On revenue, value, Ethereum, and DATs 🧵

One of the best parts about crypto is how many new experiments get run. It’s awesome, and it’s actually the main reason I am devoting my career to this space. Even in AI, I’m not sure any industry is open to innovation at such a breakneck pace.

The flip side of this is that we get a lot of bad ideas. And bc there’s nothing new under the sun, most of these are actually old ideas being tried in new ways. That’s totally ok! That’s part and parcel of trying a lot of stuff. But it’s really hard in the moment to distinguish between what’s new and interesting and what is an old idea destined to fail again.

One of the persistent debates that pops up in crypto is “utility vs memetic value.” Basically, should we create value by doing a thing or by screaming that this thing is valuable and trying to meme it into existence.

The steelman of the memetic value argument is “scoreboard.” It’s hard to argue against. Bitcoin, XRP, ADA, DOGE, the list goes on. That has given rise to the idea in crypto that we should lean into this as a way of creating value for L1s.

I have no idea how this will play out in the long run. No one does. Bitcoin certainly seems to have won with this strategy, seems reasonable enough to try to repeat it.

My counter would be that we’re at the tail end of a 15 year bull run. I think it’s interesting to ask “How good would these arguments sound at the tail end of a 15 year bear run?” My sense is anyone touting these arguments today would deny making them in such a world.

So that leads me to Ethereum. I have been accused of being not optimistic enough on Ethereum for not valuing it via a memetic, SoV type framework. My perspective is that I am actually more optimistic than these people bc I think Ethereum can be valued on the cash flows it generates.

And I actually view trying to play Bitcoin’s memetic game as giving up on the original strategy of trying to be useful and create value. There are some $700T worth of assets in the world. Most are valued via DCF. As a new asset, why wouldn’t you attack the larger, more durable part of the pie?

So I think if you are in the utility camp, you have to bet on two things. 1. L1s like Ethereum can generate a LOT of fees 2. They will have good margin on these fees via network effect. I believe both of these things.

So in conclusion, there are a lot of weird ideas out there right now. Is the future of value just whoever has the biggest microphone and screams into it? Maybe, but I’m not rooting for that future. Which is why I don’t support maximalists even when they align with my bags.

So maybe all this weird stuff like mimetic theory of value, attention economy, DATs, etc make sense. Some of these ideas are definitely valid. Or maybe we’re living during a bizarre time in history and financial markets where these ideas will be invalidated.

I don’t know so I’ll just throw my hat in on the boomer attitude that eventually these things have to generate fees or no one will want to hold them bc it’s the Occam’s razor idea. I also feel the most confident that on a long time horizon (20 yrs) this will age best.

Inspired by recent convos / posts from @TrustlessState , @jon_charb and @chainyoda