Bell Curve
L1 & L2 Token Value Capture | Jon Charbonneau
Oct 9, 2024
Explore the dynamic world of L1 and L2 tokens with insights into value capture and profitability. Discover how taxation impacts staking and the contrasting models of proof of stake and proof of work. Delve into the complexities of measuring network sustainability, especially between Ethereum and Solana. Learn about the importance of metrics like Total Economic Value and the implications of issuance for token holders. Finally, ponder whether any cryptocurrency can surpass Bitcoin's dominance in the future.
02:09:36
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Quick takeaways
- Issuance in cryptocurrencies should be viewed akin to dividends in traditional finance, as it does not fundamentally affect network profitability.
- Total Economic Value (TEV) and Real Economic Value (REV) metrics provide a fresh perspective on profitability beyond traditional financial models.
Deep dives
Impact of Issuance and Taxation on Valuation
Issuance in cryptocurrency is likened to dividend payments in traditional finance, where it's considered a non-fundamental cost. The podcast explores the misconception that staking rewards, treated as taxable income, decrease a network's profitability. Rather, the comparison emphasizes that just like dividend taxation does not affect a company's earnings, issuance should not be seen as a cost to the network. This perspective challenges conventional wisdom by asserting that the fundamental value of cryptocurrencies remains intact despite issuance.
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