Oh my… how quickly the narratives change. As DeFi evolves, so does the utility of ETH. By taking a step back, we can see that the groundwork is being set to form a number of meaningful ETH supply sinks. ETH used as collateral in DeFi, Phase 0 of ETH 2.0 PoS, and now the newly created yETH Vaults all will play a role in squeezing the available ETH supply. While in a way they are competing forces, the access of yield opportunities to ETH holders keeps growing.
As I outline below, it wouldn’t be out of the question to see total ETH locked to more than double and reach over 12% share by EOY (7m ETH DeFi, 5m ETH Phase 0, 1.5m ETH yETH Vaults). However, a counterpoint to this view could be that due to yETH vaults that offer better yields, ETH simply migrates from protocols like Compound and Aave, right into Maker. After all liquidity follows the best yields. What remains to be seen is the number of new ETH participants the vault brings in with it