Just watched the interview with Shayne and Elaine from the

foundation. He said currently the network is generating $4 million dollars (in fees) with the 16 billion transactions they've done, yet HBAR has an $829 million dollar market cap.
So why the massive disparity in the fees generated and marketcap?

Similarly, he stated in 5 years he can see 10k TPS and 40 million in fees. So why would HBAR be worth (in marketcap) $1 billion+? Am I just not understanding the math?

If 10k TPS is the"breakeven point" how is the project worth (potentially)$1 billion+. Is that not akin to a software company generating $40 million in revenue, yet having $40 million in expenses (overhead) and being worth $1 billion?

Or am I not looking at this the correct way?

I understand where you are coming from, but I think we have to resist looking at traditional stock models when looking at crypto metrics. One reason being the crypto is required to pay for network transaction fees. This will put upward price pressure that you don’t see with stocks - in your example, customers of software company x don’t have to buy stock in company x to pay company x for their services. There are a lot of unknowns 🤷🏻‍♂️

I agree, they're not the same model but someone, somewhere, has to have a model to value crypto then. I still don't see if something is "breaking even" how it's overall value can be in the billion-dollar range. That's what I'm trying to figure out

In crypto, market cap is calculated by multiplying the total number of coins that have been mined/in circulation by the price of a single coin at any given time.

Correct, I know what marketcap is. My question is, why would a project have a marketcap of $1 billion dollars IF, the network is only breaking even $0 (-$40 million + $40 million = $0) as discussed on the HBAR Bull interview.

The above link should explain better

I appreciate that article, That definitely helped explain 1 side of the equation- marketcap. But the question remains then, how do you accurately value a crypto project? What metrics would you use to find value relative to dollar value to determine if something is under-valued or over-valued?

The easiest way I can explain is to imagine you owned shares in hedera and you also hbar. As hedera grew in value so to would the share price. Hbar only grows based on demand, not value. Its even possible (although unlikely) for hedera to grow in value and for hbar to remain static in price

You can't

Maybe veiw crypto as commodities rather than stocks. They are nothing like stocks

It's all about supply and demand, BTC didn't go to $68k because of it's revenue. Look at Gold for example, what defines it's price? With HBAR it's all about adaption and demand, the revenue will increase eventually and will be used to sustain the network

Where are they getting an 829m mcap from. And I would have hoped for more TPS than 10k in 5 years. Not saying 10k is bad but with all the use cases being spoken about, I would have thought it would be higher. I've often spoken about the lack of correlation between the value of a blockchain company and its token price. I invested in a project that valued itself at 4.5bn, yet it had no on-chain activity at that time. Being from tradfi, the owners didn't seem to grasp that you cannot sell a token in a private sale based on tradfi valuations. If there is no hype around the token, there is no speculation and no price rises. Unless, of course, there is exponential growth in terms of use cases creating demand for the token in terms of transactions. The mcap of HBAR (not fully diluted) is 1.8bn according to CG and CMC. Not sure where they get 829m from, unless the data on CMC and CG is wrong. You can't base mcap on revenue being generated at all. It's just demand for the token and that can come from retail or enterprise use cases. Doge and Pepe don't have any enterprise use cases.

There is no universally accepted answer to this question. Try applying your model to a meme coin or ADA or __________(fill in the blank). There are no rails, but it seems people try to put rails up for Hedera - maybe because they are trying to be the adult in the room? Everyone is making it up as we go along. Here’s another wrench to throw in the mix…Hedera is a nascent tech company. They don’t act like other companies either. Look at Uber - they just posted their first revenue positive quarter after 14 years and have about a $90 B market cap.

Interesting discussion. In the traditional space a company is valued 15-20 times the yearly profit it makes. The current value for utility projects like Ethereum is only possible due to high fees. This is not sustainable on large scale with competitors wich are very much cheaper in fees. The valuation of Hedera can be based on future expectations but what is realistic. I get the impression that we are in the year 2000’s of the internet bubble. The crypto industry has value but a lot a valuations are insane.

Yeah, it was probably the most eye opening article regarding crypto I had ever read at the time. A must read for everyone imo

The $829m marketcap is what I pulled off of Coincodex live when I posted that, not a quote. Seems like a lot of sites/apps have different marketcaps listed as well (thus adding to the confusion). There will have to be better metrics in order for Wall St to get involved.

Absolutely mate. They need some method of valuation based on adoption rate.

BTC is another story. It is seen as a store of value. It is something very different then utility tokens.

Btc is no different. It is just more successful

Speculative trading is wat drives price fluctuation most. The fundamentals attracts the traders. In crypto it has been other way around. Founders pump price action and crypto traders are attracted by price action. The market will mature. The correlation between tps, fees and mcap is minimal now because fees are almost negligible. But I am certain some time in future fees will increase.

I mean different in a way that there is no central control. In the case of Hedera things can be changed by the GC. I don’t mean that it have to be a bad thing, it is another concept. For a big group of people the BTC concept as store of value is very attractive.

I agree with that. I just meant that it's no different in terms of it ultimately being speculative.

You could also say this for gold. But can BTC be compared to gold? That belief makes the value.

Early days, but yes, perhaps. Value is simply what someone is willing to pay at that given time. It can be entirely irrational. Even the dollar is based on faith. When it comes to investments, only sound fundamentals matter imo. By and large, if you're invested in crypto, you're invested in a loss making company

Whether it's different or the same, who make up it's price? My whole point was that Hedera's income has nothing to do with it's valuation. There is no black and white rules in crypto space to define a price of a coin. It all depends on demand from retail or institutions. I think people question Hedera because the team are running the project like a proper company and they are really involved with big institutions which for long term of the project it's the best way to do it but for now HBAR is also following the market in terns of price. Down during the bear market and I promise you it will be explosive during the next bull market

So... Should I sell my hbar?

I agree with you on your company analysis. Hedera is my largest holding because of that fact.