What's a Fair Value for Crypto Networks Like BTC, ETH and SOL? - Ep. 721

Unchained

Laura Shin

Tech News, Business News, News

4.6 • 1.3K Ratings

🗓️ 18 October 2024

⏱️ 40 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

How do you determine the value of decentralized networks like Bitcoin, Ethereum, or Solana? It’s not as straightforward as traditional investments. Jon Charbonneau, general partner at crypto investment firm DBA, joins Unchained after writing a paper that dives deep into the complexities of valuing blockchain networks. He explains why applying traditional equity models to networks such as Bitcoin falls short, how tax inefficiencies in staking rewards impact valuations, and whether Layer 2 solutions like Optimism and Arbitrum are helping or hurting the long-term value of Layer 1 blockchains. Also, he looks at the big question—are these networks sustainable in the long run? Show highlights: What motivated Jon to write the paper What the main points of the paper are Why tax inefficiencies in staking rewards are a critical factor in valuing decentralized networks and how they differ from traditional corporate taxes What makes valuing networks tricky, as Jon explains how proof-of-work vs. proof-of-stake systems differ from traditional equity models How he thinks about valuing Layer 2s and whether they are parasitic to the L1 Whether blockchains are sustainable in the long term Visit our website for breaking news, analysis, op-eds, articles to learn about crypto, and much more: unchainedcrypto.com Thank you to our sponsors! Polkadot Mantle’s FBTC Guest Jon Charbonneau, co-founder and General Partner at DBA L1 & L2 Token Value Capture Links Previous coverage of Unchained on this topic: How to Figure Out Whether a Crypto Token Is Worth Its Trading Price ETH Is Down Bad, While Layer 2s Are Ripping. Are L2s Parasitic to Ethereum? Are Layer 2s Parasitic to Ethereum and ETH as an Asset? Are L2s ‘Parasitic’? Analysis Shows Ethereum Only Gets a Tiny Percentage of Fees Ether-Bitcoin Ratio Is at Multi-Year Lows, But It’s Just ‘Temporary’ and an ‘Opportunity’ Timestamps: 00:00 Intro 01:25 What sparked Jon's interest in this topic? 03:35 Key takeaways from the paper 08:30 How staking taxes could change the game 13:46 Why traditional models fail for blockchain 20:10 Are Layer 2s helping or hurting Layer 1s? 26:51 Can blockchains survive long term? 29:20 News Recap Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:14.0	And so in large part that is what a theorem is kind of making a bet with kind of all these all two is at least from an economic perspective implicitly is that it's worth this trade off like we are giving up some amount of cash flows that's going to go to these all twos but we're going up with, you know, a million chains that are all eith-denominated and eith looks like this more store value commodity like currency like asset that's kind of used everywhere.
0:27.5	Everyone. Everyone, welcome to Unchained, your no-hype resource for all things crypto. I'm your host Laura Shin, author of the cryptopians.
0:31.0	I started covering crypto nine years ago and as the senior editor of Forbes was the
0:34.4	first mainstream meter forder stick of a cryptocurrency full time. This is the October 11th
0:38.8	2024 episode of Unchained.
0:40.8	Pocodot is the original and leading Layer Zero Blockchain with over 2,000 plus
0:45.8	developers and the Pocodot 2.0 upgrade will be a massive accelerator for the ecosystem.
0:51.1	Join the community at PocOGODOT network slash ecosystem
0:55.4	slash community. FBTC is the fastest growing omni chain BTC asset this
1:00.6	summer. Join FBTC points-inspired campaign where you can hold
1:04.2	F. BTC to earn sparks, lucrative yields, and token drops, all on your Bitcoin.
1:09.3	Today's guest is John Charbonneau, co-founder of DBA.
1:13.5	Welcome, John.
1:14.5	Hey, how's it going?
1:16.5	You just came out with a paper about how to value tokens for both layer ones and layer
1:21.5	twos. Why did you feel compelled to write this paper?
1:25.6	Yeah, so it was somewhat of a successor to like a post that I had written probably
1:30.3	about a year and a half ago at this point.
1:33.0	On just kind of talking through basic El 1 economics,
1:35.4	and I would say kind of the impetus for this post
1:37.2	was I would have hoped at some point
1:39.2	over the past couple years or in the years before that.
	...

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