The Expected Demand for Security Model (EDSM) proposes that the key driver for the price of a native blockchain asset is the gross demand for security by all present and future infrastructure, applications, assets, and users on its network.
In a nutshell, demand for security grows as potential new use cases are unlocked and the opportunity for new users to be onboarded is created. Since the price of the native asset is a key determinant for security supplied, there is positive pressure on it to meet increased demand. The key implication of the model is that blockchains should focus on applications, developers, and, of course, users. Other popular metrics like revenue, throughput, total value locked (TVL), maximal extractable value (MEV), and culture are useful but to a lesser degree. Another important implication is that the model suggests a harmonious relationship between applications, L2 solutions, and the base layer. All use cases increase demand for security and consequently add value to the base layer.
