The valuation dilemma of smart contract public chains: Why has the optimistic voice of "one call, a hundred approvals" disappeared?

In my seven years of crypto investment experience, I have witnessed a bizarre phenomenon: the public opinion environment surrounding newly launched blockchains is undergoing earth-shaking changes.

Once upon a time, the market’s attitude towards new public chains was polarized—either full of enthusiasm or complete indifference. But since 2023, this simple dichotomy has disintegrated. Today, new chains like Monad, MegaETH, Tempo, and others are already facing overwhelming criticism even before their mainnet launch. These are not ordinary doubts; they are systemic, aggressive denials—almost as if these projects were sentenced to death the moment they were born.

The question is: what market psychology is driving this phenomenon?

From Nihilism to Cynicism: The Transformation of Market Sentiment

By 2024, I felt I was fighting against a wave of financial nihilism that enveloped the entire crypto space—this view holds that all assets are memes, and everything we build is essentially worthless.

Fortunately, this extreme ideology has faded. But it hasn’t disappeared; it has merely transformed into another form: financial cynicism.

This new logic goes like this: maybe these things do have some value, maybe they are not all bubbles, but they are seriously overestimated. Wall Street will eventually expose the truth. Public chains may not be entirely useless, but their real value might only be one-fifth to one-tenth of the current trading price. If so, you’d better pray that the lies can last a little longer, or everything will collapse.

Under this mindset, many bullish analysts have started building complex valuation models—raising gross profit margins, optimizing P/E ratios, calculating discounted cash flows—trying to justify public chains with traditional financial logic.

At the end of last year, Solana proudly adopted REV (revenue) as the ultimate valuation metric, claiming it finally stopped “bluffing” and embraced real financial data. And the result? REV almost immediately plummeted after being recognized by the market.

Then Hyperliquid emerged out of nowhere. This decentralized exchange has real revenue, buyback mechanisms, and extremely low P/E multiples. The market cheered—finally, a project that makes real money! Hyperliquid will devour everything because, obviously, Ethereum and Solana have no real profits. We can abandon those illusory narratives.

But there is a fundamental misunderstanding here.

The Paradigm Error in Valuation Logic

Many people fail to realize that trying to measure smart contract public chains with P/E ratios essentially means abandoning the law of exponential growth.

I have a partner, Bo, who personally experienced the rise of China’s internet. He often tells a story: in the early 2000s, a group of early e-commerce investors gathered to debate—how big can the e-commerce market really get? Will it be limited to electronics? Can it attract female users? Is fresh food delivery feasible?

These questions were crucial for investors at the time because they determined investment directions and valuation logic. The result, of course, was— they were all wildly wrong. E-commerce eventually will sell everything, with customers all over the world. But no one truly believed this at the time.

Only after enough time has passed will exponential growth become apparent on its own. Even believers find it hard to imagine the final scale. And the few who persisted in holding almost all became billionaires.

Today, in the crypto space, believing in exponential growth is no longer fashionable. But I still believe it, because I have witnessed this process unfold again and again.

When I first entered the industry, the total locked value on chains was only a few million dollars. When we invested in MakerDAO, Compound, 1inch, they were still experimental products. Back then, a daily trading volume of only a few million dollars was considered a huge success. Now, daily on-chain trading volume routinely exceeds hundreds of billions of dollars.

Tether was once reported by The New York Times as a “Ponzi scheme on the brink of collapse” due to its $1 billion issuance. Today, the stablecoin market cap exceeds $300 billion.

This is no coincidence. It is the law of exponential growth at work.

The Lesson of Amazon: Time Horizon Decides Everything

Look at Amazon’s history. This chart shows the income statement from 1995 to 2019—a span of 24 years. The red line is revenue, the gray line is profit.

See that tiny upward trend at the end of the gray line? That’s when Amazon started to turn a real profit in its 22nd year. Before that, every year, columnists, critics, and short-sellers all declared in unison: Amazon is a perpetual Ponzi scheme that will never turn a profit.

This was Amazon’s performance in its first ten years—ten years of turbulence, accompanied by widespread skepticism. E-commerce was just a venture capital-funded charity? They were dumping poor-quality goods on cheap customers? How could they possibly make money like Walmart or General Electric?

If you argued about Amazon’s P/E ratio back then, you chose the wrong paradigm—that of linear growth. But e-commerce is not a linear trend. Therefore, for 22 years, everyone debating P/E ratios was wildly mistaken. No matter how much you bid or when you bought in, your bullishness was far from enough.

Because this is the law of exponential growth: for truly exponential technologies, no matter how big you think they can get, they will always surpass your imagination.

Ethereum just turned 10 years old. We are still in Amazon’s tenth year.

Open Systems Will Ultimately Prevail

Look further into the future.

What is the essence of crypto technology? It transforms financial assets into transferable digital files, making sending dollars or stocks as simple as sending a PDF. It breaks down barriers and achieves financial openness and interoperability.

History teaches us a core principle: open systems will ultimately prevail.

Interest groups will resist, governments will posture, but in the end, they will yield in the face of the widespread adoption, creativity, and extreme efficiency brought by this technology. Just as the internet reshaped all industries, blockchain will similarly engulf the entire financial and monetary system.

Yes—given enough time—all will be swallowed.

Conclusion: Become a Believer, Not a Commentator

There’s an old saying: people tend to overestimate changes within two years but underestimate revolutions over ten years.

If you believe in exponential growth, and if you broaden your time horizon sufficiently, everything still appears cheap. The perspective of large capital is far more profound than that of short-term traders on crypto Twitter.

I advocate: applying P/E ratios to smart contract public chains is essentially abandoning exponential growth. It means you are classifying this industry within a linear growth paradigm, implying you believe the current scale is the end point.

What I urge is: become a believer in this transformation. Not just a believer, but a long-term believer.

I firmly believe this exponential transformation will surpass any venture you participate in during your lifetime. This is your “e-commerce revolution.” When you look back in old age, you will tell your descendants— I witnessed this great change firsthand. Not everyone believes that social systems can be reconstructed, or that the programs running on our collectively owned decentralized computers can change money and finance.

But it has indeed happened. It has changed the world.

And you, you were once part of it.