It degrades bitcoin as much as using bitcoin. That’s it. There is a nontechnical consideration: if pegged side chains like liquid and citrea become more valuable than bitcoin per block, moving chain forward as opposed to reorg in low subsidy era becomes trickier for miners.

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> It degrades bitcoin as much as using bitcoin. Using bitcoin as money strengthens bitcoin. Using bitcoin for other purposes degrades bitcoin as money. It’s a simple concept, if you understand what gives value to money and what dilutes the monetary premium.