Lyn Alden, CEO and founder of Lyn Alden Investment Strategies shared her views on Ethereum in an interview conducted on Saavy Finance YouTube channel.
Host: “So beyond Bitcoin, what are your thoughts on the rest of the crypto ecosystem? I know you’ve put out a lot of actually really good information on Ethereum so what are your thoughts on that asset overall?
Lyn: “Well, so i think smart contracts are a useful tool, i think it’s good that some of those platforms exist. I think decentralized exchanges are a good thing and i think decentralized liquidity providers are a good thing. But then the main question from there is, there’s a couple of things: one is you have protocol specific issues like Ethereum is going through an issue now where it is transitioning from proof of work to proof of stake, they have throughput issues which are more of a problem for Ethereum than Bitcoin because Bitcoin transactions tend to be pretty high value and there are off-chain solutions for for smaller transfers of value. Whereas Ethereum is a more high velocity smaller average transaction size network and the transactions are more complex; and so if you’re paying a very high fee into a Uniswap trade or just to move your tokens around that’s more of a problem for that network, it’s kind of in order to work as you’d expect it to the fees should be pretty cheap. And so it’s basically the success of using it kind of hurts itself and so we see things like Tether transactions started moving more and more towards Tron of all things at least a smaller Tether transaction. So we got to the point where more Tether transactions are occurring on Tron than on Ethereum because of the high fees even though there’s more settlement value in Tether on Ethereum because the high transaction size ones still stay on Ethereum. And so overall you have that technical risk of basically changing the engine while you’re driving so we’re driving the car we have an operational blockchain, and we want to go ahead and change everything about it and that’s of course just a very challenging technical thing to go through. Then there’s the kind of broader question of even if you have a very successful utility protocol, do the tokens become money? Do the tokens accrue monetary value in the long run? And there’s that paper from 2017 from John Feffer that argued that they probably would not, that even if you were to have you know high quote GDP in that ecosystem of utility tokens that a bit that those tokens would be treated more like working capital and so they wouldn’t kind of accrue value in the same way that bitcoin might. And it doesn’t mean they can’t accrue monetary value but it means whether or not they’re going to be monetary values largely separate so you can have the ecosystem grow very large where the token value kind of stagnates. And in some ways that paper if you go back that was published in late 2017 and since then the amount of value settled on Ethereum’s gone up substantially, it’s like tripled whereas the market cap is roughly where it was three years ago.” It briefly got a lot higher since the correction i haven’t checked it last couple days but it’s somewhere in the ballpark of the same market cap so the market cap does not increase at the same rate as the transaction value has. And so that’s kind of my concerns with the overall kind of utility protocols is that while i’m glad they exist and i think there’s an interesting development being done there, i haven’t seen a compelling case of why i’d want to hold a significant amount of their tokens on the long term.”