The next chapters on $ETH will focus around the revolution creating and monetizing NFTs digital IP license pmt streams using DeFi along with real world assets being financed w/ protocols like @makerdao .

These markets are simply massive.

1/x

In parallel, as the $ETH futures market continues to expand in depth, Proof of Stake will cause $ETH to have a native yield that can be hedged to cause alpha-like return.

2/x

the global financial markets are simply not prepared for the new kid on the block as new new staking alpha has a superior risk-adjusted return (eg why would an investor buy sovereign debt instead of staking ETH and hedging it).

3/x

$ETH staking will then start to compete with junk bonds then emerging sovereign countries debt then on to the developed world. Will it control the world? Ha No. but it most certainly will have a large allocation.

4/x

the above in parallel with DeFi's capital black hole and expanding reach of yield and connecting the world like never before for remittances and micro payments while questioning the need for historic financial service providers all together

5/x

each iteration on the above has an exponential increase in the users' utility received which is causing a positive feedback loop

6/x

Dec 01 2020 cemented the start of a ~10 year super cycle for $ETH's rise. Each time a validator deposit occurs, the circulating $ETH supply is impermanently reduced.

7/x

At a max rate of 900 new validators / day (28.8k ETH) the worst case yield is known over time. Each day will bring a new economic equilibrium to compete with both DeFi and traditional finance.

8/x

L1 Smart Contracts (and then layered ZK proofs) provide near limitless settlement value possibilities (per block). The DeFi utility is both immutability and the certainty to settlement. Name the market, oil or any other. (PetroETH settlement!? anyone!?)

9/x

Txn fees. Bordering on out of control, and still people use it. Good news is that developers are more than aware and have scaling solutions coming with some avail now ( @zksync )

10/x

Unlike most other digital assets, $ETH can be used as collateral to margin itself ( @makerdao) natively without relying on an external custodian / platform. This lightens the downward selling pressure on $ETH if the price materially increases while maintaining trustlessness

11/x

$ETH is now used as a validator (capital) , collateral (asset), and fuel (commodity) allowing the use of the network. Each presents a utility use-case. Supply & Demand (w/ supply being acquired for economic usage not just speculation on appreciation).

12/x

RE price expectation. I have no clue what the price will be tomorrow or next month. However, sustainable utility / value creation drives sustainable market valuations. This part is certain.

13/x

The entire value chain is morphing. The $ETH UX of today will be almost unrecognizable in 5 years. The amount of daily settlement value will continue to go geometric. DEXs and soon licensed regulated DEXs are next.

14/x

Smart Contracts are a unique animal. Software that has the characteristics of hardware infrastructure. I estimate globally ~5 core infrastructure smart contracts (defect free) are deployed daily. While seemingly low, due to....

15/x

Smart Contract composability, the end user's utility exponentially increasing with time while the maintenance costs of the infrastructure is basically zero. Also why a fork is basically impossible now. DeFi has to pick one as the other is basically worthless.

16/x

For those in the Stock-to-Flow camp, the merge is a seismic supply shock event. Once the $ETH PoS merge is complete, buckle-up both the pace of sw dev will accelerate and the core yield narrative will be ever-more pronounced w a fraction of the new issuance.

17/x

But what about other chains? #Ethereum is not out of the woods, but until we see utility migrate to a new chain (and do things a ZKrollup can't w/ settlement amts that exceed $ETH), ETH has a tailwind of network effects working for it. That moat is not easy to traverse.

18/x

Some will devolve the entire subject down to the price of crypto-A is going up but not $ETH. All the micro price moves in the short-term are ALL noise compared to the macro underlying trends. Investors should always watch the macro.

19/x

Will this be smooth sailing? Absolutely not. The turbulence light is ON. Disruption is Full-Contact sport. This is not a game where there will only be winners. There will be bloody noses. Go big or go home!

20/x

I also fall in the camp of any asset that doesn't generate + cash flow or provide sustainable utility to users and has its price consistently raise is almost always stuck in a mania (sometimes for years). Modern day markets simply ....

21/x

no longer reward scarcity unto itself. A publicly traded stock with no profit with a fixed and capped number of shares may cause a trading frenzy, but it is not sustainable.

22/x

Similar to mineral rights where fundamental you have producing and non-producing assets. With basically no exceptions, producing asset always appraise higher than non-producing while BOTH are scarce.

23/x

To this we can look to see as a parallel in history how many oil companies own non-producing minerals vs lease producing ones. 150yr of market wisdom to digest there.

24/x

To this end, the narrative of a scarce digital oil well may emerge. There cannot be more than ~3.5MM of these wells yet they produce value to the ecosystem and recycle.

25/x

Today in times of concern RE monetary policy some will buy gold while most asset managers now just buy the S&P500 index fund. Why?

26/x

They buy a cash producing asset. If the value of the dollar declines, the cash that is produced will go up. Thus a true Store of Value is one where relative value is maintained because of operations and engagement with society.

27/x

Today the narrative is about price and scarcity. Like Wayne Gretzky said, we should be skating to where the puck will be, not where it is today.

28/x

Personally speaking, i like $ETH , but i love how we can USE it and what can and will be disrupted next as human creativity is unleashed to address both new ideas and historic challenges that smart contracts can help solve (eg democratic voting).

29/x

Bullish or Bearish on $ETH?, well a new kid is on the block. (S)he is young, adaptable, hungry, and brings a new game theory the world will struggle to value or even realize, certainty of outcome without humans.

30/x

Governments will likely have their concerns especially when they have to compete on a risk-adjusted basis for capital allocations. Which then leads to the next question of how will society respond?

31/x

In this regard, as costs of traditional finance will go up, this will have secondary impact of causing governments to run balanced budgets to have their own currency look better to investors.

32/x

How long will all of the above take to occur? A LONG TIME. Time however has a cost of capital and blockchains have the advantage here. Key takeaway, $ETH is a *productive* asset. Get ready for disruption like the world has never seen.

/fin