January 30, 2025 | Read Online

"Price is what you pay; value is what you get."

— Warren Buffett

Thursday deep-value mailbag

Q: How many crypto tokens are there?

There are at least 36 million crypto tokens in existence — and we're currently adding about a million new ones every week.

Most of these are ephemeral and go straight to zero without anyone really trading them.

However, Phantom reported that users of its digital wallet swapped 788,000 different tokens in 2024.

By comparison, there are only about 8,000 stocks available to trade on major US exchanges.

If you've been wondering why we can't seem to get a good bubble going in crypto anymore, this probably explains it: There are too many crypto tokens chasing too few crypto investors.

Q: Why are tokens so expensive then?

Right — there are far too many tokens, and yet, the tokens are all too expensive.

It's a riddle.

If you're a subscriber to Blockworks Research you'll know that not all of the tokens are too expensive, but the vast majority do seem inexplicably pricey.

Take for example VVV, the newly launched token for the decentralized chatbot Venice.ai.

Crypto investors briefly valued VVV at nearly $2 billion immediately after its launch this week — the same week DeepSeek shocked the world by demonstrating that building such a chatbot could cost less than $6 million.

The difference between $6 million and $2 billion is my anecdotal measure of how inexplicably expensive crypto tokens tend to be.

Q: Are ICOs making a comeback?

I hope so, because this would be a useful way to filter out at least some of the dross that is perpetually flooding crypto markets.

Legion, for example, is a platform for "merit-based" ICOs, which connects projects with investors based on data from investors' crypto wallets, X accounts and GitHub profiles.

There's also Echo, although this is more like a pre-ICO crowdfunding platform for early-stage investors.

Both of these platforms are KYC'd, however, so we're still a long way from the glory days of the 2017 ICO boom.

Q: Will companies issue pre-IPO stock onchain?

That is what Robinhood founder Vladimir Tenev suggested in an op-ed for the Washington Post this week — he wants to democratize investors' access to privately held companies by having them issue tokens onchain.

This, he believes, is part of an "investing revolution" that the US will miss out on if regulators don't allow it.

"We just need the regulatory clarity to connect crypto technology to real-world productive assets that are currently regulated as securities."

In other words, he wants to move securities onchain so they're no longer regulated as securities.

It's hard for me to imagine that even Trump's SEC would allow that, but if so, it certainly would be a revolution in finance — there'd be no reason for companies to bother listing on stock markets.

Pair this idea with Eric Trump's proposal to exempt crypto from capital gains taxes and the stock market would empty out entirely.

That would be a lot of fun for a crypto newsletter writer like myself, so I'm all for it — but it's not going to happen.

If stocks ever trade onchain, you'll have to KYC the same way you do with, say, Vanguard, and companies will have to follow all the same investor-protection rules they do now.

I am a believer in the idea of internet capital markets, but moving regulated securities onchain would not be much of a revolution — for that, crypto will have to invent its own investment-worthy assets.

Q: Will the SEC approve memecoin ETFs?

I hope not because memecoins are gambling, not investing, and as such, they don't belong on stock exchanges.

The problem with memecoins, in my opinion, is that they feel like stocks and that gives memecoin traders the false impression that they're investing.

Making memecoins accessible on exchanges risks cementing that impression — and would make markets less effective by causing people to misallocate their investment capital to memecoin trading.

I can't imagine why we'd enable this: Is it unreasonable to require people who want to gamble on memecoins to open a Coinbase account first?

On the other hand, bitcoin is the original memecoin and the bitcoin ETFs have been a smash hit, so I'm not sure why other memecoins shouldn't have one.

The first applications for memecoin ETFs have been filed, so we should soon find out.

(Good luck to any SEC commissioner who votes against approving the TRUMP ETF.)

Q: What should ETH be worth?

In a previous mailbag, I linked to a recent paper arguing that ETH's "moneyness" should only be worth about $3.32 per token.

But reading is hard, I know, so this week, I'm linking to a podcast with one of the paper's authors, Kevin Mills.

In it, Mills notes that the valuation of cloud providers like AWS might give us a benchmark for ETH's value as a revenue-generating asset.

The problem, however, is that cloud providers are valued at about 6x revenue and Ethereum generates only about $2.5 billion of annual revenue.

So comping to cloud providers, ETH's $400 billion market cap would make it about 27x overvalued.

(Note: It's OK to be bullish Ethereum and bearish ETH.)

Q: What should SOL be worth?

The valuation of SOL, with no pretensions to being money, is more straightforward — there's no reason to value it as anything other than a revenue-generating asset.

Right now, it's generating a lot of revenue!

Per data from Blockworks Research, Solana has generated $509.8 million of "real economic value" so far this year.

If you're willing to annualize that number, that would put SOL on only about 18x REV.

REV is more or less crypto's version of EPS, so 18x seems like a rare case of crypto value — if you believe the current level of activity on Solana is sustainable (which you almost certainly shouldn't).

Q: Is that investment advice?

Not at all, no — I just think these are fun questions to ask.

Thinking about crypto investing is like researching unsettled science — it's much more fun than TradFi, where nearly everything is priced within 10 or 20% of reasonable.

Q: Should the Czech National Bank buy bitcoin?

Sure — the CNB runs an investment portfolio that includes gold, bonds and a lot of US equities, so it makes sense that it's considering buying bitcoin, as it announced this morning.

The Federal Reserve, however, does not run an investment portfolio (because there's no need to invest when you're the issuer of the global reserve currency) — so it does not make sense that the US government is considering buying bitcoin.

Q: Should Texas buy bitcoin?

Also sure — the State of Texas already invests in equities, hedge funds and private equity, so why not bitcoin?

The proposal to set up a Texas bitcoin reserve, however, is just politics — as is the federal version.

Q: Is the TRUMP memecoin money?

By crypto's loose definition of what is and isn't money, I guess it is, yes.

You can pay for a Trump watch with the TRUMP memecoin, so that makes it a medium of exchange.

And TRUMP is up about 100x from launch, so I guess that makes it a store of value too (because isn't that bitcoin's entire claim to moneyness?).

But BTC remains better money than TRUMP — it's the only means of payment accepted for the $100,000 Crypto President Tourbillion watch (which, as pictured at the top, is tastefully encrusted with diamonds and orange sapphires).

I find it telling, however, that the prices for these fine watches are displayed in US dollars — because, however you pay, that's what the seller will turn it into.

Crypto won't truly be money until it's the unit of account for more than just NFTs and layer-one transaction fees. (Even memecoins are denominated in dollars!)

That remains a long way off, though — even the first crypto president still just wants fiat.

— Byron Gilliam

The stakes have never been higher. As markets evolve and policy takes shape, Mohamed El-Erian will cut through the noise on macro trends. Anthony Scaramucci will unpack the changing face of finance and crypto. Kristin Smith will lay out the hard truths about regulation and its ripple effects.

📅 March 18-20 | NYC

Don't miss it

Jupiter's Dominance, SAB 121 Repealed and Xmoney

The Blockworks Research analysts discuss DeepSeek's impact on the market, Trump's executive orders and the repeal of SAB 121, as well as the recent XMoney announcement.

Listen to 0xResearch on Spotify, Apple Podcasts or YouTube.

Carl Bergman @c__bergz

1/ Activity is picking up on Base. The chain surpassed $1bn daily volume in November, fueled in part by AI-agent and memecoin trading hype. As always, with more volume comes more opportunities for MEV searchers. But what's the scale of MEV activity and value leaked?