Instead of watching in disbelief boomer institutions buying #BTC, here’s a narrative that the Ethereum crowd should consider rallying around and pushing for: “ETH - a call option on a parallel future financial system.”
These boomers all went through the rise and fall and re-rise of tech stonks. They wouldn’t want to miss even just a 10% chance of something big. Especially finance.
Bitcoin used to be called a “call option”, but it no longer is. It’s mature enough to potentially rival gold. But a “call option” is perfect for Ethereum currently. It’s young, vibrant, and risky. Calling it a “call option” shows humility, that you understand the risks.
Anyway, do consider this if you want numba to go up. Ignore all of this if you are in it for the tech.
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Observation: there's one asset that's shaping to be the Schelling point of DeFi.
- Fastest horse in arguably the important sector of finance -> being integrated everywhere
- Early adopters made rich -> strong community
- Little early investor sell pressure -> possible sell-side liquidity crisis
- Healthy amount of hype -> reflexively attracts capital/talent
Not financial advice. Not schilling. Just an observation.
I continue to see more and more reasons why ETH could outperform BTC in the next bull run. Perhaps not on a risk-adjusted return basis, but likely on an absolute return basis.
However:
From a portfolio PoV, it may not make sense to own ETH at all. In my mind ETH is 50% BTC and 50% DeFi. So if you already own BTC, it makes sense to add DeFi. And if you already own DeFi, it makes sense to add BTC. But in either case adding ETH may not add uncorrelated returns.
When you construct a portfolio, not only do you need to think about the EV of each bet, but also whether a new addition to the portfolio is independent from existing bets. In this case, ETH may not be as independent from either BTC and DeFi.
I don’t know, I feel like this “double-digit shitcoin” is on it’s way to 4 digits.
Anecdotally, I’m just seeing more and more smart people from both TradFi *and* tech who are total noobs but fascinated by Ethereum and this new parallel financial system called DeFi.
Many of them got into DeFi because of Bitcoin. Many others got into Ethereum/DeFi because they don’t understand Bitcoin. Pretty interesting dichotomy.
(I don't have a PhD barely finished my undergrad so that's a typo there.)
OK I know why it says "PhD" cuz there's a fake LinkedIn profile that says I have an applied math PhD from Buffalo. Bro, if I were to do a math PhD it'd be in pure math.
A non-exhaustive list of DeFi products I'm excited about for the next couple years:
1) Synthetic traditional assets: provide access to high quality assets. Main challenge: regulatory.
2) Decentralized derivatives: on-chain perpetual swaps, futures, options, structured products, etc. Main challenge: will they be able reel in institutional liquidity?
3) Order book-based exchanges: with L2s and ETH competitors coming online, order book-based exchanges can finally scale. Main challenge: same as above, will institutional liquidity come?