Author: Pima, Co-founder of ContinueCapital
10 key insights
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 metric: Total value locked (TVL) is a metric that is often exaggerated because it can be easily manipulated. By increasing the price of L1 tokens, the TVL data can be inflated.
FDV is significant: Fully diluted valuation (FDV) is an important metric because it reflects the potential market value of a blockchain project. While it is not perfect, it can provide a rough estimate of the size of a project.
Economic security is not reliable: It is not enough to rely on economic security alone to guarantee 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 can better reflect the prosperity of the ecosystem: 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 pairs and L1 token-U/ETH pairs should be excluded.
Focus on developers, not community users: The success of a blockchain project depends on developers, not community users. Therefore, the project strategy should revolve around developers, attract them and provide support.
The U.S. stock market structure is mapped to the cryptocurrency world: Just like the U.S. stock market, the market capitalization and trading volume of the cryptocurrency world may also be concentrated in a few leading 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 that converts 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.
