valuations_of_ethereum/README.md

# valuations_of_ethereum

I kind of collect them, so here's a list of valuation models. Edits and feedback are welcome.

## ETH Reports with price targets:

- reddit.com/u/pa7x1 [on eth](https://old.reddit.com/r/ethfinance/comments/rnsk2r/fundamental_valuation_models_of_ethereum/)
    - If ETH was a money, we can get a lower bound: 15-64k (deflation based, long term target)
    - If ETH was a yelding asset 8-33k+ we can get a short term value
    - If ETH was a productive asset via DCF:  61k
- [electric capital on eth](https://medium.com/electric-capital/from-digital-oil-to-a-digital-nation-narratives-for-ethereum-in-2021-1ae86ad73dae )
    - If ETH was silver 14k (2nd store of value)
    - If ETH was copper 64k (minor commodity)
    - If ETH gold 140k (digital store of value)
    - If ETH was oil 1M (primary commodity)
    - If ETH was a store of value: 22k-200k
    - If ETH was a Payment network: 1k-50k
    - If ETH was a Productive asset via DCF: 16k-57k
    - If ETH was a Productive asset via PE: 13-160k
    - If ETH was like the Euro: 32k
    - If ETH was like the USD: 96k
- reddit.com/u/squishchaos 's  [triple halving thesis](https://twitter.com/SquishChaos/status/1387074095007817730) - 30-150k perhaps temporarily
- [Standard and Charter Bank](https://www.tbstat.com/wp/uploads/2021/09/Ethereum-investor-guide.pdf) - 26-35k
- ARK's Big Ideas 2022 slide deck: [ETH at 150k](https://research.ark-invest.com/hubfs/1_Download_Files_ARK-Invest/White_Papers/ARK_BigIdeas2022.pdf?hsCtaTracking=217bbc93-a71a-4c2b-9959-0842b6fe301c|2653a4d0-af35-42f0-853a-c5f90f002abb)
- [Coinbase,If ETH, post merge, was a productive asset via DCF](https://www.coinbase.com/institutional/research-insights/research/market-intelligence/eth-staking-post-merge-yield-estimates-and-risk): 5k
- [Arthur Hayes](https://cryptohayes.medium.com/five-ducking-digits-cd92a7ab72ce) ETH 10k as a perpetual bond

## Eth reports with no targets

- 2022 [Hal Press - Ethereum — A Generational Investment](https://medium.com/@halp1120/1-the-only-other-large-assets-that-arguably-have-structural-demand-are-luna-and-bnb-cdcf8b2a8281)
- 2021 [GreyScale's report on eth](https://grayscale.com/wp-content/uploads/2021/05/valuing-ethereum.pdf)
- 2021 [Lyn Alden investment report on eth](https://twitter.com/LynAldenContact/status/1351241309789577221) and the community [reply](https://docs.google.com/document/d/1Mvz1uKo9UR33YMSwc_-go31L7bmzkddUVV0UfWuclZg/edit) with comments from Vitalik

## On cryptoasset valuation in general

- [2022 VanEck](https://www.vaneck.com/us/en/blogs/emerging-markets-bonds/how-one-bond-manager-values-gold-and-bitcoin) $1M BTC
- 2021 [Ray Dalios BTC report](https://www.bridgewater.com/research-and-insights/our-thoughts-on-bitcoin)
- a [2021 euphoric chainlink report](https://1f9807bf-abc2-449f-a2b3-a1fab3b8450a.filesusr.com/ugd/4b8d26_0fdd218de176436d95dea6efe75c0f00.pdf) from [abstraction.capital](https://www.abstraction.capital/research)
- [2019 EY's report on cryptoassets](https://assets.ey.com/content/dam/ey-sites/ey-com/en_gl/topics/emeia-financial-services/ey-the-valuation-of-crypto-assets.pdf)
- [2019 hash-cib seeking uniform valuation for crypto](https://medium.com/hash-cib/seeking-uniform-valuation-for-crypto-34df2f106e60) [part II](https://medium.com/hash-cib/seeking-uniform-valuation-for-crypto-part-ii-5012f91d06af)
- [2019 bgits, a flow based valuation of synthetics](https://observablehq.com/@bgits/synthetix-exchange-value-flows-exploration)
- [2018 micobo](https://micobo.medium.com/valuation-of-cryptocurrencies-a-brief-analysis-of-three-valuation-approaches-and-their-implication-1525f7fd7a87)
- [2018 kalichkin](https://medium.com/cryptolab/https-medium-com-kalichkin-rethinking-nvt-ratio-2cf810df0ab0)
- [2018 Solomon Stavis](https://hackernoon.com/making-sense-of-crypto-valuations-cd4417d1f250)
- [2017 cburniske](https://medium.com/@cburniske/cryptoasset-valuations-ac83479ffca7)
- [2017 wintonark](https://wintonark.medium.com/how-to-value-a-crypto-asset-a-model-e0548e9b6e4e)

# Bonus: Friends of ethfinance:

- reddit.com/u/logristhebard https://tokenomicsexplained.com/
- reddit.com/u/lifesmage and [the rocketpool investment thesis](https://old.reddit.com/r/ethfinance/comments/qwbb8w/rocket_pool_investment_thesis_20/)

# Endnote

My personal opinion is that valuation models argue whether something will go up 10%  or 20% if it works. But the real question is if it works at all. You absolutely need to discount it by it's risk or it's a useless number.  In fact the medium term price is best looked at as the expected value = <eventual value> * <chance of success>. Price changes seem to happen as we update our mental estimate of <chance of success>. 

If ETH is 30-300k, then the current price implies a 90-99% estimation of failure by the market. I think the risk is lower than this, therefore the expected value is higher.

In cryptoassets the risk could be anywhere from 0-100%. If it's ~100% then all valuation models are useless, because it's all going to zero when a black swan hits. So the number we need to obsess about is the risk and its end to reach. That reflects the zero to one journey we are on. 

I see it as most important to monitor the biggest risks and metrics: hacks/bugs, regulation, and product market fit compared to competitors. Also the team and founders. I think Eth is doing well.
    
To that end, some links on risk in defi:

- [Ming Zhao's "Yield Farming is a Misnomer"](https://twitter.com/FabiusMercurius/status/1454513434209312772)
- Finding AAA rated defi [the primedao rating database](https://docs.google.com/spreadsheets/d/1eIOxRAxuPawM2NkCPbGGmjZUW1xbwRZxU9kYOqsPRaA/edit#gid=1429007236)
- https://cryptorisks.substack.com/about
- https://techemy.capital/wp-content/uploads/2020/06/Techemy-Capital-DEFI-RISK-MANAGEMENT-Insurance-Put-Options-Ratings.pdf
- https://feed.rekt.news/
- https://nopeitslily.substack.com/