VC has “no clue” how Chainlink, Litecoin, other cryptos have billion-dollar valuations 🚨 This article is 4 years old...
VC has “no clue” how Chainlink, Litecoin, other cryptos have billion-dollar valuations
2 min read
Updated: Oct. 15, 2020 at 1:03 pm UTC
At least thus far, the ongoing crypto-asset bull run has been almost solely focused on decentralized finance (DeFi). Coins pertaining to this esoteric space have seen exponential rallies since the start of 2020. Coins like Aave’s LEND, for instance, has gained in excess of 4,000 percent since this year started.
Despite this exponential growth in DeFi, altcoins from the previous market cycle, the 2016-2018 boom, are still around.
In fact, names like Litecoin, Chainlink, Bitcoin Cash, and others populate the top of the cryptocurrency leaderboard, CryptoSlate data shows.
Although these digital assets may have their own use cases that have allowed them to retain value over time, a leading venture capitalist says that it doesn’t make much sense that these cryptocurrencies are still so highly ranked.
Who is holding all these things?
Kyle Samani, co-founder and managing partner of Multicoin Capital, recently sat down with Coin Metrics co-founder Nic Carter to discuss his latest views on the ever-changing cryptocurrency markets.
When asked about one crucial view he had about the crypto-asset space, Samani said that the “most important feature of a token is its market cap.” He was referencing how a project gains much social legitimacy when every time someone opens Coin Gecko or Coin Market Cap, they see x or y coin.
Commenting on the specifics of this, Samani went on to say that it “perplexes him how Chainlink has a $10 billion market cap,” quipping that he “doesn’t know who is holding all these things” and who the buyers are. The same applies to Litecoin and “many other assets in the top 10,” the investor explained.
Where will the money in these coins move toward?
Samani didn’t tip his hand as to what is going to if these tokens will lose their value to competitors over time, but many in the Ethereum space think that value in “ghost” projects will accrue to DeFi over time.
Eric Conner stated in August that there is $50 billion in market capitalization value that could accrue in DeFi over time:
“The ghost chain reckoning is coming. There is well over $50bn in market cap value for chains no one uses. They will all be usurped by DeFi apps with actual use by the end of this market cycle.”
This has been echoed to a T by a variety of others in the space.
Rune Christensen, for one, said in May of this year that over time, DeFi will act as a vacuum for Ethereum that will consume all non-productive assets in the cryptocurrency space:
“4 million Dai was just minted with WBTC in a single transaction. This really showcases the latent demand for non-ETH assets, and it’s the beginning of a broader trend of DeFi acting as an economic vacuum that will eventually attract almost all value to the Ethereum blockchain,” Christensen wrote in a comment that went crypto-viral among ETH supporters.
4 million Dai was just minted with WBTC in a single transaction. This really showcases the latent demand for non-ETH assets, and it's the beginning of a broader trend of DeFi acting as an economic vacuum that will eventually attract almost all value to the Ethereum blockchain.
— Rune Christensen (@RuneKek) May 20, 2020
We already see this with the introduction of tokenized forms of Bitcoin, which have seen parabolic growth in recent months. It is now said that approximately 0.4 percent of all BTC in circulation now has a home on the Ethereum blockchain. These coins can be deployed to the DeFi space or to be used as a means of payment on Ethereum.
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Chainlink
$16.6059
Chainlink is a decentralized oracle network that connects smart contracts on the blockchain to real-world data.
Litecoin
$94.7070
Litecoin is a peer-to-peer Internet currency that enables instant, near-zero cost payments to anyone in the world.
Multicoin Capital
Multicoin Capital is a thesis-driven investment firm that invests in cryptocurrencies, tokens, and blockchain companies reshaping trillion-dollar markets..
Coin Metrics
Coin Metrics is a leading provider of crypto asset market and network data.
As a former engineer, Kyle leads technical thesis formation and diligence.