Fidelity representatives Chris Kuiper and Jack Neureuter discuss their Ethereum Investment Thesis report. They explore topics such as institutions investing in Ether, comparing assets, the nature of money, and Ethereum's potential as a store of value. The podcast also highlights Fidelity's expertise, the impact of reputable sources on institutions, and Fidelity Digital Assets' perspective on crypto.
Ether has the potential to be used as a medium of exchange within the Ethereum ecosystem, serving as an aspiring form of money.
Ethereum's transition to proof of stake enables investors to stake Ether and earn a yield or cash flow, making it a productive asset.
Ether's dual nature as an aspiring form of money and a yield-bearing asset offers versatility and options for investors in the Ethereum ecosystem.
Deep dives
Ether's Potential as Money
Ether is seen as an aspiring form of money, akin to gold or silver. It possesses characteristics of good money, such as divisibility, durability, and verifiability. While it may not have the first mover advantage and network effects of Bitcoin, Ether has the potential to store value and be used as a medium of exchange within the Ethereum ecosystem.
Ether as a Yield-Bearing Asset
With the successful transition to proof of stake, Ethereum now offers the opportunity to stake Ether and earn a yield or cash flow. This makes Ether a productive asset, like real estate or stocks, with the potential for discounted cash flows. The ability to earn yield through staking provides added value and attractiveness to investors.
Challenges of Ether as Money
While Ether has the attributes of money, it faces challenges in terms of widespread adoption and establishing a strong monetary narrative. The evolving nature of Ethereum and its protocol changes have raised doubts about its ability to achieve broad acceptance as a form of money. Additionally, Ether lacks the first mover advantage and network effects enjoyed by Bitcoin.
The Dual Nature of Ether
Ether embodies a dual nature, serving as an aspiring form of money and a productive asset. Its potential as money is embodied by its store of value properties, while its role as a yield-bearing asset offers the opportunity for investors to earn a return through staking. This dual nature adds versatility and options for investors looking to participate in the Ethereum ecosystem.
Ethereum as a Yield-Bearing Asset
Ethereum has differentiated itself from commodities like gold by being a yield-bearing asset. This allows Ethereum to appeal more to traditional finance managers who rely on discounted cash flow models to determine asset value. The ability to project future cash flows and apply a discount rate enables a more comprehensive analysis of Ethereum's value. This is significant in bridging the gap between traditional financial analysis and the crypto space.
Cash Flow Model for Ethereum
Ethereum's cash flow model is based on its network usage and the fees generated from block sales and transaction orderings. The model considers factors such as burned automated buybacks, token stake rewards, and issuance dynamics. While the model's outputs are subject to assumptions and uncertainties, it demonstrates the existence of cash flows in the crypto space. By quantifying Ethereum's projected future cash flows, investors can evaluate and analyze its value based on different growth scenarios and risk factors.
Joining us today from Fidelity are Chris Kuiper and Jack Neureuter who recently released their Ethereum Investment Thesis report.
On this episode we're asking are the institutions serious about Ether? Has Ether passed through the gauntlet…like BTC? And what does it look like for institutions to actually begin investing in Ether the asset.
Fidelity manages $4.5 trillion dollars, that's many multiples higher than the entire crypto market cap. This is worth paying attention to. ----- Check your wallet with our brand new tool: Claimables 🎁 https://bankless.cc/GetClaimables
0:00 Intro 7:07 Intro to Chris and Jack 8:50 About Fidelity Assets 12:00 Analyzing Crypto Risk as an Institution 16:42 What do Institutions Think of Ether? 19:17 Comparing Other Assets 23:5 5How Others Can Join Ether and Bitcoin 25:58 Ether and Ethereum 29:44 Is Ether a Money? 40:14 What is Money? 44:13 What Else Competes for Money? 48:38 Thesis Two 51:19 Ether Cash Flow 55:51 The Value of Metrics 1:00:41 Modeling Future Cash Flows 1:08:11 How Has The Report Been Recieved? 1:10:21 Whats Next For Fidelity? ----- RESOURCES