# I. The Key Value of Munger and Buffett's Long-Term Thinking Model for Web3

As the blockchain industry enters a high-speed cycle from 2020 to 2026, its core contradiction remains unchanged: a strong cycle of cutting-edge technology and early-stage speculation; true long-term value creation is still scarce and difficult to quantify, or in other words, the understanding of the concept of value varies. This is highly similar to the early stages of tech stocks in the last century and stands in direct contrast to the consistent investment framework of Munger and Buffett over the decades. Although Buffett and Munger have publicly opposed BTC, or it is a secret that cannot be said, it seems that on one hand, it stems from a long-standing habit of the Old Money model, and on the other hand, they oppose the "high premium expectations under extreme uncertainty" and the "valuation logic unsupported by cash flow." This point has great reference significance for the long-term healthy development of the blockchain industry in the future, especially for project ecosystems.

Munger and Buffett repeatedly emphasize:

The value of a company comes from the discounted free cash flow it can continuously generate in the future, rather than temporary price fluctuations caused by market sentiment, storytelling, or consensus. Although the valuation logic and risk style of the tech industry are completely different from the rhythm of traditional sales fields, the essence remains the same. When this long-term framework is mapped to Web3, three very critical judgment criteria emerge:

1. Does the public chain/application have long-term real demand?

Many new projects around 2026 have fallen into a misunderstanding, allocating a lot of budget to marketing for short-term stimulation and empty tasks. Coupled with exchanges using platforms like Twitter as one of the listing standards and a vicious cycle brought by a bunch of meme coins, some public chain projects have adopted market operation strategies that do not align with the long-term development of the platform for short-term TVL. Many projects seem prosperous before launch, but after three months of going live, they are silent, with almost no real human transactions except for bot activity. For long-term value, it should not be about seeking short-term incentive-driven TVL, nor the false prosperity brought by miner rewards, but rather the core functionality that users are willing to use "without subsidies."

For example:

• Ethereum's Gas consumption in normal use is a direct output of economic activity.
• Some Rollup's revenue gradually shifts to real user transactions rather than airdrop hunters.
• Some AI × Web3 projects have quantifiable income or clear potential as computing power demand grows rapidly.
• The potential replication of direct real economic models brought by the metaverse.
• Revenue from paid avenues like social software, etc.

These indicators are closer to the "fundamental output" of value investing. They can also better promote the development motivation and long-term growth logic of foundational blockchain projects.

2. Does the project have a compounding business model or long-term growth network effects?

Many Web3 projects shine during bull markets but suffer greatly during bear markets; projects that can traverse bull and bear cycles often possess "compounding effects" and long-term development potential.

Typical characteristics include:

• The larger the ecosystem, the lower the unit cost (economies of scale).
• The more concentrated the data, assets, and liquidity, the harder it is for competitors to shake (network effects).
• The higher the user migration costs (moat).

This is consistent with Munger's emphasis on "seeking outstanding companies, not cheap companies": what you need is strong compounding, not simply low valuations. Good companies may experience a period of being undervalued due to market policies and exchange strategies misaligning with long-term value, but the premise is that it is a good project.

3. Can the token system carry value rather than dilute it?

This involves the essential question of Tokenomics:

• Does the token have a value closed loop such as "revenue distribution," "buyback," and "governance voting"?
• Is the token supply curve reasonable, and can it avoid long-term dilution?
• Is the token superficially decentralized but actually very concentrated?
• Does it have quantifiable future cash flow?

Buffett once said, "Bitcoin does not produce value," just as he feels gold has no value. However, the definition of value varies for everyone, and the same asset can have completely different values under different time periods and external environments. The storage value of gold is also a form of value, perhaps it does not fit the cash flow growth value targets in the concept of value investing. With the development of the BTC public chain, other digital currencies are also included. If certain chains or protocols can allow tokens to obtain stable income distribution and rights distribution in the future, their valuation system will significantly approach that of traditional enterprises or even generate new valuation models.

Thus, it can be seen that the logic of value investing does not exclude Web3; what it excludes is hollow Tokenomics.

# II. The Huge Reference Value of Munger's "Contrarian Thinking" for Web3

Participants in the Web3 industry often indulge in the piling up of technical terms—zero-knowledge proofs, account abstraction, sharding technology—while often neglecting the underlying economic laws and the essence of human nature. Munger's thinking model emphasizes interdisciplinary integration, advocating for examining systems from multiple perspectives such as psychology, physiology, mathematics, engineering, biology, and physics (Lollapalooza Effect). This lack of a multidimensional perspective is the fundamental reason for the death spiral of Terra (LUNA), the collapse of the FTX empire, and the hacking of countless DeFi protocols. One of Munger's most important and valuable thought models is: avoid areas you do not understand and do not bet outside your circle of competence. Most of the losses in Web3, aside from the irresistible factor of the overall market trend being bearish, actually stem from:

1. Information asymmetry, being deliberately led by information advantages.
2. Overconfidence, thinking one is a genius after making a few lucky gains.
3. FOMO-driven emotions.
4. Not understanding mechanisms, only looking at short-term charts and news.
5. Lack of awareness of protocol risks, governance risks, and token inflation risks.

Munger's circle of competence framework can be broken down into three long-term judgment indicators for Web3:

1. Do you truly understand how the protocol creates value?

• Architecture logic
• Technical route
• User needs
• Cost structure
• Competitor models
• Token incentive and fee models

If you cannot understand even one aspect, it is equivalent to betting outside your circle of competence.

2. Have you assessed the most fatal systemic risks?

For example, the following dimensions:

• Changes in Layer 1 unlocking mechanisms, significant changes in the core executive team.
• CEX assets are opaque, with risks of misappropriating user assets (like the FTX incident).
• Is there a mechanism for a death spiral (like the UST and LUNA pegging ratio algorithm of LUNA's collapse)?
• DAO governance being hijacked by a few large holders.
• The forced unlocking period of staked assets (if the protocol collapses, will the unlocked asset returns retain their value?).
• Token incentive decline leading to ecosystem collapse (is the token value merely a game of stimulating incentives?).
• Long-term infeasibility of the technical route (does the team's technical foundation and vision have sustainability?).

Munger emphasizes that "avoiding stupid mistakes is more important than doing smart things." Our wisdom is that those who prepare will succeed, while those who do not will fail. Knowing yourself and your opponent ensures victory in every battle. When you can accept the worst-case scenario and do your utmost to avoid those situations, the probability of relative success will be higher. This kind of thinking model is even more valuable in the Web3 market, where the alpha is greater, bubbles are easier to form, and fluctuations are more exaggerated.

3. Can it traverse bull and bear cycles?

Munger's investment principles clearly state: excellent assets will get better over the long term, while poor assets will get worse.

The blockchain industry accelerates the validation of this with each cycle:

• Chains with increasingly strong technical foundations have greater long-term growth potential, and the actual effects are the same.
• Chains with hollow narratives and no strong resources or backgrounds have a very high probability of going to zero in bear markets.
• Applications with real user demand will gradually move towards stable revenue and smooth usage frequency and experience.
• Meme strategies that drink poison to quench thirst will only worsen the mainstream market, further draining liquidity.
• The false prosperity driven by incentives will be washed away after the listing or FOMO cycle ends, gradually becoming neglected.

Long-termism, in fact, provides the relatively fairest "screening mechanism" after traversing several severe bubbles and bull-bear cycles. It allows investors to more easily obtain high-quality targets and management teams that have been selected by the market.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。