Framework

-Companies: The internet industry was previously fueled by companies building closed products and services on top of free, open source protocols.

While there are many similarities between blockchain industry and internet 1.0/2.0 industries, there are fundamental differences between them. These nuances will dictate how value will be created, who will capture this value, and what strategy is optimal to build or invest in the space. We believe there are three main distinctions to be made:

-Tokens: With data monopolies non-existent, blockchains use network tokens as an incentive instrument that captures value for the open network.

-Equity: Companies (Google, Amazon, Facebook) captured value during the internet revolution by controlling and containing the data originating from their platforms

-Open Networks: The blockchain industry is building open protocols that underlie the products built on top of them.

Value Capture: Equity vs. Tokens

Value Creation: Companies vs. Open Networks

Our core thesis is that where the internet democratized content and information, blockchains will democratize value and trust.

-Network Valuation: While some have proposed equations for valuation of protocol tokens, each token is unique and needs to have specific analysis done to evaluate it.

Valuation: Cash Flow vs. Network Valuation