Thread by @HighCoinviction

Have been getting some DMs lately on when I plan to sell my $SOL position so thought I'd do a quick thread so everyone can benefit.

TLDR: I think there is still at least 4x to go from here, which is meaningful.

👇 to learn why

At the highest level, valuation of an asset comes down to two things:

1) Fundamentals, usually addressed via some "Core" KPI such as TVL, $ Txs settled etc...

2) "Willingness To Pay" factor, which is more art than science and is influenced by comps, market cycle & other things

The way you make the most money as a fundamental investor is by getting a multiple expansion on the markets WTP factor.

However, this is much more art than science and is often what determines who is "talented".

In L1 like assets i.e. $SOL, $LUNA, $ETH, $DOT, $RUNE the WTP factor can be extremely high given:

1) Chance of becoming the internet reserve currency and accrues a monetary premium as a result

2) They can potentially have large MOATS at scale and accrue 50%+ market share LT

Just look at price action for some the minute applications started being built on it:

$SOL = > 70x from bottom
$LUNA = > 70x from bottom
$RUNE = > 60x from bottom

With that in mind, its important to let the winners ride when investing in a L1 asset.

That being said let’s take a closer look at the fundamentals of Solana right now.

While TVL isn’t a perfect measurement of adoption, it is a good proxy because it does show how much value people are entrusting to smart contracts.

Solana recently printed a new ATH in terms of TVL locked.

The ecosystem has had a number of key DeFi and NFT launches in the past week that have driven new attention and capital to the ecosystem.

Other base layers that have done something similar include $ETH, $LUNA, $FTM.

However, not all L1's have been seeing explosive growth lately.

BSC and Avalanche for example have been realizing declining TVL's and this further solidifies that Solana is gaining traction & mindshare.

On WTP factor, here is where $SOL shakes out on a Mkt Cap / TVL basis against other mid-sized L1 blockchains:

AVAX: 21x
SOL: 10x
FTM: 5x
LUNA: 2.5x

$SOL trades at premium vs group median of 7.5x ; it deserves to given it has a chance of being the closest competitor to $ETH.

https://twitter.com/HighCoinviction/status/1427067081913159687

In fact, I think SOL could easily get a 15x to 20x TVL multiple on the basis that TVL will continue to accelerate on strong fundamentals & strong hype evidently continues to build as seen with images below.

AVAX was also able to get to 20x TVL multiple despite TVL declining, which makes the case that $SOL getting there even stronger.

On a base case scenario where I believe TVL could get to 4bn and you apply a 15x to 20x TVL multiple, $SOL could get to a 60bn to 80bn circulating mkt cap.

That would be 4x from here.

Thinking big picture is how you get rich in investing.

Credit to @RyanWatkins_ & @MessariCrypto for insights & charts.

https://twitter.com/RyanWatkins_/status/1427411329975996417