Why $ETH is going to $3T | Ryan Allis

Transcript

hey, bankless, nation, excited, about, this state, of, the, nation, episode, david, you ready, to, talk, about, eth, the, asset, my friend, it's, my, favorite, asset, ryan, i don't, know, if, people, know, this, but, i'm really, bullish, on, eth and, it's, been, a, while, since, we, have discussed, why, and, what, are, the, numbers behind, the, bullishness, because, that, is the, cool, thing, about, ether, is, there, are actual, numbers, there, we, can, actually unpack, and, discuss, some, of, the, reasons why, ether, you, can, be, bullish, on, ether yeah, so, like, i, think, this, this, obviously if, you, guys, been, listening, bankless, you know, that, we, think, ethan, is, undervalued but, how, much, how, much, by, how, much, what is, the, model, to, prove, that, this, is, uh

undervalued, and, i, don't, think, this, is the, end, all, be, all, model, it's, a discounted, cash, flow, analysis, it's fantastic, for, for, you, know, capital assets, like, stocks, and, you, know, equities and, bonds, and, and dividend, producing, assets, dividend producing, assets, but, uh our, guests, today, will, show, us why, ether, if, you, use, a, discounted, cash flow, model, based, on, his, blockchain, fees alone, ether, should, be, worth, four trillion, dollars, what it's, not, worth, four, trillion, i, only, put three, trillion, in, the, tweet, i, guess, i wasn't, both, enough, yeah, it's, gone, up okay, the, model, was, just, updated, uh, as, of today, for, these, new, numbers, we, have, ryan alice, on, the, podcast, who's, gonna, walk through, this, discounted, cash, flow analysis, uh, this, is, part, of, the, reason

we, think, eath, is, undervalued, so, stay tuned, sharpen, your, pencil, we're, gonna crunch, the, numbers, we're, gonna, open, up some, spreadsheets, and, we're, going to take, a, look, at, this, asset, in, some, more detail, um, before, we, do, david, we, should talk, a, bit, about, our, friends, and sponsors, at, zirion, because, they, are doing, some, awesome, things, we, are, huge fans, of, xeran, i, think, last, time, we, told you, about, their, new, nft, features, now they, are, upgrading, the, xerion, d5 portfolio, viewer to, give, you, access, to, all, the, chains all, the, changes and, also, they've, got, some, cool, bridging functionality, here, david, i, know, you've messed, around, with, this, a, little, bit, as well, what, have, they, added, recently, what should, bankless, listeners, be, aware, of yeah, so, xerion's, got, uh, seven, different

protocols, with, two, more, coming, all, the evm, protocols, like, things, like, avalanche polygon optimism, and, arbitrary, they, are, all hooked, into, xerion, with, things, like solana, and, phantom, coming, soon, as, well and, so, they, are, prepping, for, the multi-chain, universe, which, is, definitely coming, whether, you, believe, that, that, is a, multi-layer, one, or, multi, layer, two zerarian, has, got, you, covered, uh, seven different, chains, are, up, and, running right, now, with, over, 500, different protocols, integrated, into, xerion, which really, just, lets, you, do literally, whatever, you, want, and, so there's, so, many, different, bridges, out there, there's, hop, there's, connects there's, mover, there's, all, these different, bridges xerion, just, obfuscates, that, away and, just, makes, it, just, super, easy, just

go, i, have, asset, on, chain, a, and, i, want asset, on, chain, b make, that, happen, for, me, and, xeron, just makes, this, whole, entire, user, experience much, much, more, trivial, and, easy, to, get that, done, so, living, a, multi-chain, life is, enabled, by, xerion, bridge, within zirion, guys, so, the, call, to, action, is, go connect, your, wallet, go, play, around, with it, and, you, can, find, a, link, to, the, show notes, about, that, start, trading, across networks, start, bridging, with, xerion that's, bankless, dot, cc, slash, xerion, to find, out, more, david, i, want, to, start, with the, question, i, ask, you the, state, of, the, nation, ryan, is, aspiring we, are, aspiring, we, are, dreaming, bigger dreams, this, is, always, something, that, i

think, people, when, they, try, and, reason about, ether, and, reason, about, ethereum they, need, to, dream, bigger, dreams, and, so ryan, today, we, are, aspiring, to, dream bigger, dreams, and, we've, got, the, receipts to, back, that, up and, that, is, what, we, are, going, to, unpack to, the, the, day, today, the, receipts, that back, up, the rationale, as, to, why, people, who, are bullish, ether, should, dream, bigger, dreams we, want, to, thank, the, sponsors, that, made this, episode, possible slingshot, is, a, decentralized, trading

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other, chains, web3, the, future, of, money everything, i'm, sure, bankless, listeners are, interested, in, ryan, welcome, to bankless, it's, great, to, have, you, on thank, you, ryan, super, excited, to, be, here on, bank, list, i'm, a, big, fan, and, it's, been a, goal, to, be, here, and, i'm, happy, to, be here, today, well, uh, you, made, it, with, this analysis, my, friend, it's, a, fantastic analysis, and, uh, this, is, probably, a honeypot, for, for, ever, coming, on, the podcast, right, because, we, are, just definitely, drawn, towards, these, sorts, of things, uh, i, mean, listeners, to, the podcast, know, we, think, eth, is, undervalued and, you, are, bringing, some, numbers, to, the table, to, prove, it, so, we're, going, to, get through, your, disk, we're, going, to, go through, your, discounted, cash, flow uh, model, here, in, a, second, and, you, know, i i, don't, want, to, bury, the, lead, here

because, basically, you, you, are, predicting according, the, valuation, of, discounted cash, flow, that, ether, should, be, a, lot more, valuable, than, it, is, today, okay above, 10k three, to, four, trillion, dollars, is, what the, model, says, but, i, want, to, start, with this, question uh, for, you, ryan, so what, do, you, how, do, you, think, about, eth like, from, a, valuation, perspective high, level, i, know, we're, modeling, it, here as, a, discounted, cash, flow, but, how, do, you describe, eth, when, someone, asks about, it, is, it, is, it, like, a, stock, is, it like, a, money, is, it, a, commodity, is, it something, else what, words, do, you, use, to, describe, it yeah, obviously, ether, is, all, kinds, of things, i, i, like, to, think, of

ether, as, the, token, of, the, new, digital age, it's, it's, the, primary, money, of, the internet, and, i, think, from, a, valuation perspective you, can, look, at, it, as, a, commodity, you can, look, at, as, utility, what, ultimately drives, the, value, of, ether, is, going, to, be demand, to, buy, the, token, to, actually, use it, on, the, ethereum, blockchain, and, so there's, a, core, demand, that, drives, the price, of, youth, over, time, and, as, more people, want, to, use, the, ethereum blockchain, the, price, of, ether, is, going to, go, up, and, also, we, now, have, cash, flows soon, coming, with, after, the, merge, with the, proof, of, stake, transition, to, holders of, eth, and, that, in, and, of, itself, is going, to, drive, institutional, buyers, to further, purchase, more, ether one, question, i, have, go, for, around

i, was, just, going, to, ask, like, could, you ground, us, ryan, just, for, for, a, second, in um, you, said, cash, flows, and, what, we're going, to, look, at, in, just, a, minute, or, two is, a, discounted, cash, flow, analysis, but people, who, don't, have, experience, with this, sort, of, thing, you, know, didn't, take finance, in, school, you, aren't, aren't trying, to, value, equities, can, you, give, us the, tldr, on, what, a, discounted, cash, flow analysis, actually, is, and, why, it's important absolutely, so, just, briefly, on, my background, i, spent, 10, years, building, a software, company, a, ceo, called, eye contact, in, north, carolina, and, then, i, did a, two-year, mba, at, harvard, business school, and, when, you, go, to, harvard business, school, as, an, mba, student they, grill, into, you, that, the, way, you

value, any, asset, is, the, present, value, of future, cash, flows, and, so, you, can, and anyone, can model, out, the, future, expected, cash, flows of, ethereum, now, this, is, something, that you, couldn't, do two, years, ago, and, it's, only, since, the eip1559, update, in, august, when, they, began burning, using, some, of, the, rent, revenues from, the, transactions, to, burn, the, tokens which, you, can, think, of, sort, of, like, a stock, buyback, it's, reducing, the, supply of, ether, there's, a, 118, million, ether today, that's, going, to, go, down, if, you follow, justin, drake's, model, over, the next, 10, years, probably, to, 100, million ether, somewhere, around, there, and, so, it's like, a, stock, buyback, where, it's, reducing the, supply, and, then, the, key, thing, is, for

anyone, that, follows, bank, list, you, know that, coming, later, this, year, we, have, the merge, we, have, the, proof, of, stake, merge and, we, will, soon, have, the, rest, of, those cash, flows going, that, aren't, going, to, burn, the ether, going, to, long-term, stakers, which are, long-term, holders, so, you, can, think of, that, as, a, dividend, you, can, think, of that, as, a, on-chain, cash, flow, to, holders which, is, going, to, be, very, very attractive, when, you, combine, those, two that, means, that, 100 of, the, revenues, that, are, being, paid, for in, the, auctions, to, use, the, ethereum blockchain, are, going, to, be, paid, out directly, or, indirectly, to, holders, and because, of, that, you, can, build, a discounted, cash, flow, to, price, ether, so we've, got, two, mechanisms, here, we've, got

one, a, stock, buyback, and, then, two, we, have a, dividend, distribution, and, the, reason, a discounted, cash, flow, makes, sense, is because, these, mechanisms, are, in, place when, you, model, the, price, of, an, equity and, you, know, harvard, and, the, mbas, of, the world, and, the, business, undergrads, have been, doing, this, for, decades, already, and that's, why, the, same, tool, set, applies here, in, your, mind, is, that, the, case yeah, that's, exactly, correct, you, could look, at, ether, as, having, additional, value as, a, monetary, value, or, utility, value but, what, i'm, looking, at, is, purely, based on, the, cash, flows, the, folks, sitting, in new, york, and, singapore, and, london, that are, going, to, be, valuing, ether, from, a business, perspective, a, year, from, now, two years, from, now trying, to, come, up, with, what, is, the, fair

value, of, this, asset, based, on, cash, flows alone, this, is, the, model, they're, going, to be, using, to, be, able, to, value, how, much should, ether, be, priced, at, in, terms, of total, market, cap, and, then, in, terms, of per, ether so, for, all, the, listeners, out, there, that don't, have, a, business, background, or, a finance, background, i, don't, know, maybe you, uh, like, perhaps, me, graduated, with, a degree, in, psychology, and, the, name discounted, cash, flow, is, like, what the, reason, why, we, have, this, discounted word, in, there, is, because, you, have, to give, a, discount, for, money, that, you, don't have, today, but, you, do, have, in, the, future and, so, if, we think, that, this, company, or, equity, or crypto, asset, is, going, to, be, producing money, for, us, in, the, future money, for, you, in, the, future, is, nice, but

it's, not, as, nice, as, it, is, money, today and, so, that's, where, the, word, discounted it, comes, in, because, we, have, to, make, some sort, of, assumptions, as, to, how, to, devalue money, in, the, future, versus, money, that, we have, today, i, just, wanted, to, unpack, that discounted, cash, flow, uh, side, of, things ryan, you, want, to, add, anything, to, that yeah, that's, exactly, right, 100, in, your pocket, today, is, worth, more, than, a hundred, dollars, in, your, pocket, 10, years from, now, so, that's, why, we, discount, it, to create, the, value, of, it, today and, ryan, i'm, assuming, that, you've, made discounted, cash, flow, models, for, other assets, before, looking, at, your, your, model for, for, ether, it, kind, of, seems, like you've, done, this, a, few, times, but, how, is ether, as, an, asset, different, uh, it, is like, the, what's, it, like, to, go, and, do, a

dcf, for, ether, is, it, you, know, similar run-of-the-mill, like, oh, let, me, just, plug in, the, numbers, or, are, there, any curveballs, for, producing, a, model, like this, what's, it, like, to, produce, a, dcf, for ether well, when, you're, doing, a, dcf, for, a company, all, you, really, need, are, its current, revenues, its, current, expenses and, then, you, take, it, what, what, its, are its, current, net, profits and, those, net, profits, are, essentially its, annual, cash, flows and, then, you provide, a, growth, rate, that, you, assume that, those, cash, flows, are, going, to, grow and, usually, dcfs, are, gone, over, say, a, 15 or, 20, year, period, you're, projecting, the future, cash, flows, of, a, business, now, that could, go, up, that, could, go, down, but generally, speaking, a, growing, business, is

going, to, grow, at, some, average, rate, per year, the, the, us, economy, is, growing, about you, know, three, to, four, percent, a, year somewhere, like, that, if, a, fast, growth company, might, grow, at, 30, or, 40, percent, a year, now, what's, interesting, with, ether is, two, things, number, one, is, that, because ethereum, is, a, is, a, distributed, ledger technology, it's, a, smart, contract platform, there, actually, aren't, any, costs of, running, the, network, uh, the, costs, are all, paid, for, by, the, third, parties, that participate, in, providing, security, to, the platform, there's, no, centralized, ethereum company, that, has, a, staff, that, has, you know, people, they, have, to, pay, there's, of course, the, ethereum, foundation, but that's, completely, separate, from, the ethereum, blockchain, itself, and, so, what's

unique, this, is, the, very, first, asset, i've ever, seen, in, 15, years, of, looking, at different, assets, where, there, are, no costs, so, 100 of, the, revenue, from, the, ethereum blockchain, is, profit, 100, is, cash, flow there, is, no, overhead, there's, no, servers there's, no, electricity, it's, paid, for, by the, third, party, validators, and, so, that's something, that's, extremely, unique, in, an average, business, maybe, they'd, have, ten percent, net, profits, with, ethereum, you have, a, hundred, percent, net, profits, the other, thing, that's, extremely, unique, is most, businesses, tend, to, grow, about, 10, to 30, percent, a, year, ethereum, if, you, just look, at, january, 2022, the, month, that, just ended, and, you, compare, that, versus, its revenues, a, year, ago, in, january, 2021

which, of, course, even, then, we, were, in, the middle, of, a, bull, market, we, have, grown revenues, year, over, year, for, ethereum, by 400 407, exactly, year, over, year, and, so, what's interesting, about, this, is, not, only, do, we have, a, hundred, percent, revenues, our, cash flows, we, also, have, a, growth, rate, that's more, than, 10x, an, average, growth, company and, yet, ethereum, is, still, trading, at, a price, to, earnings, multiple, that, is, lower than, an, average, company, so, there's, a, lot of, opportunity, for, upside, yeah, so, yeah those, two, points, you, know, the, second point, that, you, said, is, the, growth, right and, david's, getting, pretty, hot, and steamy, over, there, so, we, better, slow, down and, get, a, little, bearish, for, a, second but, um, you, know, the, first, point, where

you, said, uh, there, are, no, costs, ethereum doesn't, doesn't, have, any, costs, just, want to, clarify, that, with, you, because, i, guess from, the, perspective, of, the, ethereum network, the, cost, the, thing, it's, paying for, is, security, and, that, i, guess, is, it's from, the, ethereum, network, that, is, its expense, line, item, but, i, think, you're looking, at, it, from, a, staker's perspective, or, a, validator's, perspective where, all, of, this network, security, cost, actually, comes back in, the, form, of, a, dividend if, you, are, a, staker, right, so, right, now uh, hopefully, listeners, will, know, that ethereum, is, completely, proof, of, work so, unless, you, run, mining, nodes, uh, you are, not, receiving, any, of, that, revenue

but, in, the, future, proof, of, stake hopefully, uh june, july, of, this, year then, if, you, were, staking, the, network that, means, you, you, own, ethan, you actually, stake, it, then, you, are, a recipient, of, that, revenue, is, that, what you, mean, by, no, costs, because, if, you're, a staker, you, just, get, that, revenue, that's exactly, right, now, with, bitcoin, you, can't do, a, dcf, model, because, on, the, bitcoin network, which, has, revenues, they're, about you, know, 95, lower, than, the, ethereum network, revenues, but, bitcoin, blockchain does, have, some, revenues, none, of, those revenues, go, to, long-term, holders, they all, get, paid, out, to, minors and, so, because, of, that, you, can't, model the, actual, fundamental, intrinsic, value of, bitcoin, but, with, ether, you, now, can

model, the, fundamental, intrinsic, value, of ether, and, you're, exactly, right, because all, of, the, security, starting, with, the proof, of, stake, post, merge, world, just, six months, from, now, is, going, to, be, provided by, a, distributed, network, of, tens, of thousands, or, hundreds, of, thousands, of stakers, around, the, world, potentially millions, soon what, what, that, means, is, that, all, of, the security, costs, are, actually, being, paid out, to, long-term, holders, who, are, staking the, asset, and, so, because, of, that, it's, a hundred, percent, of, revenues, go, flow directly, or, indirectly, to, long-term holders, and, stakers okay, revenue, flows, directly, and indirectly, i, want, to, unpack, that, a little, bit, right, and, this, will, be, the last, thing, before, we, get, into, the, to, the

model, uh, there, are, direct like, uh, direct, dividends, being, paid, to those, who, stake, and, that, those, who, stake they, watch, the, amount, of, ether that, they, hold, go, up, tick, upwards, slowly over, time, and, that, is, a, cash, flow, but then, we, also, have, like, and, this, is, where things, get, a, little, bit, muddled, because bankless, has, used, different, terms, to describe, the, buyback, and, burn, where, like we, we've, also, talked, about, how, the, burn mechanism, is, kind, of, like, a, dividend model, but, it's, all, but, we, need, to, be careful, there, because, with, you, when, you hold, ether, you, benefit, from, the, burn, in a, similar, way, to, a, dividend, but, it's actually, a, buyback, uh, and, so, while, like you, receive, that, value, it's, because through, the, process, of, buying, back, and

so, when, we, use, the, term, dividend, we're talking, about ether, stakers, receiving, ether distributions, from, staking, their, ether and, validating, the, network, and, then there's, the, buy, back, which, is, for everyone, else all, ether, holders, that, makes, the, ether more, scarce, and, so, while, that, revenue number, for, ethereum, like, if, ethereum pulls, in, a, million, dollars, of, revenue roughly, 70, percent, of, that, million dollars, will, get, burnt, which, is, like, a buyback, and, sometimes, in, the, past bankless, has, called, that, a, dividend, but technically, that's, not, right, technically it's, just, uh, a, buyback, and, then, the dividend, aspect, if, we're, going, with, a dollar discounted, cash, flow, model, the, dividend aspect, is, just, going, to, those, who, stake

um, so, i, just, wanted, to, unpack, that, a little, bit, anything, you, want, to, add, to that, ryan that's, exactly, correct, in, in, the, spring of, 2021, about, nine, or, ten, months, ago, you had, justin, drake, on, for, some, of, his, you know incredible, episodes, on, bank, list, and, he put, out, some, models, and, from, those models, i, was, able, to, build, this discounted, cash, flow, with, the, exact assumptions, you, just, shared, that, 70 of, the, transaction, fees, are, going, to, be burned, that's, now, of, course, happening, um and, that, soon, that, rest, of, it, the, other 30, percent, is, going, to, go, back, to, the stakers, the, long-term, holders, that anyone, can, participate, in by, the, way, does, that, ever, happen, in these, in, a, dcf, do, companies, i, know companies, buy, back, their, stock, but, do

they, ever, burn, it, they, ever, like, just take, it, off, the, market, permanently, and just, decrease, supply that, is, what, happens, so, when, a, stock buyback, happens, in, traditional, equity markets, they, purchase, the, stock, back from, shareholders, and, then, they, actually get, rid, of, that, stock, from, their corporate, treasury, such, that, the denominator, of, the, total, number, of shares, goes, down, which, makes, everyone's stock, per, share, go, up, so, it, is, fairly analogous, uh, so, okay, we, talked, about maybe, maybe, two uh, differences, which, is, the, insane growth, rate uh, and, you, know, um uh in, comparing, this, to, other, discounted cash, flows, but, one, other, difference maybe, to, to, illustrate, is, um

you, don't, have, to, wait, for, an, annual report, to, get, these, revenue, numbers and, i, think, that's, really, cool, like, you don't, have, to trust, insiders, or, you, know, analysts, to parlay, these, numbers, to, you they're, updated, in, real, time, and, anyone can, query, ethereum and, forecast, this, and, create, their, own discounted, cash, flow, models, and, that's that's, a, first, in, history, especially when, we're, dealing, with, with, this, amount of, uh, capital, and, this, amount, of, money so, i, think, that's, interesting, but, let's uh, let's, start, to, dive, into, the, model then, here, and, i'm, showing, it, now, ryan um and, i, want, to, start, maybe, on, the, on, the left left-hand, side, with, some, of, these inputs, to, the, model, and, if, you're, if you're, if, you, guys, are, tracking, on

youtube, you, can, you, can, see, this, on, my screen you, can, also, click, the, link, in, the, show notes, to, also, go, look, at, it, you, can, see all, the, people, that, are, looking, at, that because, they've, done, that, yeah, okay, cool and, then, for, podcast, listeners, uh, we will, try, to talk, about, these, things, but, let's, talk about, the, inputs, to, the, ethereum discounted, cash, flow, ryan, so, what, are the, most, important, inputs uh, that, we're, assuming, here, and, where where, did, they, come, from, and, by, the, way notice, you, just, updated, this, today because, the, numbers, went, up, i, think, from the, last, time i, saw, this so, um ether, is, worth, even, more, i, i'm, assuming you, got, that, you, updated, this, based, on january, 2022, already, so, this, is completely, fresh that's, correct, to, your, last, point, uh

this, morning, which, is, february, 1st, here in, the, united, states i, literally, went, on, a, glass, note, and, i got, the, january, 2022, ethereum, total, fees total, fees, are, equivalent, to, the, other side, is, revenue, people, sometimes complain, about, fees, but, you, have, to understand, as, a, long-term, holder, the other, side, of, fees, is, of, course, revenue that, is, now, being, paid, back, to, holders and, so, for, january, 2022, the, total ethereum, revenue, was, 1.35 billion, dollars, now, that, actually, went up, from, 1.1, billion, dollars, in, december 2021, and, so, even, though, the, price, of ether, has, come, down, by, almost, 45, percent over, the, last, two, months, we've, actually

seen, month-over-month, growth, in, what really, matters, which, is, the, amount, of revenues, that, then, get, paid, back, out, to holders, so, that's, the, very, first, input it's, the, revenue, from, the, prior, month you, could, also, do, the, revenue, from, the last, 365, days, either, way, and, then, in, the next, row, we, annualize, that, number, so, we just, take, 1.3, billion, times, 12, and, that gives, you, 16, billion, dollars, that, would be what, ethereum's, total, revenues, would, be if, we, do, exactly, what, we, did, in, january 2022, times, 12 for, the, year, of, uh, 2022., now, you, could just, leave, it, there, if, you, were, trying to, price, the, value, of, ethereum, today, on the, proof, of, work, model, without, the

rewards, going, back, to, long-term, holders you, would, take, the, total, profits, the total, revenue, at, 16.2, billion, however using, justin, drake's, modeling it, looks, like, the, latest, data, post, merge that, i, have, correct, me, if, i'm, wrong, but i, think, we're, going, to, see, about 1.1 million, each, that, are, going, to, be created, each, year, as, rewards, for, stakers and, so, at, the, current, price, of, about, 2 800, per, eth, that, adds, an, additional, 3 billion, dollars, in, value, that, is, going to, be, paid, out, to, the, holders, the long-term, holders, and, stakers, of, ether once, the, merge, happens, hopefully, around july, as, you, mentioned, so, you, add, those

two, numbers, together, 16, billion, plus, 3 billion, and, you, get, the, total, revenue for, an, on, an, annualized, basis, for, a total, ethereum, network, of, 19.2 billion, dollars, that, is, a, huge amount, of, money so that's, the, first, input, the, first, input is, annualized, total, revenue, i'm, doing, it january, 22, times, 12, but, you, could, also do, it, the, last, year, just, just, to, pause there, one, thing, we've, often, said, on, bank lists, is, like, um blockchain, sell, blocks, apple, sells iphones, blockchains, sell, blocks, this, is the, product, that, blockchains, sell, in particular, uh, smart, contract, platforms like, ethereum, and, so, what, you're, saying

is look last, month, january, 2022, ethereum, sold 1.3, billion, dollars, worth, of, its, product that, is, block, space, and, if, you, analyze annualize, that, that's, a, 16.2, billion dollar, a, year revenue, number, for, the, product, that, is ethereum, block, space that, is, exactly, correct so, that, that's, really, all, you, need, um you, you, start, out, the, second, input, of course, is, your, profit, margin there, are, no, costs, in, distributed network, all, the, costs, are, paid, for currently, by, the, miners, and, later, by, the stakers, and, validators, and, so, if, you assume, that, 100, of, the, revenues, are, in fact, cash, flows

then, what, you, do, in, uh, you, can, see, in cell, e54, you, take, the, total, 19.2, billion in, cash, flow, for, your, 2022, here, and, you put, that, in, as, an, input, into, the discounted, cash, flow, and, so, that, is, the beginning, year, 2022, the, first, year, in the, model, and, then, what, i, do, is, i've, now forecasted, the, next, 20, years, of, revenue from, 2022, to, 2041 and, i've, assumed, what, i, believe, is, a modest, and, conservative, growth, rate for, those, cash, flows, i've, assumed, it's starting, at, 40, percent, a, year going, down, to, 10, percent, a, year, by, 2041.

that, averages, out, to, exactly, 25, percent average, growth, over, the, next, 20, years, of the, revenues, from, ethereum, now, i, think it, might, actually, be, higher, than, 25, a year, for, the, next, 20, years, and, here's why um, in, the, last year, in, 2021, versus, 2020, it, went, up, a thousand, percent, and, then, in, january 2022, versus, 2021, it's, up, 407 and, even, in, a, market, where, the, prices, of ether, are, down, the, last, two, months, we've seen, a, month-over-month, increase, in, the amount, of, revenue, of, ethereum, the blockchain, and, while, some, say, okay, layer two, side, chains, might, provide alternatives, as, you, all, have, talked

about, on, bank, lists, ethereum, is, the manhattan, of, block, space, it's, the, block space, that, if, your, visa, is, settling, a few, hundred, million, dollars, a, day, you're going, to, do, that, on, the, ethereum blockchain, they, don't, care, about, the, 100 150, gas, fee, to, do, that, they're, going, to pay, that, all, day, long, and, so, because, of that, i, actually, think, we're, going, to, be in, a, world, where, the, cost, to, use, mainnet ethereum, mainnet, on, a, per, transaction basis, is, probably, not, going, to, go, down even, after, sharding, happens, eventually in, a, couple, years, i, think, the, price, will stay, around, the, same, and, i, think, the revenues, of, ethereum, will, continue, to grow, over, the, next, 15, to, 20, years significantly, more, than, 25, percent, per year so, i, want, to, unpack, the, annual, proof, of sake, staking, rewards, uh, so, can, you, just

uh, remind, me, where, that, number, comes from, is, that, uh, from, uh, blockchain, fees or, is, that, from, issuance, of, new, ether that's, issuance, of, new, ether, if, you, go down, to, the, bottom, left, of, the, model there's, a, table, that, shows, the, annual keep, going, all, the, way, to, the, bottom there's, a, little, table, right, there, and so last, i, understand, it, we're, going, to, be having, post-merge, about, 1.1, million, new supply, created, each, year this, is, um, then, multiplied, by, the current, price, per, each, about, 2 to, get, an, additional, three, billion dollars, in, cat, usd, value, um, to, stakers that, obviously, goes, up, as, the, price, of heath, goes, up, in, u.s, dollar, terms, and, of course, the, total, net, supply, for, ether, is

going, to, be, negative, and, so, you, can't say, oh, well, they're, just, inflating, away the, value, of, ethereum, to, give, out, cash flows, no they're, actually, giving, out, reward, in ether, however, the, total, supply, is, going to, go, down, which, is, going, to, be increasing, the, value, of, ether, further right, so, previously, then, when, ryan, and, i have, talked, about, this, on, on, in, other shows, we, talk, about, how, the, issuance, is actually, the, costs, and, that's, where, a little, bit, of, these, models, kind, of, get finicky, when, we, um have, like, these, more, legacy, type, mental models, for, understanding, things, is, like the, uh, when, we, mint, new, ether, that, is, a cost, to, the, network, or, when, you, mint, new currency, that, is, a, cost, to, the, network but, that's, not, how, you've, organized, it

here, because, while, it's, a, maybe, a, cost to, the, monetary, asset, of, the, network for, stakers, it, doesn't, really, matter because, it, actually, just, ends, up, as, cash in, their, pocket, uh, and, so, there's, a little, bit, of, like, a, discrepancy, i, think between, like, just, like, having, a traditional, dcf, model, and, like, how, we apply, it, to, to, crypto, networks, so, when we, take, this, is, coming, from, the perspective, of people, who, are, staking, eth, while, like ethereum, is, issuing, new, ether, which, is, a cost, of, the, network, it's, not, a, cost, of stakers, because, it's, just, going, right into, their, pockets, is, that, kind, of perspective, you've, had, but, am, i, correct right, you, you're, just, saying, this, new issuance, will, be, offset, by, the, burn, and so, it's, basically, like, just, consider, it revenue, yeah, there's, two, things, there, so um, this, issuance, will, be, by, far, more

than, offset, by, the, burn, right, because we're, actually, going, to, have, probably, a negative, issuance, here, however, if, you look, in column, g, and, h, and, rows, 11, and, 12, you can, see, that, i've, actually, created, two different, values, a, little, bit, higher it's, either, ten, thousand, six, hundred fifteen, dollars, is, the, dcf, value, per ether, token, but, if, you, have, staked, the token, then, you, benefit, from, that, added rewards, and, so, the, actual, value, to, you is, higher, by, about, about, two, thousand dollars, um, and, so, what, that's, going, to do, is, is, increase, the, incentive, to, stake and, get, a, lot, of, people, staking, and providing, security, for, the, network amazing, amazing, i, think, this, is, this is really, really, cool, um

can, we, are, we, ready, to, talk, are, you, used to, want, to, talk, about, the, inputs, david, i want, to, get, to, the, outputs, pretty, soon but, yes, uh, no, yeah, go, for, it, you're right, i'll, ask, my, question, after, the apples can, we, talk, about, the, outputs, so, when you, when, you, put, in, all, of, these, numbers and uh, if, you, were, to, kind, of, model, this with, dcf, as, you're, looking, at, like either, as, if, it's, an, equity, you're trading, an, s, p, 500, what, are, the, outputs so, what, do, we, get, i, mean, it, seems, like the, assumptions, going, to, this, model, are fairly, conservative, it's, just, basically growth, assumptions, of, revenue, and, i guess, you're, assuming, that, block, space doesn't on, ethereum, doesn't, collapse, and, doesn't go, down, maybe, in, the, face, of, alternative layer, ones, or, the, face, of, you, know, some

people, think, layer, twos, will, uh, decrease the, cost, of, block, space, i, don't, agree with, either, of, those, assessments, so, you know, but, i, think, you're, being, very conservative, with, growth, so, we, put, those assumptions, in, what, do, we, get, on, the other, side, here well, the, outputs, are are, very, attractive, um, the, outputs, are quite, sexy, and, so um, you, know, there's, two, ways, to, get, the outputs, i'm, going, to, give, you, the, the headline, output, and, then, we'll, talk about, the, different, ways, to, get, there, so the, headline, is, is, that, if, you, hold ether, today, if, you're, on, there, and you're, you, know, you, just, bought, an, ether for, twenty, seven, hundred, dollars, today great, because, i, think, if, you, hold, for four, or, five, years, there's, a, great chance, that, you, may, do, quite, well, on

that, i, know, we, all, believe, that, but, i think, there's, math, here, backing, that, up not, based, on, speculation, but, based, on real, numbers, the, dcf, value, per, single ether, today, an, unstaked, ether, according to, this, model, is, ten, thousand, six hundred, and, fifteen, dollars, i, don't, see any, reason, why, a, properly, assessed, and evaluated, price, per, ether, should, not, be ten, thousand, dollars, plus the, only, reason, it's, not is, because, the, knowledge, of, how, to properly, value, ethereum, is, not, out, into the, mainstream, institutions, yet, and there's, also, a, risk, discount, that, is being, applied, because, proof, of, stake hasn't, gone, live, yet, the, month, that, that

goes, live, you, get, 30, to, 60, days, of, track record, with, it, actually, being, utilized and, settling, billions, of, dollars, of value the, price, of, ether, is, highly, likely, to move, quite, quickly, i, believe, toward, what the, actual, value, of, those, cash, flows, are then, you, have, 12 623, dollars, and, that, is, the, value, in, the model, outputs, for, the, value, per, stake ether, you, get, the, equivalent, of, about two, thousand, dollars, in, incremental value, per, ether, just, by, staking, it, and participating, in, network, security because, you're, getting, daily, cash, flows for, doing, that, so, where, we, are, today, at 2800, eath i'm, expecting, about, a, 350, increase, just based, on, the, dcf, model, alone, and, now

keep, in, mind, if, the, revenues, increase faster, than, i, project, that's, only, going to, increase, the, dcf, value, uh, per, stake ether, and, so, that, is, that, is, the headline, that, is, the, underlying valuation, here, that, on, a, fair, value fundamental, basis, ether, should, be, worth between, 10, and, 13, 000, today and, did, we, bake, in, a, particular, p, e multiple, in, that, number, and, how, did, we come, up, with, that, number, isn't, there, an assumption, there, at, some, point yep, so, let, me, walk, you, through, this, so, i think, it's, important, for, uh, listeners, to understand, that, price, to, earnings, ratios are, a, simple, way, of, coming, up, with, what is, a, more, complex, dcf, and, so, let, me, just

walk, you, through, this, um, if, you, go, down all, the, way, to, the, bottom, right, you're going, to, see, a, green, cell it's, in, row, 73, so, just, a, little, bit, up and, so, if, you, go, 73, all, the, way, to, the right, to, column, l there's, a, green, cell, there, and, that's, l 73, and, that's, 1.49 trillion, dollars, um, and, and, what, that, is is, the, net, present, value, of, what, the market, cap, of, ethereum, should, be, right now um, and, that's, assuming, a, 12, discount rate, which, is, essentially, the, standard discount, rate, that, you, use that, you're, when, you, value, anything, and

what, that, means, is, that, today, ethereum has, a, market, cap, of, 330 billion, it, should, be, at, about, 1.5 trillion, according, to, this, analysis, and there's, a, huge, opportunity, for, it, to increase, and, so, that, is, how, you, come, up with, the, discounted, bash, cash, flow, per ether, you, just, take, 1.49, trillion, the net, present, value, of, what, the, expected market, cap, should, be, and, you, divide, that by, 118, million, that, total, ether, supply and, that, gives, you, the, 10, to, 12, thousand dollars, value, per, each, now, there's, a simple, shortcut, to, getting, there, if, you don't, want, to, do, all, this, math, for, those of, you, that, don't, have, mbas, or, you, don't want, to, build, a, new, model, every, time you're, trying, to, value, an, asset, all, you

do, is, you, look, at, earnings, and, then, you apply, a, multiple, to, that based, on, its, growth, rate and, so, uh, look, let's, look, at, tesla, tesla is, one, of, the, faster, growing, tech companies, out, there, uh, their, p, e, ratio as, of, this, morning, is, 302 and, so, tesla, elon, musk's, electric, car company, is, being, valued, at, 302, times its, last, year, earnings, its, 2021, earnings what, that, means, is, that, it, would, take 300, years, of, 2021, earnings, to essentially, justify, the, value, of, the stock, today, now, that's, one, of, the, higher ones, in, the, industry, but, that's, not abnormal, for, a, high, growth, company, to

have, a, price, to, earnings, ratio, of, a hundred, to, two, hundred now, the, average, company, in, the, s, p, 500 today the, average, stock, in, the, s, p, 500, it, has a, p, e, multiple as, of, this, moment, of, exactly, uh, 37.32 and, so, i, put, 35, here, in, the, model, and, so if, the, average, s, p, 500, company, has, a price, to, earnings, ratio, of, 37 what, do, you, think, ether's, p, e, ratio should, be the, question, is, is, ether, growing, faster or, slower than, the, average, company, in, the, s, p, 500 well, the, average, company, in, the, s, p, 500

is, growing, at, about eight, to, ten, percent, a, year, and, ether, is growing, at, 400, percent, a, year, plus, and so, you'd, think, the, p, e, ratio, of, ethereum should, be, significantly, higher, than, 35 or, 37, you'd, think, it'd, be, more, like, 100 to, 200, which, would, make, the, price, for ether, about, 16, 000, to, 33, 000, but, the reality, is is, because, people, don't, yet know, how, to, value, ethereum, as, a, cash flowing, asset, but, they, will, in, a, year they, might, start, understanding, it, after this, episode, and, after, the, merge the, current, ethereum, p, e, ratio, as, of this, morning is, a, very, low, 20.3 which, is, creating, the, implied, valuation of, 2800, per, ether, that, obviously, is, way

too, low, compared, to, its, comparisons, in the, market, yeah, and, just, for more, anchors, in, the, market, amazon, has, a 56, p, e, ratio, facebook, has, 21., google, has 25, netflix, has, 34., and again, comparing, ethereum, to, these companies, is, an, interesting, comparison just, to, get, an, anchor, but, it's, also we're, comparing, a, network, to, a, company and, networks, fundamentally, do, and operate, and, grow, in, different, ways, than companies, companies, are, in, my, like mental, model, they, grow, linearly, like, one foot, forward, in, front, of, the, others where, networks, grow, at, all, directions, at once, because, ethereum, is, a permissionless, network, because, anybody can, come, and, deploy, any, sort, of, defy, app

any, sort, of, nft project, any, sort, of, marketplace, uh, you ethereum, doesn't, actually have, to like grow, in, any, one, particular, direction, it can, grow, it, has, the, option, of, growing, in all, directions, at, once, so, it's, very, much the, difference, between, like, linear growth, of, what, i, would, expect, a traditional, company, to, grow, like, versus geometric, growth, which, is, uh, you, know exponential, growth, orders, of, magnitude growth, so, when, i, see, a, pe, multiple, of, 20 which, is, less, than, facebook when, while, uh, you, know, facebook, is, like is, uh, i, mean, it, was, once, a, network, it had, network, growth, but, it's, hit, the saturation, point, like, facebook, basically has, like, 80, of, the, planet, on, it, and, it's not, really, going, to, grow, much, beyond

that, ethereum, has, like, one, percent, of the, planet, on, it, and, it, is, way, more permissionless, way, more, accessible, than facebook, is, uh, and, so, the, uh, perhaps, the pe, multiple, of, of, uh, a, comparing, to, a company, is, already, selling, ethereum short, of of, its, potential that's, right, and, you, look, at, facebook's you, know, cash, flow, growth, rate, you, know maybe, it's, growing, by, 20, percent, a, year it's, it, used, to, be, growing, it, a, lot, more than, that, you, know, 15, years, ago, but facebook, in, 2022, is, only, growing, at, 20 maybe, 30, percent, a, year, you, look, at amazon shopify netflix, similar, probably, 30, 40, a, year maximum, but, you, look, at, ethereum, it's

growing, more, than, 10, times, that, 400 percent, a, year, i, think, it, should, be worth, probably, five, to, ten, times, what it's, worth, today what's, interesting, here, too, is, this, is um we've, talked, about, this, before, people listening, bank, lists, might, be, familiar with, um, you, know, that ether, has, a, triple, point, asset, that's sort, of, the, thesis, that uh, ether, can, be, valued, based, on, based, on three, kind, of, you, know, commodity, asset types one, is, a, commodity, or just, super, categories, one, is, a, commodity the, other, is, a a, capital, asset, and, the, third, is, a, store of, value, what's, interesting, here, is we're, really, modeling, it, based, on, a, the dcf, models, it, based, on, just, one, of, those legs, of, the, three, leg, stool, which, is

capital, asset, okay, so, we're, not, talking about, commodity, you, might, value, a commodity, differently, based, on, more supply, and, demand sort, of metrics, and, we're, not, talking, about, a store, of, value, store, of, value, is, also supply, and, demand, but, it's, kind, of rooted, in, this, idea, of use uses, money, and, the, more, it, becomes, a medium, of, exchange, unit, of, account then, it, increases, in, its, moneyness, and has, this, monetary, premium, almost, its mean, value what, this, analysis, is, doing, is, it's, just valuing, ether based, on capital, asset, based, on, discounted, cash flow, so, if, you, were, to, take, this right, which, basically, says, the, fair market, value, of, ether, is, about, 10, to, 12

k okay, and, then, you, add, monetary, premium on, top, of, that so, we're, at, 10, to, 12, k but, now, we, see, eth, being, used, as, the, uh you, know, the, money, for, the, nft, economy and, when, people, are, auctioning, it on, sotheby's, you, see yen, euro, dollar, and, ether, right, and people, are, starting, to, hoard, their wealth, in, ether, as, well, then, there's, a monetary, principle, on, top, of, that, and this, model, doesn't, take, into, account that, monetary, premium, is, that, is, that the, case that's, exactly, right, this, analysis, is primarily, designed, for, institutional investors

who, i, expect, will, be, coming, into ethereum very, heavily, in, the, second, half, of, 2022 once, the, proof-of-stake, merge, happens because, they'll, be, able, to, value, the cash, flows, that, they're, being, paid, to hold, this, asset, which, you, can't, do, with bitcoin, or, any, other, major, digital, asset and, so, on, top, of, the, cash, flow, value, the dcf, value, you, also, have, the, value, that's supported, by, it, actually, being, a, utility token, if, you, will, where, you, have, to, have eth, to, use, any, of, the, ethereum applications, to, utilize, d5, to, purchase an, nft, and, then, beyond, that, you, have, a monetary, premium, and, so you, are, right, if, you're, looking, at, the

full, bulk, case, you, have, to, use, this, as, a baseline, and, then, on, top, of, that, add, the utility, value, and, the, monetary, value so i, think, we're, i, mean, i'm, definitely, in the, camp, that, if, ethereum's, fair, p, e multiple, should, be, 200, plus, so, if, we take, that, assumption, in, what, should, the price, of, ether, be well, if, if, the, pe, multiple, of, ether, were 200 based, on, last, month's, revenues, times, 12 you'd, be, looking, at, a, 3.8 trillion, dollar, valuation, you'd, be looking, at, a, valuation, that's, more, than 2x, what, the, entire, crypto, market, cap, is right, now, and, you'd, be, looking, at, a price, per, ether, of, about, 33, 000, dollars

fantastic, fantastic, that's, exactly, what i, just, wanted, to, use, the, sound, board, let me, keep, you, up, for, that, right, ryan there's, another, aspect, of, this, ethereum that's, different, than, a, company, doing, a dc, uh, dcf, for, and, that's, the, combination of, the, aggressive, buyback, from, eip1559 in, combination, with, the, distributions, to eat, stakers, and, so, i, want, to, get, your head, chewing, on, what, happens, when, this buyback, really, compounds, over, time because, i, think, that, might, really, change the, dynamic, of, the, ether, price, in, the very, long, term, so, i, want, to, get, you, to start, chewing, on, that, but, before, i, ask that, actually, ask, that, question, we're going, to, talk, about, some, of, these fantastic, sponsors, that, make, the, show possible, when, you, shop, for, plane, tickets you, probably, use, kayak, expedia, or, google

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all, right, guys, we, are, back, with, ryan alice, who, has, this, incredible, dcf, model for, ether, the, asset, and, a, question, i have, ryan, is, that, um, we, have, this combination, of, buybacks, pulling, ether supply, off, of, the, market, right, now because, of, the, the, heavy, issuance, from proof, of, work, it's, kind, of, a, wash, but once, we, get, to, the, merge, the, the, amount of, ether, deflation, is, going, to, become really, really, significant, and, when, that happens, that, makes, uh, you, know, the, ether supply, goes, down, over, time, of, course, but then, that, also, starts, to, meaningfully, uh increase, the, value, of, the, actual dividends, because, say, for, example, we're at, uh, you, know, call, it, 120, million, ether today, and, i, don't, know, how, long, but, you know, maybe, 5, 10, 15, years, maybe, we, start

to, get, below, 100 million, supply, of, units, of, ether maybe, even, lower, than, that, and, that starts, to, uh, in, like, compound, the, value of, the, dividends, for, stakers, uh, is, that included, in, this, model, where, over, time the, reduction, in, supply, increases, the actual, strength, of, the, dividend, or, how how, do, you, account, for, that, and, is, that something, that, we, have, seen, before, in other, dcfs, or, is, that, something, new, to ethereum well, that, that's, something, that's, quite new, to, ethereum, you, know, as, you've mentioned right, now, we, have, a, slightly, positive net, issuance, for, ethereum, although, a couple, weeks, ago, it, was, negative, for, the whole, week, for, the, first, time, um, post

merge there's, going, to, be, a, lot, less, rewards going, out, and, so, there's, going, to, be less, issuance, instead, of, having, i, think 4, million, ether, per, year, created, for miners, we're, going, to, have, 1.1, million for, stakers, and, what, that, means, is, that the, net, issuance, of, ether is, going, to, be, negative, if, you, look, at ultrasound.money, the, the, website, right now, just, based, on, the, last, 30, days if, you, click, that, supply, if, you, simulate the, merge, click, that, check, box, on, and then, click, supply, growth, till, you, get, to 30, days, if, you, just, look, at, the, the, last 30, days, alone, we're, looking, at, a projected reduction, in, ether, supply, by, a, net, of 3.6, percent, per, year

which, means, you, know, we're, going, to, be getting, going, from, 118, million, it's probably, going, to, max, out, at, 119, million or, so, and, then, it's, going, to, trend downward, toward, 100, million, over, the next, decade which, is, exciting and, what, that, means, is, instead, of, making the, denominator, 118, million you, know, 10, years, from, now, we, can, just sort, of make, a, edit, to, the, model, and, we, can, make the, the, model, um, 100, million, and, so suddenly, now, that's, the, new, supply, of ether, um, and, that's, going, to, make, the value, per, state, ether, you, know, 15, 000 instead, of, 12, 000, and, not, only, that there's, a, there's, a, dynamic, in, the market, where as, you're, burning, it, um, it, essentially

increases, the, price, as, it, goes, and, so you're, gonna, have, institutions, coming, in to, get, these, cash, flows, um, it's important, to, note, that, the, three, billion dollars, in, annual, staking, rewards, um, is going, is, priced, in, usd, right, uh, because i'm, doing, a, discount, a, cash, flow, model in, usd, but, if, the, price, of, ether, goes, up let's, say, the, price, of, ether, then becomes 15, 000, our, dreams, are are, realized, as, two, years, from, now, all right, now, we're, going, to, be, having, 16 billion, dollars, in, annual, staking rewards, in, usd, basis, and, that's, going, to make, the, gap, and, the, the, delta even, higher, where, the, value, per, stake death, is, you, know, ten, thousand, dollars above, the, dcf, value, per, eth, so, i, i, think

there's, a, huge, opportunity, here, uh, wait so, i, think, the, ether, supply, accidentally reverted, back, to, 118, million, uh, what happens, if, we, boom, what, happens, if, we lock, in, a, 100, million, uh, ether, supply, in the, in, the, model yeah, so, if, we, lock, it, in, 100, million here, um, it, you, know, this, is, the, outputs and, then, and, then, do, we, need, to, also change, the, current, value, per, each because, that's, back, to, 2, 700. yeah, so, if, you, know, you're, you're, really going, for, the, bull, case, here, oh, yeah, oh yes, i, am, you, know, if, that, gets, to, let, me hide, the, middle, column, here i, mean, you're, looking, at, a, 25, 000, value per, state, death, just, taking, the, price that, you, could, buy, it, on, the, market, and then, adding, the, 10, 000, an, additional

value of, the, of, the, value, of, those, taking, cash flows, that, gets, you, to, 25, 000, per, each potentially, within, two, or, three, years, of now, and, then, what, happens, if, we, do, a, p, e multiple, of, 200 let's, max, out, all, the, stats, yeah, if, you do, a, p, e, multiple, of, 200, at, that, point and, this, is, the, highest, my, model, has gone, so, breaks, the, model, after, this, okay it's, all, we, can, do, you, get, to, 56, 000 of, value, per, each, i, guess, that, wouldn't be, fair, though, because, we, shouldn't, be pricing, in, 200, p, e, multiple, of, growth after, we've, already, burned, so, much, so, i guess, that, would, be, that, would, be, a little, bit, ridiculous, however, i'm, a, fan regardless

this, this, is, just, silly, right, isn't, it this, whole, thing, is, kind, of, silly, like, i i, want, to, summarize, this, and, then, maybe talk, about, why, it's, so, silly, so, this discounted, cash, flow, model, in, your, mind ryan, is, is, kind, of, the, the, basement floor value of, what, ether, should, be, and, we're talking, 10, to, 12k, is, the, basement, floor is, the, base, case, right, now, as, we're recording, this, the, price, of, ether, is 2700, okay, so, it's, undervalued, at, even the, base, case levels, of, what, this, asset, should, be valued, at, so, like i, guess, uh, why why, do, you, think, why, don't, why, don't people, understand, this, why, why, isn't, the

market, front, running, this, a, little, bit, i mean, as, we, just, said, when, we're, coming into, the, model, the, data's, here, for everybody, we, don't, have, to, wait, for, the ceo, of, ethereum, to, issue, an, annual report, for, us, and, tell, us, what, the numbers, are, and, what, the, growth projections, are, anyone, can, query the, chain, and, see, what, they, are, so, why isn't, the, market, factoring, this, in, right now, and, why, does, this, look, so, silly well, there's, one, or, two, good, reasons number, one in, 2018, and, 2022, bitcoin, is, down, and, now

that's, becoming, less, and, less, important as, bitcoin, dominance, declines, bitcoin dominance, was, 73, a, year, ago, now, it's under, 40, percent, and, that's, been declining, quite, rapidly, and, so, as bitcoin, becomes, less, important, in, the overall, market, if, assets, like, ethereum will, be, able, to, um, be, valued, based, on their, actual, value, as, opposed, to, a proportion, of, the, largest, one, in, the space, i, think, that's, one, reason, and, i think, the, second, big, reason, is, that people, are, applying, a, there's, a knowledge, gap, and, then, there's, a, risk and, then, there's, a, risk, gap, and, the knowledge, gap, is, that, there's, only, about 20, 000, people, in, the, world, now, that understand, what, we, understand, about, how to, properly, model, the, cash, flows, of

ethereum and, you, know, that, was, probably, 5, 000 yesterday, before, this, episode, and, so this, is, important, alpha, this, is important, information, and i, would, say, that, once, we, actually, see, a successful, merge and, the, actual, cash, flows, are, being, paid out, daily, to, stakers, that, we're, going, to see, an, on, rush, of, institutions, coming, in they, can't, yet, invest, until, it's happened, but, once, it, happens institutional, investors, are, going, to, be really, wanting, those, cash, flows, and that's, going, to, drive, the, price, of, ether i, believe, in, the, second, half, of, this year, i, hope, listeners, just, heard, there that, you, are, front, running, the institutions, if, you're, buying, eth, and you, know, this, information, and, i, think what, you're, saying, ryan, too, is, is

basically, like after, the, merge, after, this, happens, are the, education like, so, david, and, i, probably, yourself and, others, have, been pounding, our, fists, on, the, table, talking about, the, different, ways, ether, as, an asset, should, be, valued, but, after, it actually, starts, happening, and, the, cash flows, start, rolling, in, our, education work, is, kind, of, over, because, the, market will, just figure, this, out, at, that, point, in, time like big, banks, other, industry, analysts everyone, will, start, reporting, on, this and, it'll, be, self-evident, that, of, course this, is, the, way, you, value, an, asset, like ether, and, we, won't, have, to, do, this intense, education, as, we, have, previously that's, exactly, right, we've, got, probably uh, another, four, to, six, months, here, to

accumulate i'm, getting, as, much, as, i, can, really, up until, you, know, a, 5k, price, point accumulate, as, much, as, i, can, there, are going, to, be, cycles, it, is, going, to, be volatile, you, know, it's, going, to, go, up and, down, in, the, short, term, but, in, the long, term, i'm, a, huge, believer, in, ether and, i'm, a, huge, believer, that, if, you, look ahead, to, 10, years, we're, going, to, be looking, at, values, that, are, you, know, more than, 10x, where, we're, at, today, and, so, i'm accumulating, and, i, think, it's, even, once the, merge, happens, it's, still, going, to take, another, 12, months, after, the, merge for, the, knowledge, to, spread, around, the world, and, for, risk, committees, to evaluate, it, and, approve, you, know multi-billion, dollar, investments, risk committees, god, it's, something, i'd, never ever, have, to, want, to, be, a, part, of, i, do

not, want, to, be, in, a, risk, committee meeting i'm, inviting, you, to, our, new, d5, risk committee, meeting, david um ryan, i, i, want, to, ask, this, question, too so, i, read, coinstack, a, big, fan, of, your newsletter, by, the, way, and, hopefully folks, have, an, opportunity, to, subscribe uh, at, the, end, of, this, and, i, know, you're bullish, eth, i, also, know, that, you're bullish, other, alternative, layer, ones, and i, wanted, to, ask, about, that, and, talk about, that, for, a, minute, so because, i, don't, understand, it, fully right, it's, like, i, understand, the narrative, trade, around, alternative, layer ones, um, but, i'm, curious, if, you, believe discounted, cash, flow, is, a, primary, way for, layer, ones, to, be, valued, as, the, way it's, valued, with, with, ether, as, an, asset

uh, have, you, done, a, discounted, cash, flow for, these, other, alternative, layer, ones and, what, does, that, yield, because, when, i run, those, numbers, back, of, the, napkin i, get, uh i, get, red, signals, flashing, that, these things, are, overvalued, relative, to, the cash, flows, and, the, block, space, that they're, selling, what's, your, take, on, this do, you, apply, discounted, cash, flow, to other, alternative, layer, ones, and, if, not why, are, you, still, bullish, these alternative, layer, ones yeah, it's, a, great, question, so i, have, not, yet, built, a, dcf, for, any, other digital, assets, besides, ethereum, besides ether, um, the, reason, why, i'm, bullish, on other um, l1s, and, other, smart, contract platforms, is, simply, from, a, technology

standpoint, i'm, looking, at, the, define market, share and, i'm, i'm, sourcing, this, data, from, defy lama, and, when, i, look, at, the, total, value locked, in, d5, apps, across, all, the different, smart, contract, platforms ethereum, has, a, 60, market, share, as, of today um, tara, finance, smart, chain, phantom avalanche, and, solana, round, out, the, top six, um, and, i, wouldn't, be, surprised, if polka, dot, starts, taking, some, share, after it, launches, over, the, next, few, months, and so, those, are, the, ones, that, i'm particularly, interested, in, i'm, less interested, in, finance, smart, chain, and solana, you, know, but, when, you're, looking at, terra, phantom, and, avalanche i, do, see, some, promise, there, from, at

least, a, technological, standpoint, they have, of, course, made, trade-offs in, the, trilemma, and, they, are, often, as you, know, trading, off, central decentralization, in, order, to, get, faster speed, and, more, transactions, per, second many, of, these, are, already, on, proof, of stake, and, so, i, think, it, would, be, an interesting, project, to, take, their current, fees, you, can, see, the competitive, l1, revenues, on, crypto, fees dot, info however, because, they've, made, such, a trade-off, with, decentralization ironically in, order, to, get, their, fees, to, be, so, low their, revenues, are, you, know significantly, lower, avalanche, and, uh well, let's, say, binance, smart, chain, is number, two, by, fees

and, yesterday, it, was, 1.5, million, versus 33, million, for, eth, and, so, you're, looking at, you, know, less, than, eight, percent, of ethereum, and, avalanches, number, two, at 425, 000, a, day, over, the, last, seven, days so, i, do, think, ethereum, is, going, to, be king, for, a, very, long, time and, from, a, technological, perspective, i'm looking, at, the, the, market, share so, is, the, bet, basically, right, now, that these, alternative, layer, ones um, you're, betting, on, different, metrics at, this, point, in, time, you're, kind, of, for these, alternative, layer, ones, you're betting, on total, locked, value, growth and you're, kind, of, extrapolating, that, and you're, kind, of, saying, well if, total, locked, value, is, growing, and these, alternative, layer, ones, are, able, to

cross, the, chasm, and, start, charging, for their, block, space, in, the, way, that ethereum, is, charging, for, its, block, space then, you, can, start, to, rationalize, the you, know, tens, of, billions, of, dollars that, these, alternative, ones are, uh, are, valued, at, today, if, you, just apply, a, bl, like, a, discount, or, cash, flow model, in, the way, that, you're, applying, to eth, my, guess, is, like, the, pe, has, got, to be, in, the, like, you, know 2, 000, 3000, you, know, maybe, for, some, of these, the, 30, 000, mark, it's, like, broken it, it, breaks, the, model, in, the, opposite direction, so, i, think, you're, kind, of, what i, see, a, lot, of, investors, doing, is, you're kind, of classing, these, things, as, different, it's like, almost, like, ethereum, is, sort, of

value, and, growth, type, of, play, where these, other, assets, are, just, like pre-revenue just, um speculative, venture, bets, specu, or speculation, or, early, stage, venture, bets at, unicorn, valuations, is, that, how, you rationalize, this, because, this, is, sort, of what, i, think, people, are, doing i, think, that's, right, ethereum, is, the only, digital, asset, where, you, can, model out, its, cash, flows, it's, only, a, smart contract, platform, where, you, can, really model, out, its, cash, flows, and, realize that, it's, deeply, undervalued, um, all, the other, smart, contract, platforms, are, have a, very, healthy, valuation, often, in, the tens, of, billions, of, dollars, and, um, some are, more, than, a, hunt, you, know, there's some, that, are, 40, or, 50, billion, dollars

now, and i, i, think, that, is, more, based, on, hope, and speculation, than, actual, hard, cash, flow numbers i, think, uh, ryan, there's, going, to, be, a world, where all, of, the, layer, twos, that, come, online that, aren't, um that, don't, have, to, pay, for, security, and therefore, don't, have, to, have, issuance and, therefore, have, much, more, reasonable uh, like, metrics, that, don't, break, the charts, i, think, there's, a, world, where especially, when, this, multi, l2, ecosystem gets, built, out, and, the, tokens, actually start, to, come, and, these, layer, twos, also start, to, generate, revenue, in, the, same way, that, ethereum, l1, has, that, there could, be discounted, cash, flows, for, all, the

layered, twos and, so, i, think, maybe, there's, a, world where, we, repurpose, your, your, your, model for, eth, and, start, doing, all, of, these same, things, with, the, layer, two, tokens when, the, layer, two, tokens, come, out, uh, i don't, really, have, a, question, but, i'm wondering, if, that, is, something, that, is also, in, your, brain it, is, you, know, when, you, look, at, um arbitrarum, they, have, 1.9, billion, dollars in, total, value, locked, in, d5, right, now you, look, at, optimism, they, have, 300, plus million, in, total, value, locked, on, d5, and so, as, if, and, as, they, come, out, with tokens, i, think, it'll, be, possible, to, to value, them, as, well ultimately, though, i, think, your, theory about, ethereum, being, the, manhattan, block space, of, the, world, is, going, to, prove

true, and, even, though, there, are, cheaper alternatives, there, aren't, necessarily better, alternatives, when, you're, settling very, large, amounts, of, money, and, that will, always, lead, east, to, be, the, best let, me, ask, you, a, deeper, more, fundamental critique, of, this, style, of, valuation, and that, is, a, critique, by, um, like, the, three hours, capitals, of, the, world, the, suzu's of, the, world, and, that's, this dcf, doesn't, even, apply, to crypto, okay, this, market, trades, on, memes and, narratives and, that's, it and dcf, like, valuations, we're, borrowing, this from, capital, f, uh, assets, we're, borrowing this, from, from, equities, that's, a narrative, in, and, of, itself and, the, crypto, narratives, and, how, it's

valued, might, be, completely, different than, the, dcf, models, that, we've, used, in the, past, how, do, you, respond, to, that, that this, thank, you, for, the, dcf, model, but that, just, doesn't, apply, to, crypto well, in in, a, pre-2022, world uh, you, know, going, back, 14, years, now it, is, hard, to, create, a, fundamental analysis, of, what, is, the, actual, value, of these, digital, assets, today, though we, have, real, cash, flows, and, the, moment that, you, have, money, actual, cash, flows going, into, the, wallets, of, these, holders which, is, going, to, be, happening, in, six months, from, now, or, less then, people

that, control the, hundreds, of, trillions, of, dollars, of global, wealth, there's, about, 500, trillion dollars, of, global, wealth, today, are, going to, look, at, that, and, they're, going, to look, at, how, much, they're, earning, from traditional, fixed, income, which, is, about two, to, three, percent, per, year and, they're, going, to, say, wow, if, i, can hold, a, u.s, treasury, and, get, half, a percent, a, year, or, hold, a, corporate, bond and, get, two, and, a, half, percent, a, year, or i, could, simply, stake, eth, and, get, six eight, ten, twelve, percent, a, year depending, on, how, many, transaction, fees you're, going, through, there's, going, to, be a, lot, of, people, saying, wow, i, would rather, stake, eth, and, i, would, rather, get those, cash, flows, and, so i, do, believe, that, as, staking, becomes

normal, and, us, taking, rewards, from revenues become, more, and, more, normal, we, are, going to, see, traditional, metrics, begin, to develop, to, combine, with, new, metrics, of valuing, digital, assets ryan, if, this, model, goes, wrong, how, how would, it, go, wrong, what, assumptions, are, a bit, more, brittle versus, yeah, i've, assumed, a, 25, annual growth, rate, i, think, the, biggest, risk, in the, model, is, that, the, overall, cash, flows and, revenues, of, eth, don't, grow and, you, know, that, would, not, be, the, end of, the, world, because, that, means, lower transaction, fees, for, people, but, from, a and, that, could, then, create, more, usage which, would, create, more, utility, which can, drive, value, for, the, asset, in, other

ways, but, from, a, cash, flow, perspective the, way, this, model, goes, wrong, the, risks in, it, are, if, we, have, um, let's, say, l2s take, over, 95, of, the, market let's, say, alternative, smart, contract platforms, take, over, the, majority, of, the market, and, that, the, main, net, is, doing less, and, less, fees, then, that, will, impact the, cash, flow, so, that's, where, the, model could, be, a, little, over, optimistic, and that's, why, i've, tried, to, make, these assumptions, quite, conservative, to account, for, that what, do, you, think, of, this, that's, like when, you, zoom, out, ryan, have, you, ever seen, anything, like, this, so, like, we, you coming, on, the, bankless, podcast, we've made, this, claim, uh, you, know, often, but you, run, ahead, you, were, on, a, hedge, fund okay, and, and, you're, making, the, claim that, this, is, an, obviously, undervalued

asset, right, that, this, is, maybe, like, the market, doesn't, provide, these, sorts, of opportunities, where, something, is, so fundamentally, obviously, undervalued, like 5, to, 10x, undervalued, is, order, of magnitude, we're, talking, about, just, on like, basic, fundamentals, alone, have, you seen, anything, like, this, in, your, time investing, or, is, this, sort, of, a i, don't, so, when, we, start, to, say, like, a once, in, a, lifetime, opportunity, it, would start, to, sound, like, we're, some, kind, of an, infomercial, but, i, just, feel, like, the answers, are, so, obvious, i'm, wondering, if you've, seen, this, in, any, time, through your, career, of, investing, something that's, been, this, obvious you, know, i, haven't, i, i, built, this, model almost, a, year, ago, it, was, late, march early, april, of, 2021

and, it, was, just, after, justin, drake's materials, came, out, on, bankless, and, you know, that, price, of, eth, was, you, know, 1300 or, something, right, around, then and, i, was, looking, at, it, saying, wow, i, can buy, east, for, 1300, and, i, can, hold, it, all the, way, up, to, 10, 000, plus, there's, a great, opportunity, and, so, you, know, that's what, i've, done, you're, right, i, do, run, a crypto, hedge, fund, heart, rhythm, um, we generate, market, neutral, yield, by investing, and, providing, liquidity, to defy, so, that's, how, we, do, what, we, do, so we're, huge, users, of, the, ecosystem, and, um i, think, there's, a, huge, investment opportunity, here, and, once, we, de-risk, it once, you, make, beacon, shading, live, and merge, i, i, think, that's, going, to, actually start, playing, out, in, the, price

performance that's, it, guys, uh, ryan alice, here, giving, us, the, discounted, cash flow, it's, a, fantastic, lens, on, ether, the asset, that, you, probably, won't, find, in many, other, places, as, people, are, looking at, the, uh, the, day, trading, of, ether, not looking, as, much, at, the, fundamentals, ryan thank, you, for, making, this, case, for, us, on why, ether, is, so, undervalued, we appreciate, it, where, can, folks, sign, up for, your, fantastic, newsletter, by, the, way could, you, uh, hit, us, with, a, url yeah, if, you, would, like, to, subscribe, to our, free, newsletter, coinstack, just, go, to coinstack.sub fantastic, and, i, recommend, bankless listeners, do, that, of, course, guys we, talked, about, some, financial, topics, we

talked, about, some, price, targets, but, none of, this, was, financial, advice, all, right ethan's, risky, bitcoin, is, risky, all, of, d5 is, you, could, definitely, lose, what, you put, in, but, we, are, headed, west, this, is the, frontier, it's, not, for, everyone, but we're, glad, you're, with, us, on, the bankless, journey, thanks, a, lot hey, we, hope, you, enjoyed, the, video, if, you did, head, over, to, bankless, hq, right, now to, develop, your, crypto, investing, skills and, learn, how, to, free, yourself, from banks, and, gain, your, financial independence, we, recommend, joining, our daily, newsletter, podcast, and, community as, a, bankless, premium, subscriber, to, get the, most, out, of, your, bankless, experience you'll, get, access, to, our, market, analysis our, alpha, leaks, and, exclusive, content and, even, the, bankless, token, for, airdrops

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