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Are these valuations really that outrageous compared to startups? Yes they're really early, but the ETH platform is a huge force multiplier in terms of decentra

by highd 9y ago

Are these valuations really that outrageous compared to startups? Yes they're really early, but the ETH platform is a huge force multiplier in terms of decentralized scaling engineering that you don't have to do, not to mention the intrinsic benefits it has. If you think in terms of valuing based on how far a project has gone it seems crazy, but if you think in terms of valuing based on how far away it is, that actually lines up reasonably in my mind. $100M for a decent shot at eating a big chunk of a $10-100B industry in 2-3 years? I've seen crazier things in SV. Obviously a lot of these are scams, but there's some good ones, and I mostly agree with which ones the market has picked.

zherbert 9y ago
This blog post isnt making arguments about established tokens like Ethereum. Rather, it is criticizing the outrageous valuation of some tokens, like Gnosis, that have not even released a product yet but are valued at over $300m.
- highd 9y ago
  Yeah, as am I. GNO, AUG and Golem all have some pretty compelling upside. EDIT: Also remember that these ICOs are not equity, they're generally pre-orders for functionality on the system. So it's sort of like comparing revenue vs profit.
  - Taek 9y ago
    In the case of GNO, we're talking a "pre-order" where less than 4.2% of the product was sold, with the dev team retaining the remaining 95.8% at a current valuation of about $900M. These assets can be sold at any time at market price (bringing the price down and diluting the market, but that's a risk I'm betting most GNO holders don't see.) And when we are talking about pre-selling functionality, we aren't talking about pre-selling a fixed amount of functionality. It's a speculative amount of functionality where you may be able to bet on a prediction market to the tune of $100, or you may be able to bet to the tune of $10,000, and you don't know until you see how successful the platform is. Your expected return curve there is very closely related to the expected return if you held equity, except a lot worse because you don't even have a claim to any non-Gnosis products that the team builds.
TylerE 9y ago
At least when a startup fails the creditors get to auction off the Aeron chairs and Mac Book Pros.
Taek 9y ago
> but the ETH platform is a huge force multiplier in terms of decentralized scaling engineering that you don't have to do Well, we will see about that. To date, eth has been a security nightmare, and most of the experts in the Bitcoin system do not think eth has any chance of achieving decentralized scalability. That's all fairly tangent though. What venture capital investor would grant a $1B valuation to a company with a team of 10 with no product, with a well funded competitor that has better tech (by my appraisal) and a larger general userbase, and itself only a valuation of $140M? Ethereum itself is only worth $8B. Seems like a stretch to me to suggest that Gnosis is worth 1/8th of that, and in fact if you assume that the average speculator is not considering dilution, you end up at a much more reasonable valuation of $50M or so. I mostly disagree with every valuation that the market has currently ascribed to any token with massive inflation or massive dev-ownership.
- highd 9y ago
  > most of the experts in the Bitcoin system do not think eth has any chance of achieving decentralized scalability Most of the experts in the natural gas industry do not think solar power has any chance of achieving scalability, either.

by highd 9y ago

zherbert 9y ago

This blog post isnt making arguments about established tokens like Ethereum. Rather, it is criticizing the outrageous valuation of some tokens, like Gnosis, that have not even released a product yet but are valued at over $300m.

highd 9y ago
Yeah, as am I. GNO, AUG and Golem all have some pretty compelling upside. EDIT: Also remember that these ICOs are not equity, they're generally pre-orders for functionality on the system. So it's sort of like comparing revenue vs profit.
- Taek 9y ago
  In the case of GNO, we're talking a "pre-order" where less than 4.2% of the product was sold, with the dev team retaining the remaining 95.8% at a current valuation of about $900M. These assets can be sold at any time at market price (bringing the price down and diluting the market, but that's a risk I'm betting most GNO holders don't see.) And when we are talking about pre-selling functionality, we aren't talking about pre-selling a fixed amount of functionality. It's a speculative amount of functionality where you may be able to bet on a prediction market to the tune of $100, or you may be able to bet to the tune of $10,000, and you don't know until you see how successful the platform is. Your expected return curve there is very closely related to the expected return if you held equity, except a lot worse because you don't even have a claim to any non-Gnosis products that the team builds.

TylerE 9y ago

At least when a startup fails the creditors get to auction off the Aeron chairs and Mac Book Pros.

Taek 9y ago

> but the ETH platform is a huge force multiplier in terms of decentralized scaling engineering that you don't have to do Well, we will see about that. To date, eth has been a security nightmare, and most of the experts in the Bitcoin system do not think eth has any chance of achieving decentralized scalability. That's all fairly tangent though. What venture capital investor would grant a $1B valuation to a company with a team of 10 with no product, with a well funded competitor that has better tech (by my appraisal) and a larger general userbase, and itself only a valuation of $140M? Ethereum itself is only worth $8B. Seems like a stretch to me to suggest that Gnosis is worth 1/8th of that, and in fact if you assume that the average speculator is not considering dilution, you end up at a much more reasonable valuation of $50M or so. I mostly disagree with every valuation that the market has currently ascribed to any token with massive inflation or massive dev-ownership.

highd 9y ago
> most of the experts in the Bitcoin system do not think eth has any chance of achieving decentralized scalability Most of the experts in the natural gas industry do not think solar power has any chance of achieving scalability, either.