Duality thinking is like a "Medicine" - The reason cryptocurrencies need to break free from linear valuation

Crisis of Trust or Lack of Understanding?

In 2024, the cryptocurrency community is witnessing a concerning phenomenon: confidence in the future of blockchain has hit rock bottom. Not because new projects lack potential, but because of a completely different psychological attitude — what we can call “financial skepticism.”

Unlike previous years when the industry was immersed in “financial nihilism” (claiming all assets are just worthless memes), the current market is caught in a more subtle psychological trap: people acknowledge that tokens have real value, but believe they are overvalued. As a result, even when Monad or MegaETH launch, they are still heavily criticized — something that has never happened before.

A new phenomenon has emerged: those considered the “smartest” ignore blockchain tokens. They fear that Wall Street will eventually discover the “show” and everything will collapse. Then, analysts trying to build valuation models based on REV (Real Economic Value) or when Hyperliquid launches with a true P/E ratio, the community thinks they have finally found the “rational formula.” But this is where everyone makes the most fundamental mistake.

Why the “Linear Valuation Model” Is Misguided

The core issue isn’t about choosing which metric to use, but about binary thinking that is dominating the industry — calculations based on linearity instead of exponential growth.

When decentralized exchanges like Hyperliquid appear with real buyback mechanisms and measurable profits, the community begins to believe this is a “real asset.” They forget an important detail: the initial reason people hold ETH and SOL isn’t because of revenue or profit models, but because of long-term exponential growth prospects.

If you want a token with a P/E ratio like an exchange, you could have bought COIN or BNB long ago. The problem is, optimistic analysts are trying to use “linear valuation” (to cure) the “doubt” (disease). But this medicine is even more dangerous than the disease itself.

Why? Because it makes you believe that this game isn’t worth participating in. It suggests that even if a new blockchain wins, it doesn’t deserve the $30 billion reward that ETH currently has. And if you believe that, why hold at all?

Lessons from Amazon and Wall Street’s Mistakes

A fundamental understanding of blockchain must be different. Look at Amazon.

From 1995 to 2017 — 22 years — Amazon continuously posted losses. Every year, thousands of analysts wrote articles criticizing it, calling it a Ponzi scheme about to collapse. They argued that e-commerce was only suitable for electronic products, only tech-savvy users would use it. How can you sell perishable food online? How can you compete with Walmart on profit models?

All these questions are valid if you think linearly. But e-commerce is never a linear trend. It grows exponentially.

In Amazon’s first 10 years, the stock didn’t increase much. But those who held long enough — truly believing in the story — became billionaires. Not because they were smarter, but because they understood the difference between linear and exponential growth.

Silicon Valley grew on exponential thinking. Wall Street is immersed in linear thinking. And in recent years, the focus of the crypto industry has gradually shifted from Silicon Valley to Wall Street. You can clearly see this through debates about P/E, REV, or valuation models based on revenue.

Ethereum just turned 10 — Amazon took 22 years

An interesting fact: Ethereum just celebrated its 10th anniversary. Comparing to Amazon’s first 10 years, the market was still flat — no clear explosion. But that’s a sign of exponential growth, not failure.

Long-time VCs have witnessed the explosive growth of China’s internet firsthand. They recall discussions from the early 2000s: how big could the e-commerce market be? Is it suitable for women (because they need tactile experience)? Can the food industry manage perishable goods?

All these doubts make sense on their own, but they overlook a key factor: exponential growth not only exceeds linear expectations — it exceeds even the expectations of believers.

It turns out, the value of mispredicting exponential phenomena is enormous. The only ones making money from e-commerce are those who “don’t sell” — those who hold long enough to see it evolve from a crazy idea into a trillion-dollar platform.

Cryptocurrency was once the “Big Four” of technology

When entering the crypto industry, no one used these technologies. They were small, dirty, and inefficient. On-chain TVL was only a few million USD. Early DeFi projects like MakerDAO, Compound, 1inch were just research projects.

Remember EtherDelta — a DEX that was considered successful if it traded a few million USD daily, but with extremely poor user experience. Now? We see tens of billions of USD in daily on-chain transactions.

Back then, Tether’s issuance reaching 1 billion USD (USD-pegged) was considered “crazy.” The New York Times even called it a Ponzi scheme about to collapse. Today? The global stablecoin market exceeds 30 billion USD, under the supervision of the Fed.

I believe in exponential growth because I have lived through it. I have seen it repeatedly. And those doubting that this value will flow back into blockchain? They haven’t yet fully believed in exponential growth.

“Open” Always Wins

A fundamental truth: financial assets crave freedom, openness, and connectivity.

Encryption technology makes financial assets into programmable formats, making sending USD or stocks as easy as sending a PDF. It connects everything — creating a 24/7 global financial network, fully open.

This will definitely win. Because openness always wins. If the internet taught me one lesson, it’s this.

The giants will oppose, governments will threaten and pressure, but ultimately they will concede to the speed of adoption, innovation, and efficiency. That’s what the internet did to all traditional industries. Blockchain will cause a similar wave that will swallow the entire financial and monetary system.

Yes — given enough time — everything will be swallowed.

Binary Thinking vs Long-term Vision

There’s an old saying: People tend to overestimate what will happen in two years, but underestimate what will happen in ten.

If you believe in exponential growth, if you look far enough ahead, all valuations are still undervalued.

Every day, holders are more persistent than sellers and skeptics. Large capital flows operate on a much longer time horizon than short-term traders want you to believe. Historical experience teaches that big money should not fight major technological trends.

Do you remember the big story that initially made you buy ETH or SOL? Large capital still believes in that story. It has never wavered.

Conclusion: Advocates of Exponential Growth

I argue that: applying P/E or revenue-based valuation models to smart contract blockchains is a betrayal of the exponential future. It means categorizing this industry as linear growth. It means believing that 30 million on-chain DAUs and less than 1% M2 penetration are the ceiling of the crypto world.

I call on everyone to become advocates — not just believers, but long-term believers — of exponential growth. This wave of change will surpass every wave you’ve experienced in your life. This is your “Amazon era.”

When you grow old, you will tell the next generation: “When major disruptions happened, I was there.”