Recently, I came across an interesting comparison discussion on Twitter (for details, please refer to the links at the end).

The origin of the event is roughly as follows:

Blue Fox posted the following viewpoint on Twitter:

"The offshore dollar is at least over $10 trillion. If 50% of it runs on-chain in the future, with Ethereum accounting for about 60% (based on the current approximate ratio), Ethereum will have about $3 trillion running on-chain. This $3 trillion will not just sit quietly on-chain; it will participate in various financial activities such as trading/borrowing/contracts/prediction markets/options/on-chain stocks/on-chain funds… Ethereum will have a very prosperous ecosystem."

I agree with this viewpoint.

Another user raised the following question regarding this viewpoint:

"BlackRock currently manages over $12 trillion in assets, yet BlackRock's $BLK market cap is only $173 billion. How do you explain this? Scholars, please discuss."

The point of this question is:

Blue Fox believes that when the on-chain asset scale supported by Ethereum is quite large ($3 trillion), Ethereum's market cap will also be considerable.

However, this user provided a counterexample—BlackRock's current asset management scale is already quite large (over $10 trillion), yet its market cap is only around $100 billion.

Therefore, this user believes that the logic of deriving a high Ethereum market cap from a large on-chain asset scale does not hold.

Blue Fox's explanation is as follows:

"The asset management company model is actually relatively simple, relying on fee income. The ceiling depends on the global asset market scale, and there is significant room for fee compression (intense competition). Achieving a valuation above $100 billion is already quite good. It is difficult to compare with platforms or infrastructures that have strong narratives."

Upon seeing this question and answer, I recalled that I had written several articles last year discussing Ethereum's valuation and valuation methods. In fact, using that valuation method to explain the above question makes it easy to understand and clearer.

What method to use for explanation?

It is the "future free cash flow" that Buffett, Munger, and Duan Yongping repeatedly mention in their discussions.

What is "cash flow"? I have shared this viewpoint multiple times in my articles. Simply put, it is the cash that remains after a company's profits minus costs, which can be freely allocated.

The stronger and more sustainable a company's cash flow is, the stronger and more solid the company's valuation will be, according to classic value investors' calculations.

In the following description, for simplification, we will use net profit to replace free cash flow to compare the situations of these two research subjects.

As of September 2025, BlackRock's market cap is $172.5 billion, with a price-to-earnings ratio of 28.91, and net profit is approximately $3.243 billion, while BlackRock manages assets worth $10 trillion.

As one of the world's largest companies, managing $10 trillion in assets, even based on the price-to-earnings ratio and market cap, it is only about $6 billion annually.

Why is the profit so thin? Why is it so disproportionate to the asset management scale?

The fundamental reason is related to its revenue model. As Blue Fox explained, it mainly earns asset management fees, and its profit model is simple, with a very low frequency of charging.

Therefore, the net profit/free cash flow it generates each year is quite limited, so its market cap naturally cannot be high, let alone compare with the scale of assets it manages.

The core valuation factor here remains looking at the net profit/free cash flow the company can obtain.

For Ethereum's valuation, I believe its business model is very complex, resembling both a commodity and a platform. Although I have not yet summarized a satisfactory model, at least the free cash flow generated by this platform each year must occupy an important position in its valuation.

From the perspective of the profit/free cash flow potential that the platform can obtain, the gap between BlackRock and Ethereum is too large.

Ethereum is not an asset management platform; it is an ecological trading platform used for processing, clearing, and settling transactions. Its future transaction processing capability may reach hundreds of thousands or even millions of TPS.

What does this mean?

It means it will process hundreds of thousands or even millions of transactions per second.

And in each transaction, as a platform, Ethereum will genuinely collect cash flow (transaction fees, Gas) and use this cash flow to repurchase (burn) stocks (ETH) to reward shareholders (holders).

In other words, Ethereum has the potential to collect cash flow from hundreds of thousands or even millions of transactions every second in the future.

How can BlackRock compare to this potential?

The expansion of asset management scale/settled funds for BlackRock only linearly increases its asset management income (net profit/cash flow); but for Ethereum, it exponentially increases its cash flow income.

Once Ethereum's profit model starts to roll, its market cap is fundamentally incomparable to BlackRock.

Reference links:

https://x.com/BTCBruce1/status/2008375378721862094

https://x.com/lanhubiji/status/2008396142929744116?s=20

https://www.google.com/finance/quote/BLK:NYSE

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