Blockchain Valuation

[DooDiligence]

15 minutes ago, [email protected] said:

 

What?

You asked me for advice on how to buy and then you asked should I be boot from my answer?

I understand there are many scams in crypto but really feel bad when be treated like that.

 

gfp can always be counted on to do diplomatic intervention and smooth over any brewing battles.

 

Seriously, don't take it personal. I understand your enthusiasm, even if I don't share it (others may).

Reddit might be a more appropriate forum and a link to the sub would surely attract someone from here to legit discussions.

 

On another note, you got any thoughts on the recent Berkshire 10K and Buffett letter? I'm all ears.

 

Edited Friday at 02:23 PM by DooDiligence

[DooDiligence]

6 minutes ago, backtothebeach said:

Having your username an email address seems fishy, because it feels like a low level attempt at people contacting you privately. Maybe change that. If it is a realy email address you are using it is dumb to have it out there open on the internet.

 

Hacking 101

[Metta]

6 minutes ago, gfp said:

Just ask @Parsad to change it for you in a private message.  He's a busy guy but he will get to it

Thank. Please check DM @Parsad.

[Metta]

8 minutes ago, DooDiligence said:

On another note, you got any thoughts on the recent Berkshire 10K and Buffett letter? I'm all ears.

 

I read all the books and his old partnerships letters. But then, I just remember a quote from Mr Charlie Munger: "Fish where the fish are". Warren is too big and too old. He is my idol but he is now in very different situation compared to me. 

I think young Warren will look into crypto because that is very inefficient/misunderstand market with high grow potential.

 

[Fly]

1 hour ago, [email protected] said:

Don't you think Blockchain/Token valuation should deserve real thread?

 

No, this isn't r/ETH. Know your audience, read the room. When you start a thread and you post 5 times with no response then maybe that's an indication this isn't the place. We have a thread titled "Cryptocurrencies" which is more appropriate for any such blockchain/ETH discussion. I know you have also posted there and received the same muted response, so again... read the room. 

[nsx5200]

Agreed.  There are better venues for debating blockchain/crypto with more knowledgeable audience that are more attuned to the topic.  The choice to purposely seek out a venue where the the audience is typically not as knowledgeable, or even interested in the topic invites scrutiny that is rightfully placed.

55 minutes ago, [email protected] said:

I think young Warren will look into crypto because that is very inefficient/misunderstand market with high grow potential.

 

To claim that crypto is inefficient mor misunderstood when every other youtube video is about it, is IMHO, a really big claim.  Even Warran, himself, has said that if he were to start all over again, he would start with essentially small/micro caps, flipping the pages of the likes of ValueLine, and not look into crypto.

[Metta]

10 hours ago, Fly said:

 

No, this isn't r/ETH. Know your audience, read the room. When you start a thread and you post 5 times with no response then maybe that's an indication this isn't the place. We have a thread titled "Cryptocurrencies" which is more appropriate for any such blockchain/ETH discussion. I know you have also posted there and received the same muted response, so again... read the room. 

 

You are interested in Cryptocurrencies but have no interest in Ethereum.

Why is that? Are you pro Bitcoin only?

 

[Metta]

10 hours ago, nsx5200 said:

Agreed.  There are better venues for debating blockchain/crypto with more knowledgeable audience that are more attuned to the topic.  The choice to purposely seek out a venue where the the audience is typically not as knowledgeable, or even interested in the topic invites scrutiny that is rightfully placed.

 

We are talking about fundamental and don't you think this forum has a lot of people focusing on fundamental? 

If there are not many people interested in it, that doesn't mean we should not talk/discuss about it? It's the opposite. We should talk/research about it more. Because that might be where opportunities are lying. Isn't value investor very much uncommon/against the crowd many time?

Edited Saturday at 02:10 AM by [email protected]

[Metta]

10 hours ago, nsx5200 said:

To claim that crypto is inefficient mor misunderstood when every other youtube video is about it, is IMHO, a really big claim.  Even Warran, himself, has said that if he were to start all over again, he would start with essentially small/micro caps, flipping the pages of the likes of ValueLine, and not look into crypto.

 

Look, I can buy ETH on 1 exchange at 2000 and then sell it on another exchange for 2010 few seconds later. Not many youtube videos will tell you about that. You have to look for yourself. But you get the point. It's an inefficient market. Do you know there many small/micro cap in Crypto?

[DooDiligence]

I don't think you understand idiomatic English. Read the room basically means,

 

NOBODY IS INTERESTED. TALK ABOUT THINGS THAT PEOPLE IN THE ROOM ARE INTERESTED IN.

 

I can make the type font larger if that will make the meaning clearer.

Edited Saturday at 02:16 AM by DooDiligence

[Metta]

17 minutes ago, DooDiligence said:

I don't think you understand idiomatic English. Read the room basically means,

 

NOBODY IS INTERESTED. TALK ABOUT THINGS THAT PEOPLE IN THE ROOM ARE INTERESTED IN.

 

I can make the type font larger if that will make the meaning clearer.

 

Hi. Isn't that exactly the reason for creating a separate room/thread for? So people know which room is for them?

 

[DooDiligence]

3 minutes ago, [email protected] said:

 

Hi. Isn't that exactly the reason for creating a separate room/thread for? So people know which room is for them?

 

 

No. Go away.

 

[Malmqky]

36 minutes ago, [email protected] said:

 

Look, I can buy ETH on 1 exchange at 2000 and then sell it on another exchange for 2010 few seconds later. Not many youtube videos will tell you about that. You have to look for yourself. But you get the point. It's an inefficient market. Do you know there many small/micro cap in Crypto?

How does this work with fees and algos? Is this something that I could develop a bot to do, or will I be competing against HFT wizards?

[nsx5200]

13 hours ago, [email protected] said:

We are talking about fundamental and don't you think this forum has a lot of people focusing on fundamental? 

If there are not many people interested in it, that doesn't mean we should not talk/discuss about it? It's the opposite. We should talk/research about it more. Because that might be where opportunities are lying. Isn't value investor very much uncommon/against the crowd many time?

If you're going to use the nomenclature used in this forum, you should try to understand them.  It seems like there's a significant difference in the definition of "fundamental" that the members of this forum is using and what you're using.  "Fundamental" used on this forum typically have the concept of P/E, valuating the quantity and probability of extracting future earning from an asset.  The asset that you're hawking has no real concept of that, and the arbitrage you mention could be interesting if the method is reliable (and if they're reliable, you should've exploited the hell out of it like SBF).

 

The fact that you started this other thread: https://thecobf.com/forum/topic/21113-eth-the-triple-point-asset, which is more or less on the same topic with similar reception means it has even more hallmarks of a typical scam.  Like the other thread, unless you  have anything substantial to refute my points, this is the last post I'm going to post in this topic, and possibly reply to you.

[alxcii]

On 2/27/2025 at 4:35 AM, [email protected] said:

Nice. You are the most informed crypto member I know on this value investor forum so far.

1. At the end of this year, Ethereum Layer 2 like Base, Arbitrum, Uniswap...will probably faster and cheaper than Solana. Scaling horizontally as Ethereum is the right architecture, proved by Internet with millions of servers. To serve billions of users, Blockchain will also need a least thousand of Layer 2s.

2. DA from Celestia is almost free but major rollup/layer 2 still choose Ethereum. In fact Mantle, the most valuable Layer 2 that posted DA on Celestia, is moving to Ethereum. So Ethereum DA has moat and pricing power. This pricing power will get even stronger when the interop between Layers become more seamless over time. Then the network effect will be very strong.

3. Bitcoin sure has better meme for money/digital gold narrative. But Bitcoin has long tail risks(quantum, security budget, centralization) that will require hard fork and affect moneyness. 

I have one question for you, do you think Blockchain Layer 1 will be "the winner take all" market or will be multiple winners?

 

- I do believe the rollup architecture will be common but there will absolutely need to be high throughput chains as well. Operating a Nasdaq on-chain (high throughput, high composability) will be fundamentally different than say, gaming economies (rollups).

- This is why I don't believe Solana vs. Ethereum is the right question to ask as we will need both architectures.

- My view is that Solana is and will remain the category leader of monolithic chains, but Ethereum will have parts of its stack eaten by competitors.

- On DA: Without looking into where specific chains are posting their data, Celestia's market share > Eth by data posted. Celestia's interop solution will also be faster to market than another other DA layer - I think, as you say, the network effect will be very strong.

- Similar to how Bitcoin slowly ossified into being just money, I think Eth will end up being just a settlement layer. Nothing wrong with that, it should do what it's best at!

- I think winner takes most will apply in most of the layers - it's definitely top heavy, something like pareto distributed.

 

 

[Metta]

On 3/1/2025 at 9:44 AM, DooDiligence said:

No. Go away.

 

Hi man. Don't be angry. Science proved that when you are angry, your body is poisoning itself. It's not worth it for some random comments on Internet.

God bless you.

[Metta]

On 3/1/2025 at 9:45 AM, Malmqky said:

How does this work with fees and algos? Is this something that I could develop a bot to do, or will I be competing against HFT wizards?

 

Profitable after fee...

Many people develop the bot to do Arbitrage in Crypto.

But sometime I can still arbitrage manually. Just click the right buttons, fast. 

There are people making millions from a single arbitrage transaction on Ethereum. It's not coincident that Citadel is coming back to Crypto.

This post is good start if you want to go into this rabbit bole: https://www.paradigm.xyz/2020/08/ethereum-is-a-dark-forest

 

Edited Sunday at 10:45 AM by [email protected]

[Metta]

18 hours ago, nsx5200 said:

It seems like there's a significant difference in the definition of "fundamental" that the members of this forum is using and what you're using.  "Fundamental" used on this forum typically have the concept of P/E, valuating the quantity and probability of extracting future earning from an asset.  The asset that you're hawking has no real concept of that, and the arbitrage you mention could be interesting if the method is reliable (and if they're reliable, you should've exploited the hell out of it like SBF).

 

Please read the first post in this thread, it basically talks about where revenue of a Blockchain like Ethereum coming from? (congestion fee, contention fee...)

[Metta]

18 hours ago, alxcii said:

 

- I do believe the rollup architecture will be common but there will absolutely need to be high throughput chains as well. Operating a Nasdaq on-chain (high throughput, high composability) will be fundamentally different than say, gaming economies (rollups).

- This is why I don't believe Solana vs. Ethereum is the right question to ask as we will need both architectures.

- My view is that Solana is and will remain the category leader of monolithic chains, but Ethereum will have parts of its stack eaten by competitors.

- On DA: Without looking into where specific chains are posting their data, Celestia's market share > Eth by data posted. Celestia's interop solution will also be faster to market than another other DA layer - I think, as you say, the network effect will be very strong.

- Similar to how Bitcoin slowly ossified into being just money, I think Eth will end up being just a settlement layer. Nothing wrong with that, it should do what it's best at!

- I think winner takes most will apply in most of the layers - it's definitely top heavy, something like pareto distributed.

 

 

 

1. Ethereum Layer 2s will have higher throughout than Solana. For example, current block time of Ethereum Layer 2 Arbitrum is 250ms while Solana is 400ms. The fee on Ethereum Layer 2 Base is similar to Solana currently(around $0.001). And fee on Layer 2 will get even cheaper when Ethereum increase Blob per block 16x( from 3 to 48 at the end of this year). Base also just introduces Flashblock to reduce block time to 200ms, coming to live in Q2. Modular architecture is always more better for scaling than Monolithic architecture.  Internet shows that. This post clearly explain why: https://polynya.mirror.xyz/3-omFNK3uU0iAaYSpFz0f9rCvrDBjx0H3XOSDGXU8hY

2. "Celestia's market share > Eth by data posted."? What do you mean by market share here? Volume or Revenue? Volume posted on Celestia is very low quality compared to Ethereum.

3. Ethereum Layer 1 is the most secure/decentralize execution layer. I think high value txs will continue to happen Ethereum Layer 1 while low value txs will happen on Layer 2.

4. Blockchain is very much like a nation with its culture. Will Crypto end up with many different Layer 1s similar to current world order(over 100 countries) or will crypto end up with only 1 Layer 1 with thousands of Layer 2(like US with over 50 states). I'm still thinking about how market structure will play out here.

 

Edited Sunday at 11:14 AM by [email protected]

[DooDiligence]

3 hours ago, [email protected] said:

 

Hi man. Don't be angry. Science proved that when you are angry, your body is poisoning itself. It's not worth it for some random comments on Internet.

God bless you.

 

You heard anger as an echo of your own and nothing more.

Do not imagine yourself a spider to the fly, when you are in fact a Grasshopper being gently shooed away.

Edited Sunday at 01:55 PM by DooDiligence

[TwoCitiesCapital]

On 2/28/2025 at 8:45 PM, Malmqky said:

How does this work with fees and algos? Is this something that I could develop a bot to do, or will I be competing against HFT wizards?

 

Yes, but it has to be in size as the gas fees/latency/slippage impact earnings. Gas fee are basically the same for a 1k transaction as a 10k transaction for instance so the more size you have the more fees become meaningless. FTX was doing this and is one of the reasons they were so massively profitable - nobody else was really gaming price differentials across exchanges. Had they had some risk controls and actual segregation of client funds from prop trading then they'd have probably been fine. 

 

I started with ~20k in the space in 2021 and probably added $20-30k more over the course of 18 months as I was learning. The fees ate me alive. You'd probably need at least 5x that amount as a starter to dip your toes into the pool and have a reasonable amount to work with and diversify across 3-4 different activities. 

 

The traditional process: 

Transfer money to Coinbase and buy ETH (commission). Send that to your private wallet (gas fees). Take the ETH to Uniswap and buy the token you want (gas fees to permission the app/gas fees to trade the token/slippage). Take those tokens and stake them (gas fees to permission the app/gas fees to stake the token). You still haven't earned a return yet, but have paid 5 sets of fees so far. Today, there is another set of fees to move your ETH/token from base-chain to level 2 chains to lessen the ongoing gas-fees. I don't' know what this costs today, but in 2021 it was going to be over $500 of ETH for me to move my balances to L2 on Optimism and was going to leave me in an inactive limbo of 7-10 days waiting for that to process. 

 

But that isn't where the fees ended. 

 

The Yearn pools I staked to earn yield on various projects? Ended up closing due to developers moving onto new projects requiring me to withdraw the money (gas fees) and stake new pools (more gas fees) that then later closed too (more gas fees). Returns were minimal and the transaction was forced - you didn't really have a choice. 

 

The Curv stablecoin exchange I provided liquidity to? The returns in mid-2021 were not really more than low-single digits which was a far cry from what the historical revenues had been so there were more fees for me to unstake and move elsewhere.

 

The token lending I did on Aave? Proved to be the same. Rates were high at first and then immediately came down to levels less than what I could earn in a money market. Eventually, all interest rates moved to zero because I didn't unstake (gas fees), move to L2 (more fees), and restake on the L2 networks (gas fees) so I had to unstake everything and move to elsewhere. 

 

The derivative exchange I staked? Paid weekly rewards that vested in a year...i.e. weekly fees to claim (that often approached or even exceeded the reward value) and fees again in a year to claim the vested tokens. Not to mention, I had to maintain a specific ratio of capital so there were constant additional deposits/staking (more fees) to keep myself eligible to earn the rewards as the token was diving in price 90+%.

 

I looked into providing liquidity for token pairs on Uniswap and others, but was seeing that the returns there paled in comparison to simply buying and holding the tokens. 

 

All of this pushed me away from the decentralized stuff into the more centralized carriers like BlockFi and Celsius where the scale made the fees more reasonably. And then they went under....

 

Much of the yield doesn't actually occur, when it does occur it is paid in tokens that are likely to depreciate massively, you are forced into transactions you didn't necessarily want to make (like when protocols go unsupported or returns suddenly go from 10-15% to 2%), and every disposal of a token is taxable INCLUDING the gas paid for every transaction which makes tax time an absolute pain in the ass. 

 

I spent 3-years in the space. Its not clear to me that real improvements have been made for the longevity of the product, the returns are ephemeral, fees are enormous and regular, and the economy is circular. There's money to be made here, but its from the zero-sum game of taking it from others less lucky than you and not because the pie is growing overall. 

 

 

 

Edited Sunday at 04:39 PM by TwoCitiesCapital

[DooDiligence]

Would I be correct in saying this doesn't resemble value investing, GARP or even momo, in any way shape or form? Asking for a friend.

[alxcii]

11 hours ago, [email protected] said:

 

1. Ethereum Layer 2s will have higher throughout than Solana. For example, current block time of Ethereum Layer 2 Arbitrum is 250ms while Solana is 400ms. The fee on Ethereum Layer 2 Base is similar to Solana currently(around $0.001). And fee on Layer 2 will get even cheaper when Ethereum increase Blob per block 16x( from 3 to 48 at the end of this year). Base also just introduces Flashblock to reduce block time to 200ms, coming to live in Q2. Modular architecture is always more better for scaling than Monolithic architecture.  Internet shows that. This post clearly explain why: https://polynya.mirror.xyz/3-omFNK3uU0iAaYSpFz0f9rCvrDBjx0H3XOSDGXU8hY

2. "Celestia's market share > Eth by data posted."? What do you mean by market share here? Volume or Revenue? Volume posted on Celestia is very low quality compared to Ethereum.

3. Ethereum Layer 1 is the most secure/decentralize execution layer. I think high value txs will continue to happen Ethereum Layer 1 while low value txs will happen on Layer 2.

4. Blockchain is very much like a nation with its culture. Will Crypto end up with many different Layer 1s similar to current world order(over 100 countries) or will crypto end up with only 1 Layer 1 with thousands of Layer 2(like US with over 50 states). I'm still thinking about how market structure will play out here.

 

 

1a. You cannot compare L2 blocks with a centralized sequencer to Solana blocks with 1,300+ active validators - Solana is inarguably the most performant chain at scale.

1b. It depends what you mean by better. Modular lacks synchronous composability so DeFi applications should gravitate towards large high throughput chains. Handling say, liquidations, in a cross chain async environment is not ideal, but for other use cases it may not matter as much.

2. By data posted. Fee share is irrelevant because Celestia only charges only enough to prevent spam by design at the moment.

3. Time will tell.

4. I think about where trading happens today - there's only so many exchanges actually matter (NYSE, Tokyo, Shanghai, LSE etc.) My view is that L1s will mirror the distribution of public stock exchanges in significance.

[Fly]

6 hours ago, DooDiligence said:

Would I be correct in saying this doesn't resemble value investing, GARP or even momo, in any way shape or form? Asking for a friend.

“Apples to oranges” doesn’t begin to do it justice. 

Edited Monday at 02:04 AM by Fly

[Metta]

1 hour ago, alxcii said:

 

1a. You cannot compare L2 blocks with a centralized sequencer to Solana blocks with 1,300+ active validators - Solana is inarguably the most performant chain at scale.

1b. It depends what you mean by better. Modular lacks synchronous composability so DeFi applications should gravitate towards large high throughput chains. Handling say, liquidations, in a cross chain async environment is not ideal, but for other use cases it may not matter as much.

2. By data posted. Fee share is irrelevant because Celestia only charges only enough to prevent spam by design at the moment.

3. Time will tell.

4. I think about where trading happens today - there's only so many exchanges actually matter (NYSE, Tokyo, Shanghai, LSE etc.) My view is that L1s will mirror the distribution of public stock exchanges in significance.

 

1a. Yes. The security property of current Ethereum Layer 2s/Rollups is not equal to Solana. Specifically, Base is at stage 0 rollup(validation is fully trusted/centralized) and Arbitrum is a stage 1 Rollup( there is a trustless proof system but a security council that can override the proof system). But Layer 2 tech can improve to reach stage 2 to fully inherit Ethereum's core properties (trustless, open, censorship resistant). The zk proof tech is already there, just need more time for maturing and cost reduction.

In short for the current situation:

Solana is less secure/decentralize than Ethereum Layer 1 but more secure/decentralize than Ethereum Layer 2s. 

Solana is more performance than Ethereum Layer 1 but less performance than Ethereum Layer 2s. 

But as the modular tech improves, the tech selling point of Solana is going to dimmish overtime. This is why Solana Founder start talking about Network Extension - a kind of Layer 2 on Solana.

1b. You can still have synchronous composability on Ethereum Layer 1 or on each Ethereum Layer 2. Both Layers keep improving as well. Ethereum L1 keeps improve on scaling while Ethereum L2s keeps improve on security.

2. Other metric to evaluate market share is Value Secure. Around $600M asset is currently secured by Celestia while $36B is currently secured by Ethereum DA. This is what I mean by low quality data posted on Celestia. Source here: https://l2beat.com/data-availability/summary.

3. Ok.

4. Those exchanges(NYSE, Tokyo, Shanghai, LSE etc.) co-exist because there is a high barrier between them. It also causes liquidity fragmentation/market inefficient. Blockchain is different. Blockchain allows for better liquidity efficient and composability. So the outcome here might also different from old exchange world.

Edited Monday at 02:35 AM by [email protected]