jakiro
Source:Retrospectively Obvious;Compiled by: Bitchain Vision
Everyone in the crypto community is staring at the same headline:
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ETF is online
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Real economy companies are integrating stablecoins
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Regulators are becoming more friendly
Everything we had hoped for has now come true.
But why did the price drop?
Why has Bitcoin given up all its gains while U.S. stocks are up 15%–20% this year?Why is your favorite altcoin still underwater even as “cryptocurrencies are no longer a scam” becomes the mainstream consensus?
Let’s talk about this.
adoption ≠ price increase
There is a deep-rooted assumption in the crypto Twittersphere:
“Once institutions come in, once regulations are clear, once JP Morgan issues tokens… it’s over and we’re going to take off.”
Now, the institutions are here.The headlines also came true.But we remain where we are.
There is only one real core issue in investing:
Are these benefits already reflected in prices in advance?
This is always the hardest thing to judge.But market behavior is sending a disturbing signal:
We got everything we wanted – but failed to push prices higher.
Can markets fail?Of course it’s possible.
Why?Because the pricing of most crypto assets has long been seriously out of touch with reality.
$1.5 trillion…what is it worth?
Zoom out and look at it:
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Bitcoin is in a class of its own – it’s the perfect consensus symbol, like gold.Its market capitalization is approximately $1.9 trillion, compared with gold’s market capitalization of approximately $29 trillion.Less than 10% of gold’s market capitalization.As a hedging tool and potential option value, the logic is clear.
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Ethereum, Ripple, Solana, and all other cryptoassets combined account for about $1.5 trillion in market capitalization, but the narrative foundation behind them is much more fragile.
Today, no one seriously questions the potential of this technology.And very few people still think it’s all a hoax.That phase has passed.
But potential doesn’t answer the real question:
Does an industry with only about 40 million active users really deserve a multi-trillion dollar valuation?
Meanwhile, OpenAI is rumored to be valued at close to $1 trillion when it goes public, yet its user base is roughly 20 times that of the entire crypto ecosystem.
Consider this comparison carefully.
Moments like this force us to face the real issues:
What exactly is the best way to gain exposure to crypto assets from now on?
Looking back at history: the answer is infrastructure.Early Ethereum, early Solana, early decentralized finance (DeFi).
That wave of trades really worked.
But what about now?Most of these assets are priced as if usage and fees will increase 100x in the future.Perfect pricing with no margin of safety.
The market is not stupid, just greedy
This cycle gave us all the headlines we could want…but a few truths also emerged:
1. The market doesn’t care about your narrative – it only cares about the gap between price and fundamentals.
If this gap persists for a long time, the market will eventually become disillusioned with you.Especially when you start disclosing revenue figures.
2. Cryptocurrencies are no longer the hottest trade.Artificial intelligence is.
Money chases momentum.This is how modern markets work.Right now, artificial intelligence is the absolute protagonist.Cryptocurrencies are not.
3. Enterprises follow business logic, not ideology.
Stripe’s launch of Tempo is a warning sign.Perhaps enterprises will not choose to use public chain infrastructure just because they heard on Bankless that Ethereum is the “world computer.”They will go where their own interests are best.
So it doesn’t surprise me that your position didn’t explode even if Larry Fink (CEO of BlackRock) discovered that cryptocurrencies are not a scam.
When assets are priced perfectly, an unintentional remark from Powell or a subtle expression from Jen-Hsun Huang may destroy the entire investment logic.
Simple math: Ethereum, Solana, and why “revenue” ≠ profit
Let’s roughly calculate the situation of mainstream Layer 1 public chains.
First is staking (note: this is not profit):
Solana:
About 419 million SOL are pledged × about 6% yield ≈ 25 million SOL per year
At about $140 per coin → “reward” of about $3.5 billion per year
Ethereum:
About 33.8 million ETH are pledged × about 4% yield ≈ 1.35 million ETH per year
At about $3,100 per coin → “reward” of about $4.2 billion per year
Someone saw the pledge data and said:
“Look, the stakers get the benefits! This is value capture!”
No.Staking rewards are not value capture.
They are token issuance and dilution, and they are security costs, not profits.
True economic value = handling fee paid by the user + tip + maximum extractable value (MEV).This is the closest indicator to “revenue” for a blockchain.
Look at it from this perspective:
Ethereum generated approximately US$2.7 billion in transaction fees in 2024, ranking first among all public chains.
Solana has recently led the way in network revenue, earning hundreds of millions of dollars every quarter.
So, the current general situation is as follows:
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The market value of Ethereum is approximately US$400 billion, and the annual fee + MEV “revenue” is approximately US$1-2 billion.This is equivalent to a price-to-sales (P/S) ratio of 200-400 times based on “casino-style revenue” at the peak of the cycle.
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Solana has a market capitalization of approximately US$75-80 billion and annual revenue of over US$1 billion.Optimistic estimates suggest that the price-to-sales ratio is about 20-60 times (reminder: do not use peak month data to calculate annualization).
These figures are not precise.There is no need to be precise either.We’re not filing an SEC filing, we’re just trying to see if the valuation is so outrageous that it defies common sense.
And that doesn’t even get to the real issue:
The core problem is: this is not recurring revenue
These are not stable, enterprise-level revenue streams.
They are highly cyclical, speculative, recurring financial flows:
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Perpetual contract
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Meme Coin
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Forced liquidation
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MEV peak
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High-risk short-term trading
In a bull market, fees and MEV skyrocket.In a bear market, they disappear without a trace.
This is not software-as-a-service (SaaS) recurring revenue.This is Las Vegas-style casino revenue.
You wouldn’t give a valuation multiple like Shopify’s to a business that only makes money every 3-4 years when the casinos are full.
Different business natures require different valuation multiples.
Return to “fundamentals”
Under any reasonable logical framework:
With a market value of more than 400 billion U.S. dollars and supporting highly cyclical handling fees of 1 to 2 billion U.S. dollars, Ethereum cannot be considered a “value” investment target.
A price-to-sales ratio of 200-400 times, combined with slowing growth and value diversion in the Layer 2 ecosystem.Ethereum is not like a federal government that can collect national taxes; instead, it is like a federal government that can only collect state-level taxes, but let states (Layer 2) take most of the revenue.
We hyped Ethereum as a “world computer”, but its cash flow performance was simply not worthy of the price tag.Ethereum feels a lot like Cisco to me: early lead, but misvalued and its all-time highs may never be reached again.
By comparison, Solana’s relative valuation is less outrageous—not cheap, but not ridiculous.
With a market capitalization of US$75-80 billion, it generates billions of dollars in annualized revenue—an optimistic estimate of a price-to-sales ratio of about 20-40 times.
Still on the high side, still bubbly.But compared to Ethereum, it is considered “relatively cheap”.
“Dear limited partners (LPs), we outperformed Ethereum — but the fund still lost 80%.”
It turns out that we price casino-style flows as recurring software revenue.Thanks for participating.
In order to give everyone a more intuitive understanding of this valuation multiple:
Nvidia, the world’s most popular growth stock, trades at a price-to-earnings (P/E) ratio of just 40-45 times (note: it’s an earnings multiple, not a revenue multiple) — and it has:
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real revenue
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true profit margin
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Global enterprise-level needs
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recurring contract sales
and customers outside of crypto casinos (fun fact: crypto miners were Nvidia’s first real wave of growth)
Let me emphasize again: these revenues from encrypted public chains are cyclical casino revenues, not stable and predictable cash flow.
It stands to reason that the valuation multiples of these public chains should be lower than that of technology companies – not higher.
If fees across the industry fail to shift from speculative short-term trading to real recurring economic value, most assets will face a revaluation.
We’re still in the early days…but not that early
At some point, prices will reconnect with fundamentals.But it’s not that time yet.
Current status:
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There is no fundamental reason to support the ultra-high valuations of most tokens.
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Once token issuance and airdrop mining are stripped away, the value capture capabilities of many networks will no longer exist.
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Most “profits” are tied to speculation in casino-style products.
We built an infrastructure that can move money around the world instantly, around the clock, and at low cost… but the best use case is slot machines.
Greedy in the short term, lazy in the long term.
To quote Netflix co-founder Mark Randolph: “Culture is not what you say it is, it’s what you actually do.”
Don’t talk about decentralization while treating the 10x leveraged “Fartcoin” perpetual contract as the main product.
We can do better.
This is the only way we can move from being an “over-financialized niche casino” to a truly long-term industry.
The end of the beginning
I don’t think this is the end of cryptocurrencies.But I believe that this is the “end of the beginning.”
We have overinvested in infrastructure—more than $100 billion has been invested in public chains, cross-chain bridges, Layer 2, and infrastructure projects—but have seriously underinvested in application deployment, product development, and real user acquisition.
We always brag:
Transactions per second (TPS)
block space
Complex Rollup architecture
But users don’t care at all.What they care about is:
Is it cheaper?
Is it faster?
Is it easier to use?
And whether it can actually solve their problems.
Back to cash flow.
Return to unit economic benefits.
Back to the essence: Who are the users?What problem are we solving?
Where is the real growth potential?
I have been extremely bullish on cryptocurrencies for over a decade.This has never changed.
I still believe:
Stablecoins will become the default payment channel.
Open, neutral infrastructure will support global finance behind the scenes.
Businesses will adopt this technology because it follows economic logic, not ideology.
But I don’t think the biggest winner in the next decade will be today’s Layer 1 or Layer 2 public chains.
Looking back at history, the winners of every technology cycle appear at the user aggregation layer, not the infrastructure layer.
The Internet reduces computing/storage costs.Instead, wealth flows to Amazon, Google, and Apple—companies that use cheap infrastructure to serve billions of users.
Cryptocurrencies will follow a similar logic:
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Blockspace will eventually become a commodity.
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The marginal benefits of infrastructure upgrades are diminishing.
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Users are always willing to pay for convenience.
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User aggregators will capture most of the value.
The biggest opportunity now is to integrate this technology into enterprises that already have scale.Dismantle the financial pipelines of the pre-Internet era and replace them with encrypted infrastructure where they can truly reduce costs and improve efficiency – just as the Internet once quietly upgraded all industries from retail to industry, just because the economic benefits were too good to ignore.
Companies adopt the Internet and software because it conforms to economic logic.Cryptocurrencies are no exception.
We can wait another ten years for this to happen naturally.
Or, let’s take action now.
Update knowledge
So where do we go from here?
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The technology is feasible.
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The potential is huge.
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We are still in the early stages of real-world applications.
It’s time to re-evaluate everything:
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Evaluate network value based on real usage and fee quality, not ideology.
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Not all fees are created equal: distinguish between recurring revenue and recurring financial flows.
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The winners of the last decade will not dominate the next decade.
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Stop using token prices as a scoreboard for technical effectiveness.
We are still in such an early stage that it would still be naive to believe that token prices reflect whether the technology is viable.No one is going to choose AWS over Azure just because Amazon or Microsoft stock is going up that week.
We can wait another ten years for companies to proactively adopt this technology.Or, let’s take action now.
Put the real gross domestic product (GDP) on the chain.
The mission is not yet accomplished.
Reverse thinking (Invert) (Note: “Invert” comes from Charlie Munger’s concept of reverse thinking. The core is to find clearer answers by thinking backwards about problems.)
