Valuing blockchains with Michael Nadeau: an institutional investor's perspective | Fundamentals ep.61

In this episode of the Fundamentals podcast, I’m joined by Michael Nadeau, a crypto data and research analyst and author of the DeFi report.

In this episode with Michael, we explore how blockchains can be valued, especially from the perspective of more traditional and institutional investors. We discuss the main differences between traditional assets and crypto assets - focusing on L1 blockchains and their native tokens, the role of key metrics in analyzing these projects, we speak about market consensus and the roles of buy and sell-side analysts, the similarities and differences between blockchains and web2 businesses, and how comparisons can be drawn from specific key metrics.

Mike also walks us through several valuation frameworks and how the can be applied to blockchains, and we wrap things up with thoughts on how he sees valuation frameworks developing now that institutions are slowly entering the space.

Michael:

Linkedin: https://www.linkedin.com/in/michael-austin-nadeau

Twitter: https://twitter.com/JustDeauIt

The DeFi report: https://thedefireport.io/#newsletter

VanEck’s Ethereum analysis: https://www.vaneck.com/us/en/blogs/digital-assets/matthew-sigel-ethereum-price-target-118k-by-2030/

Ethereum’s dashboard on Token Terminal: https://tokenterminal.com/terminal/projects/ethereum

Make sure to leave a comment if you have any questions 🙌

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Timestamps:

00:00 Introduction

02:00 Mike’s introduction & background

04:33 The main differences between a traditional asset (stock), and a crypto network (Ethereum)

09:05 The role of key metrics in analyzing assets (crypto vs. tradfi)

13:07 The typical roles and perspectives of buy-side and sell-side analysts

16:42 Conducting due diligence

18:18 Comparing Ethereum to traditional businesses like Apple and Amazon

21:58 Token incentives as a superior capital formation tool

27:25 Valuation methodologies: Robert Greer framework

30:47 Valuation methodologies: DCF analysis

32:21 VanEck’s Ethereum valuation methodology

34:45 Valuation methodologies: TAM analysis

36:25 Blockchains as economies & GDP analysis

38:59 How metrics like L2 take rate, App/Protocol layer take rate, and validator yield effect the value of an L1 blockchain

42:06 Closing thoughts: the future of valuation frameworks for crypto networks & the effects of institutions entering the space

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