Blockchain Valuation

[Metta]

10 hours ago, TwoCitiesCapital said:

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. 

 

Nowadays, you can sent money from Coinbase straight to Layer 2 like Optimism/Base... and the txs fee on Base in around $0.001. Many Layer 2s even have zero fee. 

The tech improvement is enormous.

[DooDiligence]

 

edit: OK, so seriously. Now I'm just gonna block this gentleman and the extra account he's created that gives the illusion that SOMEONE is seriously interacting with this spam, and be done with it. Does anyone know how to block or ignore a thread(s)?

Edited March 3, 2025 by DooDiligence

[Metta]

31 minutes ago, DooDiligence said:

edit: OK, so seriously. Now I'm just gonna block this gentleman and the extra account he's created that gives the illusion that SOMEONE is seriously interacting with this spam, and be done with it. Does anyone know how to block or ignore a thread(s)?

 

To get out of the hole, stop digging. To get a cold thread, stop posting. God bless you.

[Metta]

On 3/2/2025 at 12:00 AM, 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.

 

 

 

One advantage of modular tech stack like Ethereum is that it attracts Layer 2 developers. Layer 2 developers can make a lot of money. See Base from Coinbase. Therefore, many exchanges like Coinbase(L2 Base), Kraken(L2 Ink), Bybit(L2 Mantle)... are building Layer 2 on Ethereum. They will attract more users, coders, and liquidity to Ethereum. Layers 2s are builders/distributor for Ethereum Network. Who win the distribution problem will probably win the blockchain war.

 

Maybe one day Robinhood, Stripe, Blackrock, Charles Schwab, Nasdaq... will build a Layer 2 on Ethereum. 

Sony already launched an Ethereum L2 called Soneium: https://www.sony.com/en/SonyInfo/News/Press/202501/25-002E/

World(co-founded by Sam Altman ) is also an Ethereum Layer 2.

Deutsche Bank is reportedly creating a layer-2 (L2) blockchain solution on Ethereum using ZKsync technology: https://www.binance.com/en/square/post/12-18-2024-deutsche-bank-develops-layer-2-network-on-ethereum-using-zksync-17746441239850

Edited March 4, 2025 by Metta

[Metta]

Aave Proposes turn on fee switch and buyback program.

Aave DAO has announced significant updates to its tokenomics, including the initiation of a buyback program and the activation of a fee switch. This proposal, considered the most pivotal in Aave's history, aims to redistribute excess protocol revenue and enhance token value for holders.

[alxcii]

12 hours ago, Metta said:

 

One advantage of modular tech stack like Ethereum is that it attracts Layer 2 developers. Layer 2 developers can make a lot of money. See Base from Coinbase. Therefore, many exchanges like Coinbase(L2 Base), Kraken(L2 Ink), Bybit(L2 Mantle)... are building Layer 2 on Ethereum. They will attract more users, coders, and liquidity to Ethereum. Layers 2s are builders/distributor for Ethereum Network. Who win the distribution problem will probably win the blockchain war.

 

Maybe one day Robinhood, Stripe, Blackrock, Charles Schwab, Nasdaq... will build a Layer 2 on Ethereum. 

Sony already launched an Ethereum L2 called Soneium: https://www.sony.com/en/SonyInfo/News/Press/202501/25-002E/

World(co-founded by Sam Altman ) is also an Ethereum Layer 2.

Deutsche Bank is reportedly creating a layer-2 (L2) blockchain solution on Ethereum using ZKsync technology: https://www.binance.com/en/square/post/12-18-2024-deutsche-bank-develops-layer-2-network-on-ethereum-using-zksync-17746441239850

 

I believe you are conflating Eth the ecosystem with Eth the asset - I am less sanguine on the latter than you are. Eth will grow as the broader crypto ecosystem grows, but predicting whether it can outperform relative to everything else is I think, a seven foot hurdle.

[Metta]

23 hours ago, alxcii said:

 

I believe you are conflating Eth the ecosystem with Eth the asset - I am less sanguine on the latter than you are. Eth will grow as the broader crypto ecosystem grows, but predicting whether it can outperform relative to everything else is I think, a seven foot hurdle.

 

More Rollups directly lead to more DA revenue/fee for ETH holders. 

More L2/Rollup also directly leading to more demand for ETH asset.

 

The negative side of Rollups is that they take some sequencing/execution fee away from Ethereum. The good new is that Ethereum L1 is stepping up to provide Executing service as well.

 

Edited March 6, 2025 by Metta

[Metta]

A Blockchain always has 3 problems:

1. Scalability.

2. Security.

3. Decentralization.

Ethereum L1 is designed to solve 2 and 3. So the main fee/revenue of L1 come from this service.

Ethereum L2 is designed to solve 1. L2s provide speed and cheap txs. The main fee/revenue of L2 comes from this service. Batching, sequencing, compressing txs.

There are MEV fee as well but this should be passed to app layer.

[Metta]

An interesting point is that the best biz model with highest revenue/profit in Blockchain currently is from Stablecoin developers. Tether/Circle currently have highest profit.

alxcii Do you think that Tether/Circle profit is sustainable or other competitors will show up(like USDG from Robinhood?)

Edited March 6, 2025 by Metta

[Metta]

https://coinshares.com/corp/resources/knowledge/ethereum-staking-yields-explained/

https://ethresear.ch/t/is-it-worth-using-mev-boost/19753

[Metta]

Very interesting view point on the valuation of ETH. His view point is simple: "Ethereum’s value lies not in fees or scarcity, but in its role as the backbone of a new global power struggle."

 

"Ether is the geopolitical soft-power of the future. He who controls the ETH, controls the world."

https://www.the-edge.xyz/p/the-nation-state-thesis-of-ethereum

Edited March 12, 2025 by Metta

[TwoCitiesCapital]

On 3/11/2025 at 8:32 PM, Metta said:

Very interesting view point on the valuation of ETH. His view point is simple: "Ethereum’s value lies not in fees or scarcity, but in its role as the backbone of a new global power struggle."

 

"Ether is the geopolitical soft-power of the future. He who controls the ETH, controls the world."

https://www.the-edge.xyz/p/the-nation-state-thesis-of-ethereum

 

Therefore, control of Mainnet will become control of the Global Financial System - this will ignite the Ethereum Arms Race."

 

This presupposes the global financial system will move to ETH. That doesn't have to happen and this is actually an argument against it happening...

[Metta]

58 minutes ago, TwoCitiesCapital said:

 

Therefore, control of Mainnet will become control of the Global Financial System - this will ignite the Ethereum Arms Race."

 

This presupposes the global financial system will move to ETH. That doesn't have to happen and this is actually an argument against it happening...

Yeah. Global Financial System moving to Ethereum is quite a bet. 

What's your view? 

Do you think that Global Financial System will be moving on to Blockchain similar to the information system moved on to the Internet?

If so, which Blockchain will get the most benefit from this trend?

[Metta]

More discussion on the value accrual problem to ETH asset from Dankrad - an Ethereum Researcher at Ethereum Foundation:

Currently Ethereum is making almost zero fees from both L1 and L2 transactions *because it chooses to*: If we were a company, we would put a reasonable price tag on transactions, and raise it when there is congestion. But instead, we currently charge very close to zero for transactions and DA when there is no congestion, and the result is there is almost zero fees. Looks bad when you want to evaluate Ether based on that!

 

But here comes the more tricky part: In its current form, it may well be that Ethereum DA does not have much of a moat. It provides very little UX benefits, and only very abstract security benefits that will probably be very closely replicated by alt-DA. Therefore, the moat for DA is low and it's likely Ethereum will never charge significant fees over a long time period.

 

So what should be the plan? My best guess is:

- scale L1 to make sure that integration with Ethereum remains attractive

- scale DA to make sure that we lower the incentives for alt-DA (this doesn't have to mean lower fees. We can just charge a fee!)

- work on shorter block times, single-slot L2 interop etc. to maximize value of Ethereum DA

 

[Metta]

"If Ethereum were a company, it would be more concerned with growing network effects and user base than worrying about trivial details that are easy to fix later (like some kind of minimum tx or blob fee). ETH is not money if nobody uses it." 

 

 

[Metta]

"Agree, DA needs to expand & be cheap until the moats are developed:

- Moat 1: liquidity & economic network effects, through cross-rollup interop

- Moat 2: trust & security network effects, through native rollup execution"

[DooDiligence]

"He who controls ETH controls the world"

[Metta]

On 3/14/2025 at 8:04 PM, DooDiligence said:

"He who controls ETH controls the world"

This will take 5Y to 10Y for many people to see it. We currently have $220B USD tokenized and $4B Treasury tokenized. Once trillions of USD, Treasury, other fiat currencies and other assets are tokenized then controlling the Blockchain that hosts the most economic activities will be geopolitical important. 

Many countries depend on Internet for economic activities now.

Many countries will depend on Blockchains for finance/economic activities in the future.

And unlike Internet, there is a token for a Blockchain.

Edited March 20, 2025 by Metta

[TwoCitiesCapital]

3 hours ago, Metta said:

This will take 5Y to 10Y for many people to see it. We currently have $220B USD tokenized and $4B Treasury tokenized. Once trillions of USD, Treasury, other fiat currencies and other assets are tokenized then controlling the Blockchain that hosts the most economic activities will be geopolitical important. 

 

Which is precisely why the US government will not be issuing or endorsing treasuries/stablecoins on Ethereum. Tokenization =/= Ethereum blockchain.  The US government will want control of its debt issuance, stablecoins, etc to control monetary policy, fiscal policy, and force those playing in our financial assets to act in our interest.  

[Metta]

21 hours ago, TwoCitiesCapital said:

 

Which is precisely why the US government will not be issuing or endorsing treasuries/stablecoins on Ethereum. Tokenization =/= Ethereum blockchain.  The US government will want control of its debt issuance, stablecoins, etc to control monetary policy, fiscal policy, and force those playing in our financial assets to act in our interest.  

 

The US Gov still control monetary policy and fiscal policy when USD stablecoins are issued by private sector on Blockchain like Ethereum. Stablecoin/Blockchain is just a rail similar to Visa/Mastercard for payment/money transfer. The different: Stablecoin is cheaper, faster, more programable, and more global. 

Stablecoin/Blockchain is a really good tool for US Gov to export dollar and other assets to the whole world through Tokenization.

60%-70% of Tokenization(USD Dollar, TBill, Private Credit...) is happening on Ethereum today. 

[Metta]

22 hours ago, TwoCitiesCapital said:

 

Which is precisely why the US government will not be issuing or endorsing treasuries/stablecoins on Ethereum. Tokenization =/= Ethereum blockchain.  The US government will want control of its debt issuance, stablecoins, etc to control monetary policy, fiscal policy, and force those playing in our financial assets to act in our interest.  

BlackRock’s head of digital assets: 
“ETH is a bet on blockchain adoption and innovation".
"ETH is a bet on tokenization, on stablecoin adoption, and on decentralized financing,”

 

Link: https://www.cnbc.com/2025/03/20/blackrocks-head-of-digital-assets-says-staking-could-be-a-huge-step-change-for-ether-etfs.html

Edited March 21, 2025 by Metta

[TwoCitiesCapital]

37 minutes ago, Metta said:

 

The US Gov still control monetary policy and fiscal policy when USD stablecoins are issued by private sector on Blockchain like Ethereum. Stablecoin/Blockchain is just a rail similar to Visa/Mastercard for payment/money transfer. The different: Stablecoin is cheaper, faster, more programable, and more global. 

Stablecoin/Blockchain is a really good tool for US Gov to export dollar and other assets to the whole world through Tokenization.

60%-70% of Tokenization(USD Dollar, TBill, Private Credit...) is happening on Ethereum today. 

 

"he who controls ETH controls the world" 

 

"The US govt still controls monetary policy and fiscal policy" 

 

Those two statements are incompatible. Either the US has control on a decentralized ledger and there is no control of ETH....

 

Or the US government is a vassal to the ETH network and dependent on it to be able to issue securities. 

 

And even if the second isn't true, you can be damn sure the US government is concerned about an environment where it is...which is why ETH will NOT be the block chain of choice if the US government tokenizes its securities. There is 0 reason for the US government to rely upon a third party to provide the block chain for their securities to trade - at least as long as it's the reserve currency. 

Edited March 21, 2025 by TwoCitiesCapital

[Metta]

25 minutes ago, TwoCitiesCapital said:

 

"he who controls ETH controls the world" 

 

"The US govt still controls monetary policy and fiscal policy" 

 

Those two statements are incompatible. Either the US has control on a decentralized ledger and there is no control of ETH....

 

Or the US government is a vassal to the ETH network and dependent on it to be able to issue securities. 

 

And even if the second isn't true, you can be damn sure the US government is concerned about an environment where it is...which is why ETH will NOT be the block chain of choice if the US government tokenizes its securities. There is 0 reason for the US government to rely upon a third party to provide the block chain for their securities to trade - at least as long as it's the reserve currency. 

 

He who controls Internet controls the world.

The US Gov can control the information they want to release to the public(Like JFK File) on Internet. 

Those two statements are NOT incompatible.

Ethereum is a decentralize network similar to Internet. 

Because "he who controls ETH controls the world" so everybody will want to control part of it, making it decentralize.

Just a side note: the US government probably will NOT tokenizes its securities but the private US sector(like BlackRock) will tokenizes US securities.

 

 

Edited March 21, 2025 by Metta

[Metta]

The Revenue of Ethereum and how it distributes revenue to different stakeholders. 

 

 

Edited March 21, 2025 by Metta

[Metta]

The Bull Case for ETH is $700,000.
280x from current price of $2500.

38 pages report here  https://ethdigitaloil.com/

 

Edited June 15, 2025 by Metta