Awesome blog! Probably the piece I’ve read since getting into crypto that’s most made me rethink both the space and my investment thesis. Very interesting to get a more rigorous and detailed analysis of how value flows through the functionality stack:
Just one question: While I follow you when you say that value flow as a result of turnover is distinct from value flow as a result of utilisation, I don’t see how “ Utilization value and turnover value are largely independent and uncorrelated”
It seems to me that, at the very least, value flow as a result of turnover will be correlated to value flow as a result of utilisation. Using your Augur example, creating a prediction market on Augur reportedly uses 3M gas and creating and filling orders on existing markets both cost 500k gas.
Given this, I don’t see how an increase in value flow as a result of turnover to Augur (which also necessarily implies increased prediction market creation and created/filled orders) could occur without also causing an increase in value flow as a result of utilisation to Ethereum (more gas fees from increased usage). I’m sure I’m missing something and would really appreciate your thoughts on this!
