"People overestimate what will happen in two years and underestimate what will happen in ten years."

Author: Haseeb ＞|＜

Translation: Deep Tide TechFlow

Rebranding the "Defense of Exponential Growth"

In the past, I often told entrepreneurs that the reaction they would receive after launching a project would not be "hate," but rather "indifference." Because by default, no one cares about the new blockchain you are launching.

But now, I must stop saying that. This week, Monad just launched, and I have never seen a newly launched blockchain provoke so much "hate." I have been a professional investor in the crypto space for over 7 years. Before 2023, almost every new chain I saw go live was met with either enthusiasm or indifference.

However, now, as soon as a new chain is born, it is surrounded by a chorus of "hate." The number of critics I have seen for projects like Monad, Tempo, MegaETH, etc.—even before their mainnets went live—is indeed a brand new phenomenon.

I have been trying to analyze: why is this happening now? What does it reflect about the psychological state of this market?

"The cure is worse than the disease"

A heads-up: this may be the most vague article you have read about blockchain valuation. I have no fancy data metrics or charts to impress you. Instead, I will attempt to counter the mainstream thoughts on Crypto Twitter, which I have almost always opposed over the past few years.

In 2024, I feel that I am opposing a form of "financial nihilism." Financial nihilism is the belief that these assets are fundamentally meaningless, that everything is ultimately just "meme culture," and that everything we build is essentially worthless.

Fortunately, that atmosphere of "financial nihilism" no longer exists, and we have finally escaped that predicament.

But the current mainstream mindset can be termed "financial cynicism": well, maybe these things do have some value, perhaps not all of it is "meme culture," but their valuations are severely inflated, and Wall Street will eventually discover this. It’s not that all blockchains are worthless, but their actual value may only be one-fifth or even one-tenth of the current trading price (have you seen these P/E ratios?). So, you better pray that Wall Street doesn’t expose our bluff, because once they do, everything will turn to dust.

Now, many bullish analysts are trying to counter this sentiment with optimistic L1 valuation models, desperately inflating P/E ratios, gross margins, and discounted cash flow (DCF) to try to reverse this pessimistic trend.

At the end of last year, Solana proudly adopted REV (Realized Economic Value) as a metric that could ultimately prove its valuation was reasonable. They proudly announced: we—only we—are no longer bluffing to Wall Street!

However, of course, almost immediately after Solana adopted REV, this metric quickly collapsed (though interestingly, $SOL performed much better than REV itself).

This is not to say that REV (Realized Economic Value) itself is problematic. REV is indeed a very clever metric. But the focus of this article is not to discuss the choice of metrics.

Next came the launch of Hyperliquid. A decentralized exchange (DEX) that has real revenue, a buyback mechanism, and a P/E ratio. Thus, the market's voice arose—look, I told you so! Finally, for the first time, there is a truly profitable token with a reasonable P/E ratio. (Don’t mention BNB; we’re not discussing it.) Hyperliquid will devour everything because clearly, Ethereum and Solana are not really making money, and we can now stop pretending to value them.

Hyperliquid, Pump, Sky—these buyback-centric tokens are all excellent. But the market has always had the ability to invest in exchanges. You can buy Coinbase stock, or BNB, or other similar products at any time. We also hold $HYPE, and I agree it is a fantastic product.

But that is not why people invest in ETH and SOL. L1 blockchains do not have the high profit margins that people buy them for—if they wanted that kind of margin, they could just buy Coinbase stock directly.

So, if I am not criticizing the financial metrics of blockchains, you might think this article is going to blame the "evils" of the token industrial system.

Clearly, everyone has lost money on tokens over the past year, including venture capital firms (VCs). This year, altcoins have performed very poorly. Therefore, another half of the mainstream voices on Crypto Twitter have begun to argue about who should be held responsible for this. Who has become greedy? Is it the VCs? Is it Wintermute? Is it Binance? Is it the liquidity mining farmers? Or is it the founders?

Of course, the answer is the same as it has always been.

Everyone is greedy. Every single person—VCs, Wintermute, liquidity mining farmers, Binance, KOLs—they are all greedy, and so are you. But that doesn’t matter. Because any normally functioning market does not require participants to act against their own interests. If our judgment about the future of the crypto industry is correct, then even if everyone is greedy, investing can still succeed. Trying to explain a market downturn by analyzing "who is greedier" is like holding a meaningless "witch hunt." I can guarantee that no one started becoming greedy in 2025.

So, this is not what I want to write about.

Many people hope I will write an article about why $MON should be worth X or $MEGA should be worth Y. But I have no interest in that, nor will I suggest you buy any specific asset. In fact, if you have no confidence in these projects, then you probably shouldn’t buy them at all.

So, will the new challenger chains (emerging public chains) prevail? Who knows. But if they do have a chance of prevailing, then their pricing will be based on that possibility. If Ethereum has a market cap of $300 billion and Solana has a market cap of $80 billion, then a project with a 1%-5% chance of becoming the next Ethereum or Solana will be priced according to that probability.

Crypto Twitter (CT) is shocked by this, but it is actually no different from the biotech field. A drug with less than a 10% chance of curing Alzheimer’s, even with a 90% chance of failing to pass Phase III clinical trials and ultimately going to zero, will still be given a valuation of billions of dollars by the market. This is the logic of mathematics—and it turns out that the market is very good at doing mathematical calculations. The pricing of binary outcomes is based on probabilities, not on current earnings performance or moral judgments. This is the "shut up and calculate" valuation logic.

I really don’t think this is a topic worth writing about. "A 5% chance of success? Impossible, it’s clearly a 10% chance!" For any individual token, the market, not an article, is the best way to assess that probability.

So, what I really want to write about is: Crypto Twitter seems to no longer believe that public chains themselves are valuable.

I don’t think this is because people don’t believe that new chains can win market share. After all, we just witnessed Solana rise from the ashes and dominate market share in less than two years. That is not easy, but it is clearly possible.

The bigger issue is that people are starting to believe that even if a new chain wins the competition, there is no prize worth competing for. If $ETH is just a "meme," if it can never generate real revenue, then even if you win, it cannot be worth $300 billion. The competition itself is not worth participating in because these valuations are all false, and everything will collapse before you can claim your "prize."

Being optimistic about chain valuations has become outdated. Of course, that doesn’t mean no one is optimistic—clearly, there are always some who are optimistic. After all, every seller has a buyer, and even though the "cool kids" on Crypto Twitter (CT) are keen to mock L1s, there are still people willing to buy SOL at $140 and ETH at $3000.

However, there is now a widespread view that all the smart people have given up on buying smart contract chains. Smart people know that this game is over. If it’s not over now, it will be over soon. Those still buying now are considered "suckers"—like Uber drivers, Tom Lee, or those KOLs who talk about "trillion-dollar markets." Maybe even the U.S. Treasury. But "smart money" will no longer enter the market.

This is complete nonsense. I don’t believe this, and you shouldn’t either.

Therefore, I feel it is necessary to write a "Declaration of Smart People" to explain why general-purpose public chains are valuable. This article is not about Monad or MegaETH, but rather a defense of ETH and SOL. Because if you believe ETH and SOL are valuable, then everything else will naturally follow.

As a VC, defending the valuations of ETH and SOL is usually not my job, but damn it, if no one is willing to step up and do it, then I will write this article.

Feel the Power of "Exponential Growth"

My partner Bo personally experienced the explosive growth of the Chinese internet when he was a venture capitalist (VC). Over the years, I have heard countless comparisons of "crypto is like the internet," to the point of numbness. But every time I hear his stories, it reminds me of how costly it is to get these major trends wrong.

One story he often tells is about the early 2000s when all the early investors in e-commerce (at that time, the circle was still very small) gathered together for coffee. They debated: how big will the e-commerce market actually be?

Will it mainly focus on electronics (maybe only tech geeks will shop online)? Will women use it (perhaps they care too much about the tactile experience)? What about food (maybe fresh food is simply unmanageable)? These questions were crucial for early VCs because they determined what projects to invest in and what prices they were willing to pay.

Of course, the ultimate answer is that all of these people were dead wrong. E-commerce ended up selling everything, and the target users were the entire world. But at that time, no one truly believed this. Even if someone believed it, saying it out loud would seem utterly ridiculous.

You can only wait long enough for "exponential growth" to tell you the truth. Even among those who believed in e-commerce, very few truly thought it would become so massive. And those few who really believed almost all became billionaires by holding on and not selling. As for the other VCs—just as Bo told me, because he was one of them—they sold too early.

In the crypto space, believing in "exponential growth" has become an outdated notion.

But I still believe in the exponential growth of the crypto space. Because I have experienced it firsthand.

This is Amazon's profit and loss statement (P&L) from 1995 to 2019, a full 24 years. The red represents revenue, and the gray represents profit. Do you see that little fluctuation at the end? The gray line starts to rise, which is when Amazon, after 22 years of establishment, finally began to turn a real profit.

It took 22 years for this gray net profit line to first rise above zero. In every year prior, there were column articles, critics, and short sellers claiming that Amazon was a Ponzi scheme that would never make money.

Ethereum has just turned 10 years old. And this is Amazon's stock performance in its first 10 years:

A decade of turbulence. During this time, Amazon was surrounded by skeptics and non-believers. Was e-commerce a charity subsidized by venture capital? Were they just selling low-priced, low-quality goods to consumers chasing bargains? What significance did that have? How could they possibly make real money like Walmart or General Electric (GE)?

If you were discussing Amazon's price-to-earnings (P/E) ratio at that time, you were completely missing the point. The P/E ratio belongs to the realm of linear growth, while e-commerce is not a linear trend. Therefore, those who argued based on P/E ratios over the 22 years were all dead wrong. No matter how much you paid or when you bought in, your bullishness was insufficient.

Because that is the nature of exponential growth. When it comes to truly exponential technologies, no matter how big you think it can get, it will always get bigger.

This is precisely where Silicon Valley understands better than Wall Street. Silicon Valley grows on exponential growth, while Wall Street is accustomed to linear growth. And in recent years, the focus of the crypto industry has gradually shifted from Silicon Valley to Wall Street. This change is evident.

Of course, the growth of the crypto industry does not appear as smooth as e-commerce. It is more volatile, exhibiting characteristics of intermittent explosions. This is because the crypto industry is closely tied to money, deeply influenced by macroeconomic factors, and faces more severe regulatory tug-of-war than e-commerce. The crypto industry strikes at the core of nations—currency—therefore, its impact on governments is much greater and more unsettling than that of e-commerce.

But the trend of exponential growth will not diminish because of this. This may be a rough argument, but if the crypto industry is indeed exponential, then this rough argument is correct.

Zooming out.

Financial assets crave freedom. They desire openness, interconnectivity. Crypto technology transforms financial assets into file formats, making it as simple to send a dollar or a stock as sending a PDF. Crypto technology allows everything to communicate with everything, enabling it to operate around the clock, globally, interconnected, and open.

This model will surely prevail. Openness will always win.

If the internet has taught me one thing, it is this. The vested interests will fight fiercely, the government will loudly oppose, but ultimately, they will compromise in the face of the accessibility, creativity, and sheer efficiency brought by this technology. This is exactly what the internet has done to other industries. And blockchain will devour the entire financial and monetary realm in the same way.

Yes—given enough time—everything.

There is an old saying: "People overestimate what will happen in two years and underestimate what will happen in ten years."

If you believe in exponential growth, if you zoom out your perspective, then everything still seems cheap. What should humble you even more is that every day, those holders are surpassing the sellers and skeptics. The time horizon of big capital is much longer than what short-term traders on Crypto Twitter (CT) would have you believe. Big capital has learned through history not to give up easily on significant technological bets. You know what? That compelling story that initially made you buy $ETH or $SOL? Big capital believes that story too, and has never stopped believing.

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