A Monetary Blockchain is Less
The Ethereum blockchain is fatally tied to fiat monetary systems. Stablecoins of massive liquidity traded within Ethereum are, theoretically, redeemable one for one for cash in the old, established monetary system. Decentralized finance, DeFi, rests heavily upon this assumption and is the primary use case for Ethereum. The issue then, is the power those stablecoin issuers have in protocol changes.
Blockchains, before they settle any higher order tokens (like a stablecoin), settle their native currency and when a blockchain undergoes democratic change, it forks into two or more versions each with a different version of the native currency - the value of the native currency on each fork has to do with values appraised against the different versions. Users and the market at large are free to use their coins on either chain and set the relative values.
This is not the case with the fiat-backed stablecoins - their value comes not from the underlying blockchain, but from their promise that they can be redeemed from a single chain into the raw money of the established banking system. If the blockchain a fiat-backed stablecoin is hosted on forks, the bank(s) which redeem those stablecoins will not allow both forks to redeem both copies of any coin (that would double their liabilities) - they must choose the fork they will allow redemption from. The liquidity and utility these stablecoins provide is the backbone of the primary use case on contract chains: DeFi. Any fork where these stablecoins lose their value is a fork in which this primary use case implodes.
This fact inverts the power dynamic which faithful blockchains are initially strengthened by; rather than being independent of the banking cartel, blockchains whose utility relies on use of stablecoins concede the power and influence to their to the issuers of those stablecoins. If the Ethereum community, or even the team, were pushing a fork in which a prominent stablecoin issuer did not approve, those issuers could effectively nullify that version of the chain by refusing to redeem stablecoins on it.
The community may still follow their principles, sell their stablecoins on the issuers preferred fork, and bridge the exchanged asset over to the community fork, but the finance protocols reliant on that stablecoin's liquidity (most are reliant on one or multiple) would still suffer extreme disruption as the interlinked finance protocols are shattered and traded in panic across two disparate timelines - enough to make those invested think hard about the fork choice the banks of old impose on our budding neo-money.
But the general principle behind this goes deeper than fiat-backed stablecoins: it is a matter of value reliant on acceptance from external sources; it can be boiled down to a difference in monetary blockchains versus commodity blockchains. The same dynamic of a blockchain being held hostage by outside sources can be realistically applied Bitcoin as well - even assuming Bitcoin were never to host any type of stablecoin. The fact that Bitcoin is superior as a monetary protocol to existing systems will not necessarily stop the powers that be from cutting it of at the all important choke-point: acceptance. Bitcoin is fundamentally money, and money ultimately relies on literal monetary acceptance for value.
Just like how stablecoin issuers can control the future of Ethereum and other contract chains by selectively redeeming on the forks which serve their interests, governments can selectively accept and sanction Bitcoin based on their preferred fork; this could includes transaction or address censorship, arbitrary protocol changes, or an outright outlawing of the coin and anything in between - all of which would diminish the utility and lower the value of Bitcoin as money; this devaluing is quite obvious when money is understood as a common means of exchange - take away mutual acceptance of a currency and the monetary utility degrades as a direct result. This vulnerability lies within all blockchains whose utility depends on acceptance, or whose primary use-case is money; this is what it means to be a monetary chain.1
A commodity chain, on the other hand, is not reliant on external approval for value. The utility a token provides on a commodity chain is not preceded by others accepting that value - it simply from the ability to publish data on a blockchain which has the fundamental properties of universal broadcast, censorship resistance, and non-excludability. Whether or not certain powers, institutions or Dave down the street approve of the protocol does not diminish the utility of imbuing data with those properties; once the data is on-chain the value has been delivered - there is no need for perceived monetary legitimacy. The native currency associated with a commodity chain is then primarily exchanged for space on-chain.2
All blockchains allow this utility whether intended or not, but almost none are optimized for it - David Lancashire and Richard Paris’s work a notable exception.
Much like gold, Bitcoin's primary source of value in the market comes from its acceptance as a store of value, what may be thought of as an augmentation of money - despite both having *some* secondary utility. Though Ethereum, by nature of hosting stablecoins, opens itself up the the vulnerability of external acceptance its existence is indeed predicated on providing utility in the form of computation and so it may be mistaken for a commodity chain, that is, if computation were a feature which was unique to blockchain.
Such auxiliary utilities are applications of blockchain and are ultimately reliant on how well a chain can provide the properties which make blockchain unique - utilities which need not be bound to specialized chains - the Ethereum community admits as much when they embrace rollups and other layer-2s as necessary for scaling, technology which performs once once on-chain computations off-chain. To be even more obtuse: it is demonstrably true that very little data is posted on Bitcoin or Ethereum which use the chain itself as a commodity; it is the monetary use cases where the value of money moving around is proportionally greater than the fees paid to publish that data, those instances, which dominate space on-chain.
A true commodity chain offers competitive pricing for universal broadcast, censorship resistance, and non-excludability - the primary feature is the chain itself as a data layer, and so efficiency in funding and security around this task is of utmost importance; there is no hiding behind the speculative or relilgious incantations of value its followers attempt to imbue into the native currency. The value, finally, is objective.
This is important as an existential defense for that blockchain. The commodity properties of a secure and robust blockchain cannot be devalued by outside appraisal, while the extent to which the chain is monetary in nature, so too is its reliance on widespread acceptance. It imparts value from the properties it grants data published to it and delivers that value immediately without external permission or approval - even Bitcoin needs approval; this explains the great lengths the community goes to evangalize it and its followers.
The great irony is that the value which data may take on from being broadcast on-chain ultimately backs the value of the chain-native currency - a commodity chain therefore hosts a more secure form of money, as the value of the token is exchangeable for a non-subjective utility, unlike money which is reliant on external acceptance. If the intense salesmanship of existing blockchains ever bewildered you, the fundamental need for approval as a prerequisite to being money, combined with the inability to be useful as anything but, explains why.
Blockchain money which is truly ambivalent towards external power is backed by a utility which that power may gain no outsized control over; it need not be convincing to or approved of by anyone to provide its value.
Bitcoiners today are often demonstrably ignorant of this. They cheer when competing blockchains are to be labelled as 'securities,' subject to rule under the SEC, without realizing how wide they are opening the door for governments to be selective on which chains are legitimate and to be accepted, and which are not. By letting government choose which chains are allowed rather than the market, they invite the government to greatly influence which forks of Bitcoin are to be accepted and which are not.
A commodity chain does not mean that there is no currency associated with the blockchain - currency which possesses the properties of the blockchain is fundamental to the tax and reward systems which makes those properties possible; many novices rightfully dismissive of rampant speculation wrongly believe that the solution is a blockchain without a currency, not fully realizing the role a native currency plays in the system.