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ETH Bullet Point Thesis
  • Dominant smart contract platform. Ethereum is to smart contracts in 2022 as iPhone was to smart phones in 2010. There's honest debate about whether a cheaper alternative will take share, but Ethereum has already won in 2022 for the same reason the iPhone had already won in 2010 even though we didn't know it yet: all the developers are building on Ethereum just like all the developers were building on iOS. Ecosystem escape velocity.
  • Smart contract platforms are valuable because they are the base settlement layer for all internet-native economic activity: DeFi, NFT-based commerce, tokenization of everything, and TBD. They provide: security, trust. They receive: cut of all economic activity on the platform. Perpetual tax on the crypto economy.
  • Triple-point asset thesis (h/t @banklesshq): ETH is the first asset that is simultaneously a capital asset (like a stock or bond), a consumable asset (like oil) and a store-of-value asset (like gold or fiat). In this way, it is arguably the best "money" ever invented. For it's role as the native currency to the Ethereum ecosystem, it has a chance at being one of the few global assets to earn a monetary premium.
  • Triple-halving thesis (h/t @squishchaos): EIP-1559 (already implemented - burn mechanism) + Eth 2.0 upgrade (shift to Proof-of-Stake) = 90% reduction in issuance, equivalent to 3 bitcoin halvings. Additionally, steady rise in % of ETH staked as we approach PoS (Q3 2022 est) takes circulating supply off the market. Contracting supply + growing demand = number go up.
  • Adoption: crypto is the fastest adopted new technology in history, faster than the internet (h/t @raoulgmi). The growth in total wallets continues unabated despite the recent price action. Historical correlation to Metcalfe's Law suggests current support for a $600 billion market cap (+85% from current levels), rising exponentially.
  • Non-demanding valuation for exponential asset at 42x network fees (comparable to revenue), which grew 47% YoY in Q122 and 49x annualized ETH burned (comparable to earnings).
  • Price target: $20,000/ETH (~$2-2.5 trillion market cap) within 18 months of Eth 2.0 upgrade (expected mid-2022, so $20k ETH price by year-end 2024).
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Dissecting the Markets's avatar
Great memo! My only concern with Ethereum is that their hesitancy to connecting with other blockchains (or even with Layer-0 chains like Cosmos and Polkadot) are why I see innovation on the Ethereum platform being hindered in the long run. Many developers are going on other platforms because the coding language isn't as complicated as Ethereum's Solidity.
Zack Morris's avatar
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