Ethereum

Interestingly, Ethereum’s rollup-centric roadmap is implicitly a gambit in this direction. ETH is sacrificing REV to its L2s rather than capturing it all to itself, in return for spreading the moneyness of ETH the asset. It’s unclear if its L2s will win out, or if they’ll continue to aggressively use and spread ETH in the future, but it’s clearly t... See more

Bitcoin is special. It was the first, and it’s still the most decentralized, credibly neutral, predictable, and reliable network. No other network can match its story, and perhaps no other will match these features.

Also, unlike most of its peers here, BTC makes no attempt to be a productive capital asset. Now, that may sound like a weakness at firs... See more

There exists no meaningful technical barrier between BTC vs. the field. Most other networks are obviously even technically more advanced. But we’re focused on the dollars and cents outcome here. Will any of these other assets be used in a similar manner over time as BTC, justifying valuations far in excess of their intrinsic value from producing in... See more

Aside from being productive capital assets, you have likely heard some variation of these two other buckets for assets (neither of which are necessarily mutually exclusive with each other or capital assets):

• Consumable / Transformable Asset – Sometimes also classified as commodity or utility value. Cryptoassets offer infinitely programmable, fast,

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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

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

PoS – Imagine a PoS network with 1mm validators, costing $100mm p.a. to run. Users pay $200mm p.a. in REV, and the chain issues $800mm in tokens p.a. to stakers. Operators take a 10% cut on TEV ($100mm here). The “profit = fees – issuance” proponents will say this is unsustainable: $200mm fees – $800mm issuance = $600mm loss! This doesn’t hold up.

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And now, I think what comes next is real consumer tokens. Tokens that combine the expansive ambitions of top infrastructure projects, with the belief systems, cultural value, and social properties of memecoins. Tokens connected to product and social experiences that people actually care about instead of vaporware. Tokens from projects that are tryi... See more

However, compromising on decentralization has never been an option for the Ethereum community. It's also essential because it is closely tied to security and gives the Ethereum network properties like neutrality, censorship resistance, and permissionless-ness, which are equally important as the ones in the scalability trilemma.

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