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Comment by numair | Hacker News Reader

> I am more bullish on ETH personally because it has the best underlying economic model of any web3 asset.

It's amazing how, after wiring money to a few winners, venture capitalists who make such insane statements can be perceived as smart and worthy of respect. For context, here is the token market cap of ETH:

https://coinmarketcap.com/currencies/ethereum/

The author would like us to believe that the $146 billion dollar market cap for Ethereum is a low point from which the "asset" will "recover." Sorry, but, I don't see $146B worth of value or earnings potential, or whatever, being created by Ethereum. I've done the deep dive, set up my wallets, generated my own tokens, set up my .eth, the works -- after all of this, I came to the same conclusion as all of the naysayers: it's Magic Internet Money propelled by little more than hopes and dreams.

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Ethereum's current valuation can be explained fully by its current use. With this I mean, if you take current demand for blockspace (i.e. demand to settle a transaction on Ethereum) in USD and issuance of ETH you get current prices. So Ethereum is not trading at any premium, nor any assumption of future growth cooked in. Ethereum is valued at the price that its current use justifies.

Here is the very quick back of the envelope calculation:

Current daily fee revenues: 2M USD (slightly above but let's round it)

Current daily ETH issued through staking: 1800 ETH (again, rounded)

2M USD / 1800 ETH = 1100 USD/ETH

In fact, if you plug-in 3 month moving average of blockspace demand and issuance you get the current 1200 USD it's trading at.

HN needs to start waking up to the fact that ETH is a productive asset, there are cash-flows behind it and those accrue to token-holders.

Where does that $2M/day come from? Is anyone spending money on anything that's not related to speculative investments yet?

The fee revenues come from its users, they pay when they use an application built on Ethereum to settle the transaction. Most of the applications, specially the most successful ones, the ones that spend the most ETH, are financial in nature at the moment. I suspect this is likely always going to be the case, as blockspace is a scarce resource only the most added value applications can compete for it. Non-financial applications will exist in the multiple L2s that are being built on top, these involve various cryptographic proofs to settle batches of transactions onto the L1. So financial applications and L2 proof verifiers will likely dominate the use of Ethereum in the future.

That’s money spent on fees to execute a transaction. It’s usually relatively small to the amount of value transacted. If we assume a 1% fee burden, then Ethereum transferred $200M that day in value. And that’s low-balling it, the actual amount is probably in the billions.

What you fail to understand is that Crypto is huge. $1Bn is a shit-ton-lot of money and the current market cap is $795Bn. Stables tokens alone account for around $100Bn of that. And keep in mind, on a relative basis, this is the worst crypto winter ever. The bottom is probably in or close. I think we’ll see prices rise up again mid-2023.

Jim Cramer has been shouting stock picks on television since the 90s. Just in case you were not aware that he is still around.

You have to treat these people with a certain kind of detachment to exactitude. If you run into Fred Wilson I suggest nodding along knowingly to every single thing he says.

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