10 key understandings in the currency circle#

MEV is the foundation of long-term value: In the long run, MEV (maximum extractable value) is a key indicator to measure the development prospects of a chain. It reflects the scalability, security, and attractiveness of the blockchain to developers and users.

TVL is a misleading indicator: Total locked value (TVL) is an often exaggerated indicator because it can be easily manipulated. TVL data can be inflated by raising the price of L1 tokens.

FDV is important: Fully diluted valuation (FDV) is an important indicator because it reflects the potential market value of blockchain projects. Although it is not perfect, it can provide a rough estimate of the size of the project.

Economic security is not reliable: It is not enough to rely on economic security alone to ensure the stability of the blockchain, as the cases of LUNA and ATOM show. Other security mechanisms are also needed, such as consensus mechanisms and governance models.

The execution layer is the key to value capture: The execution layer is the core of the blockchain, which is responsible for processing transactions and verifying data. Therefore, it is also the main place for value capture.

DEX data better reflects ecological prosperity: Data from decentralized exchanges (DEX) can more accurately reflect the prosperity of the blockchain ecosystem. In order to obtain a clearer picture, the data of stablecoin exchange trading pairs and L1 token-U/ETH trading pairs should be excluded.

Focus on developers, not community users: The success of blockchain projects depends on developers, not community users. Therefore, project strategies should revolve around developers, attract them and provide support.

The U.S. stock market is mapped to the currency circle: Just like the U.S. stock market, the market value and trading volume of the currency circle may also be concentrated in a few head projects.

Business model is crucial: Just having a large number of users does not guarantee the success of a project. What is more important is to find a viable business model to convert user value into actual benefits.

Value is the foundation of prosperity: The long-term prosperity of blockchain projects needs to be built on a solid value foundation. This requires the introduction of traditional investment systems and valuation models to more objectively evaluate project value.