Read on Twitter
1/ With the gas price high today, I wanted to share updated thoughts on eth's fees and revenue.
Yesterday and the day before, eth's daily fees were on track to hit our 2022 revenue forecast of $20B.
Today's daily fees are much higher, closer to our forecast for 2023.
Thoughts
Yesterday and the day before, eth's daily fees were on track to hit our 2022 revenue forecast of $20B.
Today's daily fees are much higher, closer to our forecast for 2023.
Thoughts
2/ Who pays high fees, and why? It seems that the rich, corps, and govts are willing and able to pay high fees. Demand from the rich is often inelastic due to consumer surplus. For example, if you're closing a $20M position, you want to pay $0 in fees but are willing to pay $2k+.
3/ The vast global audience of non-rich are clearly much more sensitive to high fees. Ethereum is relying on the successful launch of L2s and CEXes to integrate with these L2s so that almost all users may live on L2 and avoid high fees. This seems to be going well, eta Q3 2021.
4/ In our April 19 report at https://ethereumcashflow.com , we'd given a DCF value of $16.8k per ETH using @ryanallis's DCF model. With an updated 2021 revenue forecast of $17B and a model discount rate of 9% instead of 12%, the DCF jumps to $56k per ETH.
5/ Note that the DCF value per ETH is the forecasted net present value from cash flow alone. It assigns $0 of value for ETH's confidence and utility, which is, of course, not at all how ETH is actually priced by the market.
6/ Our expectation is that the actual market price of ETH will be much higher than our forecasted DCF value per ETH because of the confidence in ethereum and ETH's utility. As well, our revenue forecasts are intended to be moderately conservative and may continue to be exceeded.
7/ In short, ETH's fundamentals are looking stronger than ever. imo, the bear case for ETH is evaporating. After L2s ramp up and the merge goes well, I'm not sure if the bear case for ETH may materially exist at all, except in terms of market cycles.
