges the narrative that staking yields alone generate outsized returns for large holders, and suggests that sustainable ETH valuation depends on real economic use rather than speculative accumulation.