Empire

How to Value L1s, L2s, and Crypto Assets | Kyle Samani

24 snips
Apr 26, 2024
Crypto asset valuation expert Kyle Samani joins the hosts to discuss valuing L1 and L2 crypto assets. They explore MEV as the primary value accrual mechanism, challenges in standardizing valuations across blockchain architectures, evolving fee market designs, and the costs and benefits of token airdrops. The conversation also touches on Altcoin investments, user experience in crypto transactions, IBC, Wormhole, EVM standards, the evolution of fee markets, analysis of crypto assets and MEV, and token airdrop strategies.
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INSIGHT

MEV is Key Value Driver

  • The primary way to value L1 and L2 crypto assets is through MEV (Miner Extractable Value), not transaction fees.
  • MEV represents real reward streams to token holders through staking and arbitrage opportunities, making it the key value accrual mechanism.
INSIGHT

Blockchain Fees Should Near Cost

  • Transaction fees on blockchains should approach the actual cost of compute and bandwidth, tending towards zero in the long run.
  • MEV revenue matters more than fees because MEV arises from market dynamics, not from transaction verification costs.
INSIGHT

L1 Tokens Need MEV Value

  • An L1 token needs MEV to be valuable because MEV accrues real rewards to token holders beyond mere fee revenue or monetary premium.
  • The monetary premium narrative is weak since most assets and commerce do not price in native tokens like ETH or SOL.
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