Introduction
Dragonfly managing partner Haseeb Qureshi has sharpened his defense of Ethereum’s valuation, arguing that critics are using the wrong financial framework. In a recent podcast appearance, he contended that ETH should be analyzed more like an early-stage Amazon than a mature value stock, with blockchain fee revenue treated as pure profit rather than traditional sales. This perspective challenges conventional metrics and reframes the debate around how to properly value foundational layer-1 blockchain technology during its exponential growth phase.
Key Points
- Qureshi argues blockchain fee revenue should be treated as profit, not sales, because protocols lack traditional corporate expenses like hosting costs.
- He compares Ethereum's current valuation multiples (300–380x) to Amazon's peak P/E ratio of over 600x during its growth phase, not its lower P/S ratio.
- Qureshi believes Ethereum is still in an exponential build-out phase akin to early internet infrastructure, and short-term price volatility doesn't change the long-term fundamental thesis.
The Core Debate: Profit Versus Sales in Blockchain Accounting
The valuation clash between Dragonfly’s Haseeb Qureshi and investor Santiago “Santi” Santos, hosted by ThreadGuy and revisited on the Milk Road Show, centers on a fundamental accounting question: what constitutes revenue for a blockchain? Santos had labeled Ethereum’s valuation as “embarrassing,” citing a price-to-sales (P/S) multiple exceeding 300 times, which dwarfs traditional benchmarks like Amazon’s peak P/S of 42. Qureshi did not dispute the multiple’s magnitude but rejected the P/S lens entirely. His controversial claim is that “Blockchains don’t have revenue. They have profit.” He argues that when a protocol like Ethereum charges transaction fees, that income incurs no direct corporate expenses—there is no AWS hosting bill for the decentralized network. Therefore, this fee revenue is effectively net income from the protocol’s perspective.
This distinction is critical. Qureshi posits that what equity analysts might call “sales” for a blockchain is better analogized to the Gross Domestic Product (GDP) or Gross Merchandise Volume (GMV) of its on-chain economy—a vast, indirect metric not captured on a protocol income statement. “The sales in some sense is like the GDP of the blockchain which we’re not measuring,” he explained. The only clean, observable financial line is fee income, which he insists should be treated as profit. This reframing means Ethereum’s high P/S ratio of roughly 380 transforms into a Price-to-Earnings (P/E) ratio of the same figure, setting the stage for a different historical comparison.
The Amazon Analogy: Growth Over Immediate Profitability
Qureshi’s defense pivots on drawing a direct parallel to Amazon’s early history as a public company. He emphasized that Amazon prioritized massive growth and market expansion for nearly two decades before achieving consistent profitability. “Amazon literally made no profit until basically about 20 years in as a business,” Qureshi noted. Despite this lack of earnings, public markets assigned it extreme valuations based on future potential. He highlighted that in 2013, Amazon traded at a P/E ratio exceeding 600.
Under Qureshi’s framework, this is the apt comparison for Ethereum. If Ethereum’s fee income is profit, then its current P/E multiple in the 300–380x range should be evaluated against Amazon’s historical 600x P/E during its hyper-growth phase, not against Amazon’s much lower P/S ratio. “The right thing to understand is what is the profit of Ethereum relative to the profit of Amazon,” he argued. The core message to skeptics is that dismissing Ethereum based solely on a high P/S ratio is analytically inconsistent if markets once tolerated far higher earnings multiples for a company explicitly deferring profitability to build a dominant platform.
This analogy underpins Qureshi’s broader thesis, referenced from his essay “In Defense of Exponentials,” that transformative technologies like foundational blockchains are in a build-out phase. “None of [these technologies] started printing a bunch of profit immediately in the first five or even 10 years,” he stated, positioning Ethereum as digital infrastructure akin to the early internet, where growth trajectory matters more than near-term earnings.
Conviction Amidst Volatility: The Unchanged Long-Term Thesis
Despite recent market volatility that has seen ETH fall from around $4,800 to approximately $3,325 and general underperformance of altcoins versus assets like AI equities and gold, Qureshi stated his conviction in Ethereum has strengthened. “If anything, I have become more confident in my view,” he said, asserting that nothing material has changed in the underlying fundamentals over recent months. “What exactly has changed in the last 2 months…? The answer is basically nothing.”
For Qureshi, short-term price swings represent sentiment oscillating around a fixed fundamental anchor. A genuine reassessment of his bullish stance, he argues, would require a fundamental invalidation of core assumptions—such as a quantum computing breakthrough that breaks modern cryptography or a structural collapse in on-chain stablecoin demand. Absent such catastrophic shifts, he views the current valuation debate as a matter of applying the correct financial model to a novel asset class. His rebuttal to the “crypto is all a big casino” narrative is that Ethereum’s fee-generating economy represents real, high-margin utility, and its valuation, while high, is consistent with historical precedents for exponentially scaling platforms.
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