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We are currently averaging at around 1.6 MB per block. Removing the witness discount would bring us back to 1 MB blocks. This would be a 37.5% decrease in L1 transaction throughput. Over the past week we have been seeing a ~16% reduction in block production rate. (presumably due to the US winter storm) Despite this fees are still very low. Yes, a 37.5% decrease would increase fees more, but I wouldn't go as far as saying that fees would immediately explode to levels of 2017 or April 20th 2024.
What should then be the next move after that?
After such a change L1 would probably become more of a final settlement layer and less useful for small payments. So we should focus on improving L2 scaling solutions like Lightning or Ark.
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It would also reduce the blocksize and significantly reduce the transaction throughput, but blockspace demand right now is just a little less than blockspace production. So I would expect the feerates to explode again like they did in 2024 and 2017. While I’ve expected for a very long time that small payments would get priced out over time, such a move would probably make transactions very expensive immediately. What should then be the next move after that?