Thread by @cburniske

1/ Published an expansion of the 2017 #cryptoasset valuations piece, bifurcating into cryptocapital & cryptocommodities, two groups with fundamentally different models of value capture: placeholder.vc/blog/2019/4/26…

2/ The primary point of bifurcation boils down to what's a "productive asset" (cryptocapital) vs a "non-productive asset" (cryptocommodity).

The equation of exchange (MV = PQ) only applies to the non-productive subset of cryptoassets.

3/ Any cryptonetwork that requires ownership of the native cryptoasset to gain access to a recurring value stream generated by the network,​ t​hereby creates a capital asset as opposed to a commodity.

4/ Translating this to cryptoland, any asset that is staked, bonded, or otherwise committed in order to get a claim on value flows can be considered cryptocapital.

5/ Cryptocapital will take inspiration from its capital asset peers, and as a productive​ asset its value will be calculated as the net present value (NPV) of annual value flows to supply-siders.

6/ Meanwhile, the equation of exchange (MV = PQ) remains our best bet at pricing ​non-productive​ cryptocommodities, where PQ = annual transaction volumes using the native asset.

7/ Note that “annual value flows to supply-siders” and “transaction volumes” are separate metrics, and serve as the respective linchpin metrics for cryptocapital and cryptocommodities.

8/ Not only is it important to understand these differences as an investor, but as a builder the means to value capture (or lack thereof) should influence what you're designing, and how you choose to govern it.

9/ That's the cliff notes, I'll leave the nuances for the paper. Thanks again to @jmonegro @BradUSV @alexhevans @mlphresearch, all of their minds are in the work, and also to @HASHCIB for help in the crafting.