From Digital Oil to a Digital Nation—Narratives for Ethereum in 2021

Myles Danielsen: Other projects certainly offer more upside potential, but the risk-adjusted opportunity of Ethereum seems particularly compelling relative to both the rest of crypto and other asset classes globally. At present, Ethereum appears to offer the model set-up of all of investing: long-term secular tailwinds, near-term catalysts, and att... See more

4) Ethereum is the clear leader, but faces competition

So far, this post has focused almost exclusively on tokens’ ability to capture value by generating income streams for their holders. They are productive capital assets. This may very well be sufficient to value most tokens in the long-run. Equity-like analysis will do the trick here. Think DCF and DDM.

However, valuing tokens based on cash flows rem... See more

There are many ways to look at value of financial assets globally, but one thing is clear - the current $133bn sitting in Ethereum TVL (and $221bn sitting across ALL blockchains) pales in comparison to the total addressable market. One can take their own view on how much of these assets migrate to decentralized trustless blockchains, but the upside... See more

It seems obvious that applications, not general-purpose networks, will capture the majority of cash flows generated in these systems over the long-run. This is already playing out. Apps have all of the leverage and pricing power with the end-customer. There’s still a big question though – how much MEV leakage will these apps leave around for the ch... See more

The end goal for Ethereum is to become the financial layer for global coordination.

Fundamentally, I consider ETH to derive most of its value from being a global, permissionless store of value, and while it is engaging to discuss the value accrual story as it relates to scaling of the ecosystem, long-term user and developer growth should take precedent over short-term focus on token mechanics. The rollup-centric roadmap makes a lo... See more