There’s been some debate on which utility / DeFi coins are worth buying from a HTF value perspective. IMO we’ve made quite considerable progress via regulatory relief over the past few years, but still have some ways to go before this is a viable investment strategy.
The three components I need to see in order commit capital from a value investing mindset is as follows:
1. Absolute certainty that tokenholders are the top priority (or at least pari passu to equity holders) from the team’s POV. There is no reality in which I will ape tokens for value when equity holders are receiving benefits that tokenholders do not get. This doesn’t necessarily mean that tokenholders NEED direct token utility today (buybacks / dividends etc), but clear and consistent messaging from the team that tokenholders are ultimate beneficiaries is absolutely required.
2. A business model that doesn’t directly rely on the speculative Ouroboros that crypto is famous for. This is where many ‘fundamental’ investment bros fall into the trap, because trading volumes can fall 90% and then another 90% in bear markets making any PE or PS values irrelevant. Also annualizing revenues from a protocol that had ‘good’ one month numbers when protocol mindshare + momentum is at its highest is the most autistic thing one can do.
3. Belief in management’s ability to execute. Like every business, you need to undertake due diligence and believe why the team behind the protocol is able to execute on its vision to beat out competitors either via technical moats or via executional prowess.
So far I think only a handful of protocols fit this criteria and I’ll be looking to pick these up when the time is right. But for 99.9% of other tokens out there, it’s the gulags you go.
Some ramblings from a 🕊️
