Is the block chain more like a business or a country?

On Arca, we have always asserted emerging industries in the area of ??the block chain (such as DEFI, NFTS, games, and Web3, including its various sub-industries in document storage, cloud computing, and telecommunications) and traditional entrepreneurial companies. Similarity. But there is a department despite the longest time, but it has not met this classification, it is the block chain protocol and platform itself.

Both the first layer (L1) block chain (e.g., Ethereum, Avalanche, Terra), and even the second layer (L2) block chain (eg, Polygon, Ronin, Arbitrum) denies a simple definition or valuation of it. Therefore, although we can affirm their logins with certain value, they don’t provide users with an easy definition requirement.

Take some DEFI applications as examples, such as SushisWap, which is engaged in the simple business of the user to translate the transaction. They provide profits to the Currency holder to create a sufficiently simple valuation model. AvaLanche’s protocols and platforms are more like an app stored on the Internet or in the Apple system, and people can establish an application on its agreement. Despite this, due to the protocol coin of its operation, it cannot be easily completed.

Although the specific situation is complicated, people seem to be divided into two camps when thinking about the value and structure of the block chain. One of the camps consisting of practical, traditionally, financially friendly people as a block chain (BAB), who set the block chain as a company with a definable cash flow, product-market adaptability and business model.

Another camp is a plenty of intellectual dreams. They support as the country’s block chain (BAN), which will become a country that supports its own government, economy, military and taxation systems. These two distinct frameworks lead to different views of the value of the zipper chain: BAB patriaries focus on the return value of the handset holders today, and the BAN sent more attention to new users and economic growth, not Compensation for the holder of the loop holder. This division also leads to people’s debate because they are good at evaluating the block chains they like with a very different indicators.

As a person across these guidelines, I learned a lot from every side, and two camps have improved when describing this division of digital assets.

The block chain is a case of enterprises (BAB)

If you look from a traditional financial frame, it’s not difficult to find that the block chain looks like a business. Bankless Ryan Sean Adams said that it is the most appropriate, he claims: “The block is selined is block.” Block can be sold to B2C (sold to users) or B2B (sold to other block chains), But these two ways can bring income.

For companies in selling blocks, increasing the number and price of the block is the top peak of success. Bab’s advocate focuses on the cost (ie, the revenue earned by the agent chain) to show the product and the market. They have reached the goal of cash to the Currency holder through the charge, or through the currency policy of the inflation, or through other free cash flows (such as bet rewards). In addition to ensuring the economic security of the network, these indicators also indicate a huge investment opportunity.

Analysts such as Ryan Allis attempts to valuate the first layer (in this case Ethereum) based on the basic cash flow indicators, which will be included after Ethereum mergers later. Ryan Allis found that Ethereum transaction prices have great discounts compared to its basic valuation (more than $ 10,000), which is based on future cash flow, from Stakeing (Sphi block chain Dividends on the dividend) and the general contraction of the money supply (such as stock repurchase). The main cash flow model of the BAB advocate with analytical capabilities, which seems to be a kind of embarrassment in the Ban camp.

Objectively, these numbers can see that some block chains are better than others. Ethereum L1 (or reduces the range, Binance Smart Chain) can rely on relatively high mining costs and complete blocks. These are all cash flow in the area of ??the block chain, and the current fundamental surface has proven solid investment.

Terra can also be classified into this category, because of its historical deflation monetary policy to return the value to the handset holder (stable coin is also a great business) on the other hand, Solana, Polygon, Cosmos, Avalanche The chains such as only have a name fees and there is a more serious inflation – this will allow the BAB camp to lose all over the superiority.

All-Star Digital Asset Indicators and Research Suppliers TOKEN TERMINAL also take the same method of allocating the basic indicators of the block chains (basic indicators include income, price and sales ratio and price and yield ratio), and Sushi and Axie Infinity and other application The same way. However, in view of many district block chain projects have different charging policies and heavy donor issuance, this approach may encounter problems when comparing. For example, Terra can return value to its original LUNA’s holder by inflexion, but token Terminal cannot allocate any “revenue” or price-earnings because it cannot be dollar. Another key issue that links the block is another key issue for the company is that they produce the currency used in the cost. The block chain is different from any of the enterprises in the real world. It fully earns income and profit at its own native parties, rather than using external currencies such as dollars.

In the view of Bab’s critics, it is said that the block chain makes money as “earn profit”, but does not receive new cash as a profitable standard. In order to bridge the differences in this view, the BAB camp regards their native Currency as a fundamental new asset that consists of capital assets, consumer assets and value storage assets. When the L1 native parties are set to a new asset category, people are easier to ignore how it gets income.

BAB advocates fundamentally departs, regarding statutory currency (especially US dollars) as a framework of its global account unit. Because consumers decide to purchase block chain spaces, instead of using their dollar to consume other things, the cost of the zoning chain is valuable.

I have not judged this view and think it may be more practical in both viewpoints. However, there is another way to look at the problem, it advocates the block chain as a country instead of a company.

Block chain as a national (BAN) case

For newcomers in a WEB3 field in a master, tribalism between each L1 community is extremely strange. The people of Bitcoin and Ethereum seem to be despised, and Ethereum advocates and other “new” L1 people are often tensioned.

For those who are familiar with investment, this is a phenomenon in any other asset category. No one is willing to perform (social) war (social) war for Coca-Cola and Pepsi, hold Goldman Sachs rather than Morgan Tatong’s stocks do not have some identity. But for some reason, there will be such a phenomenon between the various digital asset communities.

Although it is more difficult to detect in their native assets (probably due to the stability of native assets), patriotism around a particular community is generally in “residents”. Ethereum’s extremists and Solana’s extremists may fight within the world of the block chain, but they all agree with traditional finance and promote the effect of zone chains.

This mechanism is like two countries that may fight on adjacent borders, and if they meet in New York City, they will be united against other cultures. When people participate in their communities, they will be passionate about the community. When their society, economic and physical health are in danger, they are willing to put down everything to defend their values.

In fact, you can find the social structure of the block chain to find the social structure of the block chain. When a country is just formed, it is a blank canvress with infinite potential, but there is no real economic value except for the “future option value”.

But over time, as a society is gradually building roads, schools and other companies, the GDP and tax revenue of a country began to grow. The same is true of block chains, which develops from early formation and speculative value in order to have an application and transaction income. The verification node is responsible for the rules of the “Election” government (and decided) social operations, miners and coin merchants provide security for the military to enable the country from potential attackers.

However, when the rebels reached a certain scale, there may be a cruel civil war in the block chain. Commodities (NFT) and services supported the diverse economic, deep-depth financialization and trade route (bridge) played the role of connecting this. Most activities occur in the native Currency of the country, it is the main medium of value exchange. This loop is also used to pay the excavation fee “tax”, support for public goods serving everyone who uses the chain.

For the Ban camp, BAB pays the tax amount paid by national residents to measure the value of the Currency seems very stupid. The native partner is a currency, and the most important thing in currency is to be used in a large dynamic economy. The status of the reserve currency will eventually appear, but early everyone in the block chain can participate in the game. It is important that it grows, not its current value; from the long run, it is really possible to flow into its local economic funds, rather than the payee of the Currency holder.

In the most important case of growth, the following charts in the analysis process are more useful than understanding costs and profitability.

We saw the winners in the past eight months, and Ethereum, Binance, Bitcoin increased slowly and steady growth. The network effect is very weak in the new world of the digital countries seen in the BAN camp. The current leader does not have any places worth it. Ethereum (and smaller Binance Smart Chain) also continues to charge high procedures, other chains can seize this opportunity to compete with their competition, attract users and capital to their “country”. Natasha Che of the Tascha Lab firmly supports this camp, which presents the L1 block chain closer to the government, rather than enterprises, believes it is based on its original currency, with its own economical “GDP” expanded. She also wrote a bear market report on Ethereum, believes the relatively slow growth and the transition to the second layer (canceled the direct contact with the user) will make Ethereum a turning man (compared to other L1 block chains) .

Dragonfly’s Haseeb Qureshi also has a similar point of view, and he makes the block chain as a city. The size of these cities is constantly expanding, eventually become too crowded, too expensive, forcing a batch of new cities to emerge. For example, expensive but culturally representative Ethereum is New York City, but the adventurous people will go to the west, choose from Solana, Chicago (Avalanche) and San Francisco (NEAR). Haseeb’s urban metaphor has effectively defended the future of multiple block chains (all in the world is completely impossible), which also shows that these cities in the United States will be able to coexist, rather than mutual killing.

Although the A16Z of Chris Dixon sometimes voted to the BAB camp, he is also a person who will draw a poem “Ban Gospel”. Chris Dixon puts web3 than a chaotic city, and Web2 is Disneyland – it is clean and beautiful, but it is highly planned and unnatural. In Chris Dixon, the block chain has promoted a combined digital economy; the new economy has emerged, and anyone can create new products and services and trade with others. They certainly not only bring profits for the loop holders as the Disneyland.

Although this framework may better describe the structure of the block chain, the BAB faction (correctly) believes that its real use is limited. Since the currency cannot fundamentally valuable, the only investment method of the BAN party is to follow the financial value and citizen to rotate between different chains. Although community aborigines may have strong beliefs on the technical or social structure that supports specific chains, investors may be difficult to satisfy only by these more qualitative judgments.

In order to let the whole world join these systems, we need to help people understand the block chain by means of resonating with them. For some people, the ratio of block chains and traditional enterprises is obvious; for others, the block chain as a more revolutionary framework of the country may be more meaningful. Both ways to explain the emerging world of Web3 and assessing their largest assets. Which one can also cause your resonance? What you say can reveal that you may ignore the blind spots and help you understand why many people are full of enthusiasm for this space.