Revisiting the DCF argument for Blockchains

Although I have already made a clear case for why Ethereum Should Not be Valued Based on Fees or Discounted Cash Flow (https://t.co/yPtk8mxSl7), the DCF and Fee-Based Model is simply misapplied logic.

Applying traditional metrics to blockchains is shortsighted, but if a chain like Solana wants to apply it to themselves, that’s fine. But don’t apply it to Ethereum, because Ethereum is way beyond that.

DCF, validator revenue, or protocol fees miss the point. It is the equivalent of valuing Amazon in 1998 by its shipping costs. If you see Solana like a software-as-a-service (SaaS) company, estimating its future cash flows and discounting them back to present value, that’s fine. But don’t apply it to Ethereum because Ethereum is not that.

The DCF framework quickly collapses under scrutiny:

* Blockchains aren’t companies. They don’t have shareholders, retained earnings, or management seeking to maximize profits. But if Solana sees themselves otherwise, fine, do it for yourself, but not for Ethereum.

* Fee structures are dynamic and often political. Protocols can—and do—lower fees for strategic reasons (e.g., Layer 2 scaling).

* Subsidies distort reality. Solana heavily subsidizes validator revenues, which inflates perceived “earnings” without reflecting the real, organic usage. So, maybe one should discount the Solana DCF by the % amounts being artificially subsidized. That’s at least 25%, if not more.

Ultimately, DCF assumes a central issuer and a predictable revenue stream, neither of which are natural to decentralized public blockchains. But then, Solana is not a public blockchain. It is tilting more as being a private blockchain.

So, let’s not compare Solana to Ethereum on that basis. Let Solana be judged against database companies or Hyperliquid and let’s see how it fares.