Stratos – Valuing L1s and L2s, monetary premium, fat protocols, sustainability, and more | ep.74

Fundamentals

In this episode, we’re joined by Rennick Palley, Founding Partner at Stratos – a fund that seeds the future of crypto. Stratos focuses on both Venture, where they invest in DeFi and web3 companies, and Infra, where they provide the hardware, stake, and expertise that helps blockchains grow. We discuss Stratos, their investment strategy, and how they approach the market. We then move on to speak about the execution layer landscape, and dive into valuing Layer 1 and Layer 2 blockchains – and what the main differences in valuation methodologies are between the two. We cover topics including monetary premium, staking ratio, real staking yield, positive economic balance, and intrinsic value. We draw parallels between tokens and more traditional assets, and speak about applying comparative valuation concepts to crypto assets. We speak about the current lack of value accrual mechanisms for L2 tokens, and what the future could look like on that front. Finally, we speak about the current state of the blockchain market, and what keeps Stratos optimistic about the future. Tune is for a great discussion about how Rennick and Stratos approach the market! Stratos: Site: https://www.stratos.xyz/ X (Twitter): https://twitter.com/StratosXYZ Rennick: https://twitter.com/RennickPalley Make sure to leave a comment if you have any questions 🙌 📊 Token Terminal platform: ► https://www.tokenterminal.com/ ----------------------------------------- 💬 Join our Discord: ► https://discord.com/invite/tokenterminal ----------------------------------------- 📱 Follow us on Twitter: ► https://twitter.com/tokenterminal ----------------------------------------- 📩 Subscribe to our Newsletter: ► https://tokenterminal.com/resources ----------------------------------------- Timestamps: 00:00 Introduction 01:48 Overview of Stratos 03:09 What problem does Stratos solve for LPs? 05:12 The vast majority of cryptoasset value consists of L1 & L2 tokens – what are the implications for investors? 10:56 “Monetary premium” and its significance in valuing L1 blockchains 16:59 The function of revenue in a L1 network – economic balance 19:36 Positive economic balance is not a strict requirement for monetary premium 21:30 Country theory of L1s 25:09 Blockspace purchasing power parity 28:09 Real vs. speculative intrinsic value 30:43 Why is achieving sustainability so challenging for L1s? 35:09 Sovereignty of money comes with existing outside purely financial metrics 36:41 Fat protocol thesis: what changes as we move towards more modular architectures? 42:45 Where does value accrue when competition increases at the app layer? 45:09 How will dApps creating application-specific rollups affect value accrual? 47:47 How do the above valuation methodologies adapt from L1s to L2s? 51:46 Envisioning the future of value accrual for L2 tokens 53:36 Why it’s so easy for someone coming from tradfi to middle-curve crypto? … Crypto redefines the way businesses are built and operated. Token Terminal gives you the tools to evaluate and track the most promising projects. The following content is meant purely for educational and informational purposes, and should not be relied upon as financial, investment, legal, tax, or any other professional advice. The authors of this content, or members, affiliates, or stakeholders of Token Terminal may be participating, or are invested, in protocols or tokens mentioned herein. The foregoing statement acts as a disclosure of potential conflicts of interest and is not a recommendation to purchase or invest in any token or participate in any protocol. Token Terminal accepts no liability whatsoever for any losses or liabilities arising from the use of or reliance on any of this content. #Stratos #Fundamentals #Blockchain #Crypto #tokenterminal