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