The underperformance of the cottage market has raised industry doubts among many people. In a complex environment with different stages of industry development, increasing investment difficulty is inevitable. However, the fundamental problem lies in finding a long-term sustainable business model for the project.

Over the past decade, I have found that many industry insiders, even those with extensive experience, do not fully understand why public chains have consistently dominated the top 100 rankings. They wonder why leading public chains attract billions or even trillions of funds, while your coin struggles to attract even millions or billions. Personally, I prefer to simplify complex matters, so I attempt to analyze this issue from first principles.

Starting from the first principle, P=E*PE, which means Stock Price = Profit * Valuation. Therefore, in the long term, the factors influencing stock price are only profit and valuation.

Firstly, Valuation PE. This is quite complex, with numerous influencing factors such as growth potential, interest rates, penetration rates, industry space, central bank liquidity, monopolies, and more. For instance, Warren Buffett said he doesn't invest in BTC because it lacks cash flow (you can consider cash flow as profit). In the long term, I feel that most of what he said is valid. However, in the above stock price formula, only profit E is considered, without taking into account valuation PE. From another perspective, MEME/BTC can be classified under the PE factor. As long as your MEME continues to attract buyers, it can rise without creating its own cash flow, but an important premise is that it stays within a certain market value. The larger the market value, the more buyers you need to attract. Without sustained cash flow support, it is very difficult to last.

Secondly, Profit E. Let's mainly discuss this. Profit comes from revenue, so for stock prices to rise, revenue must increase. And where does revenue come from? It comes from the business model, which is defined as the business activity that generates profit by providing goods or services to others. In 2006, Duan Yongping spent $620,000 to have lunch with Buffett and asked him a question that had long troubled him: What is the most important thing in investment? Buffett's answer was the business model. A company cannot sustain long-term development if it doesn't know how to make money. The core driving force behind the continuous rise of the seven sisters of the US stock market is profit, not other short-term factors.

The question is, what is the business model in the cryptocurrency industry?

In my opinion, it mainly revolves around: block space fees; SWAP fees, which include exchanges (DEX/CEX); lending, interest differentials; stablecoins, transaction fees; MEV, which parasitically exists in block space. Other aspects are easy to understand, but let's focus on block space fees.

What's actually very subtle is that the cryptocurrency industry has created a new business model: selling block space, which means public chains price and charge for block space using GAS fees. Global consumers purchase access and storage rights to global computing/bandwidth resources based on the basic price of each transaction.

I used to be very puzzled by a few words, what does "value" internet mean? We know that most of the information on the internet is free, such as images, text, videos, etc. Information can be infinitely copied, so in the early stages of internet development, people didn't know how to make a profit. It was only through subsequent exploration that they gradually discovered the internet's business models, including earning money through SaaS subscription services, advertising, and transactions (e-commerce). So where is the business model in blockchain? I later understood the concept of the value internet in the cryptocurrency industry, which is a paid internet. Every click requires payment of GAS. There is a significant difference between blockchain and the free internet. You cannot repeatedly pay the same amount to others using a single unit of money, which the free internet cannot solve. Therefore, as it extends from currency to public chains, its uniqueness lies in making consumers bear the cost of accessing block space. Over the past few decades, enterprises in the internet industry have leased computing resources and paid AWS bills to provide products and services to customers, thereby earning revenue. But on blockchain-based applications, users pay for project operating costs. Global consumers pay tens of billions to hundreds of billions of dollars in GAS fees each year, and this is the revenue of public chains. For example, the total USDT issuance on TRX has reached 60 billion, occupying a significant portion of the USDT market. I found that TRX's annual income is approximately 400-500 million USD, with 75% of it coming from USDT transfer fees, which amounts to a profit of 400 million USD. If we give it a 20x PE, an 80 billion valuation for TRX is reasonable. However, the key point is not this. The key point is whether this data can increase tenfold or more in the next ten years. How much incremental market share can SOL gain in the future with its payment/open finance initiatives? I've digressed, and I won't further expand on the topic of expansion here.

You need to understand that I am only trying to explain why the public chain market is huge. I have only explained the existing phenomenon of your willingness to pay GAS fees. I have not delved deeper into why you need to pay GAS and why more people will pay GAS in the future. Is it for transfer payments? Wealth accumulation (hoarding GAS)? Entertainment (paying for a certain DAPP)? The demand for trading cryptocurrencies/commodities/stocks/SWAP? You should know that if no one pays GAS fees in the future, the public chain market will cease to exist. Therefore, when you see some fancy terms, it's hard to tell whether it's due to the early stage of development in the cryptocurrency industry or the difficulty in practical implementation. The promotion of these abstract terms that are difficult for ordinary people to understand, such as scalability, ZK technology, L2, UTXO, chain abstraction, modularization, homomorphic encryption, parallel EVM, etc., is probably because I didn't participate in the early development of the internet. In the internet field, these terms are rarely mentioned, but they are repeatedly emphasized in the cryptocurrency industry. I am now resistant to these terms. After understanding the basic concepts, I directly ask: How much revenue can this technology bring me? How much profit can it generate for buybacks? Otherwise, where is the market fit for your technology? I can support long-term cultivation of basic technology/basic disciplines, but tell me, how long will it take to obtain a clear business model? Two years, ten years, or twenty years? The more complex questions to consider are how to increase GAS revenue in the future and who can occupy the leading market share. Although I have chosen SOL?

Therefore, since public chains are products with revenue, cash flow, and profit, their business model is clear and has a way forward. The remaining task is to decide how to expand revenue, increase market share, and reduce costs in line with the path of business development. Many projects in the cryptocurrency industry lack a business model; they don't even know how to make money. Only 3% of the Fortune 500 companies have survived until now. Investment is about finding these 3% of projects and holding them for the long term. Many investment philosophies are very simple, but implementing them is very difficult. With tens of thousands of projects in the cryptocurrency industry, it's difficult to see the value and make investments. Be serious about investment.

How clear is the river, and how long is life? Don't indulge in impractical and unrealistic things. Stay grounded. Otherwise, time is running out for you.

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