"ETH's next decade, integ... | Mercy OKX Feed

"ETH's next decade, integration, innovation or opportunity?" On the weekend, a friend sent me a private message in the background, saying that I hope to see the replay of the Friday roundtable discussion, and I am very happy that some users recognize our content and benefit from it! Mercy has compiled a text version in the past two days, hoping that the views of the three teachers will inspire 👇🏻 everyone ▫️ Ethereum is a perpetual opportunity, trading without focusing on fundamentals? ▫️ Ethereum has now broken away from fundamentals and turned into a giant MEME? ▫️ Ethereum is similar to Bitcoin, with the attribute of "useless" store of value, and is expected to break 5,000 in this round? ▫️ From God V to the Foundation, Ethereum lacks strongman leadership and offensive genes? 【Guest of this issue】 Lao Bai @Wuhuoqiu: Former investment research partner of ABCDE. In the second half of 2017, Ethereum was first exposed and the first on-chain transaction was conducted. Yuan Jie @forgivenever: One of the founders of Conflux, known as the "investment director". His connection with Ethereum began in the early days of entrepreneurship, and he used Ethereum to pay salaries, witnessing Ethereum's journey from being questioned to becoming a cornerstone of the industry. Million @CycleStudies: Quantitative trader, known as "Boss Wang" for running a farm. He came into contact with Bitcoin in 2013 and later focused on quantitative trading, mainly sharing trading experience and position management skills. This discussion not only had insights into the development and market trends of Ethereum technology, but also the teachers' incisive summaries of the past decade. If you are curious about the future direction of #ETH, the logic of investment, and how to seize opportunities in this uncertain market - I highly recommend you read it carefully! 1/

Yuanjie: Ethereum has currently detached from its fundamentals, with MicroStrategy and SBT being seen as the "locomotives," while Ethereum itself is a giant MEME. These "locomotives" are actively and frequently disclosing their increased holdings of Ethereum in a bid to compete for the title of "top Ethereum micro-strategy." This is very similar to the operational model of MEME tokens, where their accumulation and reduction behaviors did not require news disclosures in the past and could be observed directly through on-chain data. However, since the holdings of Ethereum are not public information and they are unwilling to disclose their holding addresses, they can only inform the market of their increased holdings and sufficient capital reserves through announcements, in hopes of continuously attracting investment. As long as the "locomotives" can continue to finance and increase their Ethereum holdings, we can continue to hold. Once the "locomotives" can no longer purchase, we should exit in a timely manner. Therefore, the entire process will become highly MEME-like, accompanied by wild fluctuations. After detaching from fundamental drivers, Ethereum has transformed into a purely capital and sentiment-driven game. At the same time, ETH, as a super-sized MEME, while its price fluctuations may not be as exaggerated as those of MEME tokens, will still be longer and more tortuous in terms of time dimension, but essentially remains a game of capital and sentiment. We need to closely monitor the capital reserves, purchasing strength, and speed of these "locomotives." Once they show signs of "failure," we will choose to exit. Therefore, I believe Ethereum will experience accelerated rises and falls in the coming months, potentially entering a true bear market thereafter. Regarding the "locomotives" purchasing Ethereum by selling stocks and increasing capital reserves, I see several potential issues: First, if the U.S. stock market crashes overall, their strategy may not work, as liquidity in the U.S. stock market will dry up. Second, Ethereum's "micro-strategy" is essentially a copy of Bitcoin's "micro-strategy," and such copies are continuously emerging, even spreading to various other cryptocurrencies. The more copies there are, the more dispersed the market attention and capital become. As shown by the experience of the last cycle, the more copies there are, the worse the effect. Therefore, we need to be wary of the dilution effect of copies on attention, sentiment, and capital. All these factors could become turning points for Ethereum to quickly rise and then rapidly fall. As experienced investors, we should thank the stock market investors for providing a backstop for the cryptocurrency market. As for when they can no longer continue to backstop, that will be our exit point. Everyone just needs to grasp this key point.

Mercy: Teacher Yuanjie just mentioned that this round of Ethereum is similar to MEME because many traditional institutions have entered the market, creating what is called the "locomotive effect". Recently, there have been many news stories, such as Peter Thiel investing in Tom Lee's ETH treasury company, Bit Digital liquidating Bitcoin to invest in ETH, and several companies like BTCS are competitively hoarding Ethereum. Will the emergence of the "Ethereum treasury company" and the discussion of the "billion-dollar competition" structurally change the flow of funds for ETH? What is the willingness and potential of institutions to allocate Ethereum? Old Bai: I believe this will inevitably structurally change the flow of funds for Ethereum. The current competition for funds and the change in "mind share" for Ethereum highly align with the views of the OGs in Europe and America. I remember in April and May of this year, when Ethereum dropped to over a thousand dollars, there was a pervasive sentiment of "frustration at its lack of progress" in the Chinese Twitter circle. However, while there were similar sentiments in the European and American circles, their suggestions regarding Ethereum differed from those in the Chinese-speaking community. They proposed viewing some functions of Ethereum as MEME. The strength of Bitcoin lies not only in being the pioneer of cryptocurrencies but also in its characteristic of "useless usefulness"—it emphasizes consensus and value storage, discouraging its use for daily consumption, as it is a solid value store. Many OGs in Europe and America are trying to reverse the mindset formed around Ethereum after DeFi Summer. DeFi Summer led people to believe that Ethereum is a useful, AWS-like global "world computer". At that time, the valuation of Ethereum was based on its ecological scale, Gas consumption, and user investment, known as REV (Real Economy Value), which assesses the total payment fees of Layer 1 (the sum of Gas and MEV). The OGs in Europe and America believe that Ethereum, as a smart contract public chain, carrying a large ecosystem, should indeed be evaluated in this way for its price and market value. However, they emphasize that this is not the only evaluation standard. The other half of Ethereum should be similar to Bitcoin, possessing the value storage attributes of "useless usefulness", and its inherent value storage characteristics should be fully emphasized. I believe this is similar to the current motivations of institutions in buying Ethereum. They are buying Ethereum not just for Staking or building nodes to ensure the security of the Ethereum network, thereby providing support for applications like RWA. This is just a narrative; market participants are not foolish. Ethereum is already sufficiently decentralized and secure, and does not lack these institutions participating in node construction or ecosystem development. Therefore, institutions view Ethereum more as an asset, emphasizing its asset attributes and competing for this asset. This trend will structurally change the flow of funds for Ethereum, as well as the willingness of market participants, especially mainstream institutions, to hoard Ethereum in the future. If it can reach 30% to 50% of Bitcoin's "mind share" and thought logic, it will be very successful. 5/

Yuan Jie: Previously, Ethereum's positioning was divided: Vitalik called it the "world computer" and Wall Street called it "digital oil". This inconsistency in positioning has led to a poor hoarding of Ethereum ETFs by institutional investors. However, the market now seems to be more inclined to the concise and powerful slogan "Gold, Silver Ether", as well as the wealth effect of MicroStrategy's investment strategy on Bitcoin and Ethereum, which is undoubtedly more attractive. Therefore, we should first increase the proportion of institutional investors' positions. In the past, institutions such as BlackRock have worked hard to promote compliance and establish ETF channels, but they have not been able to effectively increase the proportion of institutional holdings of Ethereum, making it difficult to push up its price. For example, Conflux holders are almost all retail investors and lack institutional support, so it is naturally difficult for the price to climb. As a result, Ethereum's "micro-strategy" fundamentally changes its position structure. This is similar to the US stock market, which has not risen solely by retail investors, but by a large number of public funds and hedge funds. In contrast, A-share public funds are mainly limited to domestic institutions and lack the participation of global capital, while Hong Kong stocks perform better. This structural change has an essential impact on the capital market. In many cases, the essence of investment assets does not depend entirely on fundamentals, but on their positioning, narrative, story and overall liquidity structure as a carrier of funds. Ethereum has previously had a structure similar to Bitcoin, such as having ETFs and corporate hoarding, but has not been able to effectively sell its advantages to Wall Street or significantly increase institutional holdings. However, since the implementation of Ethereum's "micro-strategy", I believe that many institutions have also begun to open positions in Ethereum after seeing the driving effect of the "locomotive", believing that they can at least make quick profits from it. Previously, Wintermute, as a significant market maker in the cryptocurrency space, said that the supply of Ethereum on its OTC platform was snapped up and had to turn to the spot market to buy in large quantities, which undoubtedly pushed up the price. This indicates a sudden and significant increase in institutional buying on Ethereum, which has substantially changed the underlying financial asset. I think once these financial institutions start buying Ethereum, the market's familiarity, intimacy and trust in it will increase, and more institutional investors will frequently enter and exit the Ethereum market, which will effectively raise the bottom price of Ethereum. Before the Ethereum "microstrategy" really worked, I had the same view as Zhaobei teacher @Master_Jobber, believing that the bottom of Ethereum could fall to $800 in this cycle, and I would consider opening a position at that time. However, with the advancement of Ethereum's "micro-strategy" and the influx of a large number of institutional investors, I think even if this bull market ends, Ethereum's cycle bottom price will be above $800, and it will be difficult to return to this price. 6/

Mercy: What will be the next catalyst for Ethereum's explosive rally, similar to the 2017 ICO or DeFi Summer 2020? Lao Bai: I think of two catalysts. One is the technical foundation, according to the Ethereum Foundation and strategic roadmap, its recent positioning is to improve the performance of Layer 1 by about 10 times in the next two years, while greatly optimizing the user and developer experience. Another direction I like more is its recently established Ethereum Realize, which is an institution on the level of the Ethereum Foundation, mainly for the docking, education, and coordination of traditional finance on Wall Street in the United States. Therefore, we can see more and more institutions such as JPMorgan Chase and Citigroup testing the waters on Ethereum, including stablecoins and RWAs. But the big tipping points, the whole big new direction and new narrative like DeFi Summer or ICO, I don't feel like I'm seeing anything particularly clear at the moment. Whether it is the performance improvement just mentioned, or the combination of RWA and PayFi in traditional finance, they are all moving forward step by step, slowly moving forward, rather than suddenly appearing a burst point. But I can think of two objective environmental catalysts that are more likely to be "FOMO": one is if one day Ethereum suddenly enters a relatively stable deflationary state. We have reached a stage where Ethereum was deflationary for a period of time after switching to POS, but not long enough. If one day, maybe a few years later, RWA and stablecoins will be popular on Ethereum, and Ethereum will enter a stable deflation every day, then I think Ethereum's attributes as an asset will be "FOMO" at that time. The original "Ultra Sound Money", that is, "Ethereum is an innovation at the level of human civilization", may once again enter the field of human vision. At that time, you will find that the narrative of ETH is very solid, with DeFi, RWA, stablecoins, PayFi, and asset attributes, which are still increasing compared to Bitcoin (although the growth rate is getting slower and slower), but Ethereum has entered deflation and has remained less and less in the past 6 to 12 months. This could cause a frenzy of Ethereum by institutions or retail investors as a whole, as this asset form is so tempting that it is both useful and deflationary. So such a starting moment, I think may be the biggest catalyst for "FOMO". But to achieve this, an ideological help is needed. I heard a podcast two days ago, and one of the guests spoke very well - "The irony now is that decentralized Ethereum needs a centralized strongman's 'personality trait' more than ever to keep Ethereum on the offensive." Look at Solana's Multicoin's Kyle Samani and Anatoly Yakovenko founders, including MicroStrategy's Michael Saylor, and Robinhood's CEO. These people are very aggressive in their personality traits, and they promote their products to the market. But Ethereum is too moderate, from God V as a tech otaku to Ethereum's inactive foundation, they lack a strongman leadership and offensive genes. This needs to be improved. The good thing is that we can now see a16z, BNM, and some CEOs and former executives like ConsenSys coming out to take the lead and make Ethereum more offensive. I think this ideological offensiveness and the performance improvement just mentioned, including the fact that one day Ethereum's narrative and fundamentals will reach a stage of stable deflation, which may be the time when Ethereum's "FOMO" moment comes. 7/