Ah, the $450 billion-dollar question.
Disclaimer: This is not financial advice. Anything stated in this article is for informational purposes only and should not be relied upon as a basis for investment decisions. Triton may maintain positions in any of the assets or projects discussed on this website.
Ethereum and the EVM, the most heavily used smart contract platform and computation engine respectively, have without a doubt already impacted the world in a significant way. It is impossible to understate the impressiveness of the feats of engineering required to both build the network in the first place and to continually upgrade it on the fly, maintaining competitiveness with new-to-the market chains. At the time of writing, there is nearly $170B in total value locked on the chain, supporting nearly $1B in daily perps volume, $25B in weekly trade volume and the activity of 400K daily active users. In a single day, there is over $40B in ETH transacted on the network – amounting to nearly $15 trillion annually. If you include the layer 2 and layer 3 networks, these counts balloon even further.
Undeniably, the network provides an incredibly valuable service and will continue to be incredibly disruptive to the status quo, generating enormous value for users and the economy broadly.
But how much of that value creation is ultimately captured by the native asset of the Ethereum network, Ether (ETH)? What does that mean for ETH as a financial investment today?
The Ethereum community is currently mired in deep debate about whether ETH is an equity-like instrument that provides claims on cash flows, an internet-native commodity, or ‘money’. There is also an increasingly significant disconnect between what appears best for Ethereum (the network and technology) and what financial stakeholders in the network want and/or expect as investors.
Our role as long-term, fundamentally driven investors is to answer these questions based on the network’s current adoption and performance, the competitive dynamics of the industry, and the roadmaps of Ethereum and its competitors. Only then can we understand the value of ETH the native asset – and that answer may or may not be directly equivalent to the value creation of Ethereum the network.
For this week’s post, we conduct a thorough evaluation of ETH to answer the question: is ETH, at $450B, a sound investment today given the alternative investments available in the liquid digital asset space? We apply a rational investor’s lens to understanding the value flows of Ethereum and how they manifest into sustainable value capture by ETH the asset. We also offer a framework through which investors can better navigate the liquid digital asset space and understand the component pieces that determine the fundamental value of tokens.
Please find our analysis here: whatisethereumworth.com, or download the PDF version here.
For those readers unfamiliar with Triton’s fundamental approach to investing in liquid digital assets or the general economics of Ethereum/digital assets, these posts are helpful supplements:
We cover market data, policy impacts and predictions for 2025.
As one of the first liquid crypto hedge funds licensed in ADGM.
The $450 billion-dollar question. What is the value of ETH the native asset.