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Ethereum: A Store of Value with Cash Flow [pdf]

ethereumcashflow.com

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Re: Ethereum: A Store of Value with Cash Flow [pdf]

#131

Post by delaaxe »

lottin wrote: post #10

The fact that something is scarce doesn't make it a store of value. Scarce simply means is in short supply, but prices aren't determined by supply alone, they are determined by supply and demand. Moreover, if an asset is in fixed supply, then its price is determined entirely by the demand. This means such an asset will only be a store of value if the demand for the asset remains strong over a long period of time, whi…

The drawings I made as a kid are very scarce, but completely worthless.

Demand is what creates value, not scarcity, although scarcity has an amplifying effect

Re: Ethereum: A Store of Value with Cash Flow [pdf]

#132

Post by koheripbal »

delaaxe wrote: post #131
lottin wrote: post #10

The fact that something is scarce doesn't make it a store of value. Scarce simply means is in short supply, but prices aren't determined by supply alone, they are determined by supply and demand. Moreover, if an asset is in fixed supply, then its price is determined entirely by the demand. This means such an asset will only be a store of value if the demand for the asset remains strong over a long period of time, whi…

The drawings I made as a kid are very scarce, but completely worthless. Demand is what creates value, not scarcity, although scarcity has an amplifying effect

Scarcity is also not something that you want from a currency, fundamentally. A currency needs to be abundant when needed, and scarce when oversupplied. That's the point of controlling the money supply based on economic growth rates, and the entire reason we have a Fed.

I believe strongly that cryptocurrencies have a strong future, but what is really needed is a crypto that automatically manages its money supply.

In the same way a car engine uses an oil pump to automatically ensure engine oil pressure is consistent when the car is revving vs when it is idle.

I also think there are better ways to incentivize mining rather than fixed crypto rewards. A better way would be a multi-year bond instrument that would pay coin dividends well into the future so that miners are vested in the future success of the coin, and not just the immediate pump & dump.

Re: Ethereum: A Store of Value with Cash Flow [pdf]

#133

Post by lottin »

ArtTimeInvestor wrote: post #125
lottin wrote: post #118

Earlier quoted context omitted.

So, the borrower starts with X BTC. They post X BTC as collateral and borrow X-y BTC (where y > 0). Once the loan is paid off, they get the collateral back. This means they end up with X BTC minus the interest paid on X-y. Why would anyone do that?

I am not sure if lending makes sense if the collateral is the same asset that is borrowed. A more typical example I can envision: Someone owns land in Decentraland. The land is an NFT on the Ethereum blockchain. To make profits from the land they need to put a hotel on top of it. But they don't have the means to buy/build the hotel. So they lend Decentracoins (some other asset on the Ethereum blockchain) and provide…

> I am not sure if lending makes sense if the collateral is the same asset that is borrowed.

It doesn't. And if the collateral is a different asset, there is no certainty that the value of the collateral exceeds the value of the principal. So there's a risk involved and that explains the premium over the risk-free rate. It's got nothing to do with the fact that the loan is denominated in some cryptocurrency.

Re: Ethereum: A Store of Value with Cash Flow [pdf]

#134

Post by chii »

koheripbal wrote: post #132
delaaxe wrote: post #131

Earlier quoted context omitted.

The drawings I made as a kid are very scarce, but completely worthless. Demand is what creates value, not scarcity, although scarcity has an amplifying effect

Scarcity is also not something that you want from a currency, fundamentally. A currency needs to be abundant when needed, and scarce when oversupplied. That's the point of controlling the money supply based on economic growth rates, and the entire reason we have a Fed. I believe strongly that cryptocurrencies have a strong future, but what is really needed is a crypto that automatically manages its money supply. In t…

> automatically manages its money supply.

that's an interesting question and premis - automatic monetary policy. I wonder if good monetary policy could be encoded as a set of rules that can be followed by a machine.

Re: Ethereum: A Store of Value with Cash Flow [pdf]

#135

Post by nathias »

asjdflakjsdf wrote: post #79
nathias wrote: post #74

Earlier quoted context omitted.

How do you define a pyramid scheme? Thing go up in value?

I'd basically see it as an investment opportunity that greatly favours early adopters.

I hope you then also count stocks, land ownership etc. as such.

Re: Ethereum: A Store of Value with Cash Flow [pdf]

#136

Post by zertrin »

ddeyar wrote: post #58

A planned upgrade of 6 years? How would that be in the future? How long does it take to fix a minor issue? Tezos for example is able to evolve every 3-4 months without forking and is PoS since 2017. Also they're doing a better job on security. https://tezos.com/

Not doubting any of your statements, but why have I never heard of it before? If it is good why hasn't it displaced ethereum and become more mainstream? Are there any cons that prevent it to become more prominent?

(sincere question from me, I am curious to know more)

Re: Ethereum: A Store of Value with Cash Flow [pdf]

#137

Post by ArtTimeInvestor »

lottin wrote: post #133
ArtTimeInvestor wrote: post #125

Earlier quoted context omitted.

I am not sure if lending makes sense if the collateral is the same asset that is borrowed. A more typical example I can envision: Someone owns land in Decentraland. The land is an NFT on the Ethereum blockchain. To make profits from the land they need to put a hotel on top of it. But they don't have the means to buy/build the hotel. So they lend Decentracoins (some other asset on the Ethereum blockchain) and provide…

> I am not sure if lending makes sense if the collateral is the same asset that is borrowed. It doesn't. And if the collateral is a different asset, there is no certainty that the value of the collateral exceeds the value of the principal. So there's a risk involved and that explains the premium over the risk-free rate. It's got nothing to do with the fact that the loan is denominated in some cryptocurrency.

> It doesn't

Proof needed. I can in fact think of counter examples:

Say there is a DAO that gives more voting power if you own more ETH. In that situation, it might make sense to borrow 900 in ETH with 1000 ETH collateral. Then you make your vote on the DAO with a power of 1900. And pay back 910 in ETH to the lender. The vote on the DAO might trigger an action that is worth more than the 10 ETH you paid in interest. For example if you run a company and the vote on the DAO was to buy a service from your company.

Re: Ethereum: A Store of Value with Cash Flow [pdf]

#138

Post by jakupovic »

zoshi wrote: post #91
tim333 wrote: post #81

Earlier quoted context omitted.

It could be a case of the perfect is the enemy of the good though. I mean Ethereum isn't perfect but not much else is either.

If I’m going to stick my savings in a cryptocurrency, I want the network to be stable for the foreseeable future (and be private, but that’s another story).

You can have your own network/blockchain but none would pay for it. Hence the problem.

Re: Ethereum: A Store of Value with Cash Flow [pdf]

#139

Post by lottin »

ArtTimeInvestor wrote: post #129
lottin wrote: post #96

Earlier quoted context omitted.

And you'll find these failed governments bonds were paying a considerable risk premium, i.e. a spread over the risk-free rate.

Not necessarily. Since the government can print the money they lend, they can dictate the risk premium. They can keep it as low as they want. Italy and some other European countries are basically broke. But they pay less interest than the USA.

The risk premium is the interest rate spread that investors demand. Not clear how the government can "dictate it" by printing money.

Re: Ethereum: A Store of Value with Cash Flow [pdf]

#140

Post by dmihal »

dash2 wrote: post #65
sherlock_h wrote: post #7

What mostly excites me about Ethereum ist the very vibrant ecosystem of developers and builders around it. You can think of NFTs and DeFi whatever you want, the sheer amount of new applications and innovative ideas on the ethereum blockchain has been mind-boggling. My personal favorite is Sorare, which combines NFT collectibles with fantasy soccer. And sure, right now everything suffers from high gas prices but it lo…

A question I've asked before: are there any applications which don't involve speculation?

Do you consider earning interest to be speculation?

I can put stablecoins (crypto dollars) in a lending protocol like Aave and earn ~10% APY. Compare that to my savings account, which pays out 0.25% APY.

Or how about the stablecoins themselves? MakerDAO creates the Dai stablecoin, backed by crypto-native assets like ETH & BTC.

I have a number of friends in Argentina who are surviving hyper-inflation by keeping their wealth in stablecoins.

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