The central thesis running through the crypto-currency space is an unhealthy obsession with supply-side scarcity.

The ultimate goal of creating digital-gold, a scarce resource, confers upon the holder riches beyond its ostensibly low intrinsic value. Much like the pale yellow physical-world counterpart is intrinsically useless but conferred value by social consensus. (Clearly, crypto-architects have visited India during ‘wedding season’!)

Accordingly, crypto-architects endow their creations with a limited or fixed supply schedule. When limited supply meets increasing demand, hodlers will become rich.


Stellar’s work is important, and it is required.

However, as investors, our primary focus is a dispassionate analysis of the economic model that underpins Stellar’s investible asset — the Lumens token (XLM).

In our view, there must be a discernable economic link between increased network usage and returns to token holders.

We ask simple questions — How does the token generate returns? Is what’s good for the network also good for the token?

Accordingly, we now analyze the XLM token model in context of Stellar’s vision of developing a new financial system for the world. We unpack the sources of returns and determine whether these are attributable to token holders.


Daniel Gorfine — Chief Innovation Officer and Director of LabCFTC — released a piece this week that attempts to value Bitcoin (BTC) as a fiat currency such as the USD, EUR, GBP, and JPY. That is, according to the standard macroeconomic factors that affect the demand for a national currency: namely national interest rates, inflation rates, and production rates.

Mr. Gorfine’s piece, unintentionally, brings into sharp focus the mile-wide chasm between BTC and everyday fiat currencies.

As a former Econ Professor, I’ve seized this opportunity to flex my old skills a bit and delve into the specifics that were glossed over by Mr. Gorfine.