Ethereum - ETH

Why $ETH is going to $3T | Ryan Allis

CORRECTION: It’s actually ETH to $4 Trillion 👀

Ryan Allis is the managing partner at Heart Rithm, and a serial entrepreneur with 20 years in technology, marketing, and business. Ryan writes about Ethereum, Bitcoin, Polkadot, DeFi, Blockchain, Web3, and the future of money on his substack – Coinstack.

Today, we’re evaluating ETH according to Ryan’s recent DCF (discounted cash flows) model, and getting to the bottom of why ETH could be fairly valued at $10k with a market cap of $3 Trillion.


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Topics Covered:

0:00 Intro
6:00 Ryan Allis, ETH, Cash Flows
12:29 Making a DCF for ETH
16:34 Costs & Security
21:16 Generating Insane Revenue
31:42 The Outputs are Sexy
40:55 Monetary Premium
47:00 Buybacks & Distribution
52:14 Markets vs Education
57:02 Alt Layer 1’s & L2
1:03:25 Memes vs Fundamentals
1:08:19 Closing & Disclaimers


Ryan on Twitter:

Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research.

Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here:


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  1. awesome episode! thanks guys! these projections going out decades… and all these prices denominated in “dollars”… is inflation taken into account? what if we denominated in BTC (boo “dollars”)?

  2. I don’t agree with his model. It takes too much into assumption. Things change and other L1s & L2s are taking Dapp share away from ETH. Even exchanges can exchange in native L1/L2 tokens instead of erc20.

    I agree Eth will be highest valued and more of a settlement layer. Other chains are suitable for minute txs.

    L1/L2 liquidity is the game of 2022.

  3. Things are getting worse, it’s so bad that having a job doesn’t mean financial security on

  4. wouldnt the cost on tx fee change dramatically with eth 2.0? hence that would lower the eth revenue by a lot?

  5. Anyone ever notice that when people are bull talking that David usually bops his head repeatedly?
    It is like he is telling himself “Alright alright alright” in his head.

  6. Warren Buffet’s Berkshire Hathaway is worth over 8K per share now when considering stock splits… I’ve been saying for over a year that WB will enter crypto via Ethereum because of the type of models that we are finding in this episode.

  7. I did similar napkin math on Bitcoin… about $500k in daily fees but $35m in daily issuance (@38k/btc). It means btc needs millions of new money daily just to maintain itself i.e. transactions are subsidized a ton. Eventually, new participants will thin out and cash flow fundamentals will be the dominant factor in price.

  8. 12% discount rate sounds extremely high, me personally I use 5.85%. That’s the last 40 year average of the real 30 year treasury plus the USA capital depreciation rate.

  9. It’s complicated to explain but a late short would not work until the price went down at least 30 %

  10. All three of you guys did awesome job. Best talk I’ve seen on Eth. Keep it up I wish you all and Eth the best of success. 🥰

  11. I like and respect these guys alot. But I would like if they were more open about how wealthy they’ve become by investing in ETH and how that could have an impact on their viewpoints. Just as a matter of psychology. It’s possible they have addressed this before. I just don’t like when other crpyto millionaires say it’s not about becoming rich but we all know that’s not true. I think the massive returns are a big reason we are drawn to this industry and remain bullish.

  12. This was great. Thanks guys. Would be great to see a DCF episode every quarter with Ryan

  13. Also would be amazing to build DCF for Terra, and AVAX as well as for L2s like MATIC. The only issue is Ethereum fees are bomb right now, what if the fees go low but adoption go high, more platform usage and number of transactions, so basically fees reduce by 10 times, but no of transactions increase by 100 times which is very much possible, then we are seeing some different level of returns that Ethereum can provide

  14. Brilliant – thank you. Insightful intelligent and finally a common sense metric application of financial value benchmarked to current financial models of commodity’s and assets. .

  15. It’s kinda funny that the audio cut out in the beggining of the markets vs education section. He was about to give the reasons why the price isn’t where it should be, and then poof audio gone.. lol

  16. What is revenue here? Is it the transaction fees paid by users to miners? Who’s making the 100% net profit here? Sorry, this isn’t clear to me – if someone could explain who’s making the 100% net profit, it’d be helpful.

  17. Why isn’t the aggregate cost of all staking validators (depreciation of equip/electricity/maintenance labor/cost of locked capital in the form of ether) taken into account?
    The cost of capital as locked ether is very real, and it will become the biggest cost factor once the switch to PoS is completed.

  18. Excellent episode. I think Ryan has a great starting point for building a model. However, I question some of the assumptions. 12% discount rate seems exceedingly low. I would value more like a high-growth start-up and assume discount rates ranging from 12% at the lowest, and possibly as high as 40%. I would also tweak the constant January 2022 revenue assumption, since monthly revenue can be volatile.

  19. Hey sound dropped out a few times. Most important to me is response at 53:24. Can someone post the response in a nutshell for why market isn’t reflecting true value other than not having a DCF yet?

  20. Hey guys just recently dove into the crypto rabbit hole within the last few weeks. And I have not missed an episode. I’m obviously still trying to wrap my head around everything but after listening to this it seems like a good time to get into it. Any advice is appreciated. Thanks guys!!

  21. This season has been really great 💰💰, I’ve been making maximum returns on my crypto investments all thanks to my expert Katie Stein.

  22. Sorry, but the price per coin forcast in the description doesn’t really make sense given the current coin supply (118 million), the current price per coin, and the upcoming 90% issuance reduction. Assuming an almost negligible supply addition (because of the 90% issuance reduction) At about a 1 Trillion Market Cap, and a 118 million Ethereum coin supply, the price per coin would be about $8,500 per coin. Therefore, a 3 Trillion Market Cap would put Ethereum at about $25,500 per coin (assuming a supply of 118 million). How’d you do the math on that one? The only way you could really have that low of a coin price is if you had a supply of about 300 million Ethereum, which I’m not sure will be the case after the upcoming 90% issuance reduction. Currently, there are 18 million ether mined per year. That would imply that it would it take about 10+ years (not including the issuance reduction) to get to $10,000 per coin (118 Million Ethereum currently + 10 years at 18 million Ethereum mined per year adds another 180 million Ethereum, giving us a total of the needed about 300 million Ethereum for your price forcast of $10,000 per coin at a 3 Trillion Market Cap – technically it would be 298 million Ethereum – 118 million ether plus 180 million ether). Assuming PoS takes at least 3 years, meaning mining happens for another 3 years (which I highly doubt) that means another 18 million ether are mined multiplied by 3 years, giving us 54 million more Ethereum. Now we take a 3 Trillion dollar market cap, and divide by the total supply of ethereum (a 118 million current supply plus the additional 54 million ether created in the next 3 years – equaling 172 million ether total) which gives us $17,500 per coin.

  23. I like the “blockchains sell block space” concept. But if true, it seems like the fees are the revenue and the miner rewards are the cost to secure the network.

  24. I wish we would all just walk away from eth for awhile just to send them a message about excessive gas fees. Thank god for BNB and SOL

  25. how’s the NPV calculated? I couldn’t see where the initial investment is coming from in the sheet, does anyone know?

  26. Ryan and David, You guys see that this model is based on the false assumptions, right ??? Harvard business school or not, the model misunderstands and misrepresents the economics of Ethereum and how it works.

  27. This was the first time I wasn’t completely bored by a crypto conversation. Thank goodness someone put it in tangible, accessible accounting terms. 🙏🏼


  29. I love you guys but surely the discounted cash flow method relies on income from fees. We all agree I think, that the biggest downfall of ethereum is that fees are too high. Supply and demand says that if these ‘revenues’ don’t reduce that demand will diminish over time?

  30. It’s great to see an application of traditional DCF Model to Ether. There is definitely relevance and it’s creative. However, I am skeptical about how only 12% is used as a discount rate. The discount rate for aggressive investments like Private Equity Or Crypto projects should be on a far higher side attributing to the HIGH RISK HIGH REWARD nature of these Asset classes. Could someone throw some light on this pls?

  31. The financial market has been a really tough one this past months, but I watched an interview on CNBC where the anchor kept mentioning “…Lynne Ellen Rule…”. This prompted me to get in touch with her, and from October 2021 till now we have been working together, and I can now boast of $540k in my trading portfolio

  32. “CORRECTION: It’s actually ETH to $4 Trillion” What’s a Trillion more or less among friends anyway?

  33. The first thing is to thank the author and Bankless for the exercise carried out. I think that more people will be encouraged to carry out valuation models with Ethereum and a consensus can be created. So thanks.

    My criticism of the valuation is as follows:

    In my opinion, the model has some problems in its assumptions:

    1) The cost of miners, or in the future, the cost of stakers, cannot be considered as part of the free cash flow (FCF), it does not add up. That’s clearly a cost to holders.

    2) I think the only FCF is the amount of Ethers that is burned. It is what is left over after paying the cost of securing the network and therefore is what the holder has left.

    3) I also believe that there are problems with the discount rate, in the first place 12% seems very high, but it is also being considered that Ethereum is limited to the dollar economy exclusively when it is multicurrency.

    4) Growths of 40%, for the early years, are a bit strange on the low side.

    Thanks again and sorry for my English.