In the wild world of crypto, few topics spark as much heated discussion as how to value Layer 1 blockchains. Think Ethereum, Solana, or Bitcoin—the foundational networks powering decentralized apps and tokens. Yet, as a recent exchange on X highlights, we're still fumbling in the dark after a decade of innovation.

It kicked off with analyst Ryan Watkins dropping a truth bomb: "L1 valuation debates are hilarious because we still don’t even have a basic shared understanding of wtf L1s are at an economic level. It’s been 10 years since Ethereum launched, and everyone is still talking past each other using their favorite metrics to justify their own bias."

He's spot on. Since Ethereum's debut in 2015, we've seen explosive growth, but the core question lingers: What are these L1s, economically speaking? Are they tech platforms? Digital commodities? Something in between? Without consensus, every bull and bear pitch feels like shouting into the void.

Enter qw (@QwQiao), who nailed the frustration in a sharp reply: "the fact that the market cant agree on wtf l1s r at an economic level or how tf to value them is tautologically why its hard to make a compelling bull (or bear) case for them."

In plain English? The lack of agreement is the reason we can't build solid investment theses. It's a self-fulfilling loop of confusion.

But qw doesn't stop at venting. He cuts to the chase on what really matters for traders: "to make money in markets u have to own something that the market will eventually catch on to." Spot on advice. Crypto's history is littered with tokens that soared once the crowd "got it"—Dogecoin as a meme-fueled rocket, anyone? Or Ethereum's shift from curiosity to DeFi powerhouse.

So, the million-dollar question (or should I say, billion-dollar?): Which story will the market latch onto for L1s?

The P/E Story: Treating Blockchains Like Stocks

One popular angle borrows from traditional finance: Price-to-Earnings (P/E) ratios. Here, you'd value an L1 based on its "earnings"—think transaction fees, staking rewards, or token burns as proxies for profitability. Proponents argue it's a grounded way to assess if a chain like Solana is overvalued compared to its revenue stream.

Critics? They say blockchains aren't companies. No boardrooms, no quarterly reports—just code and consensus. Applying stock metrics feels like forcing a square peg into a round hole, especially when "earnings" can swing wildly with market hype.

The Network Effect Story: Metcalfe's Law in Action

Then there's the network effect narrative, inspired by Metcalfe's Law: A network's value grows exponentially with its users. For L1s, this means more developers, dApps, and daily active users = higher token price. Ethereum's dominance? Chalk it up to its massive ecosystem lock-in.

This story resonates in meme token circles too—remember how PEPE or SHIB exploded on viral adoption? But it cuts both ways. If a new L1 like Sui steals mindshare with slick tech, watch the old guard scramble.

The Store of Value Story: Digital Gold 2.0

Don't forget the Bitcoin playbook: L1s as "store of value" assets. Scarce supply, halvings, and HODL culture position them as hedges against inflation or fiat woes. Ethereum's proof-of-stake upgrade amplified this, blending utility with scarcity.

Yet, in a meme-driven market, this feels almost... quaint? When Dogwifhat pumps on a hat-wearing pup, who cares about monetary policy? Still, for long-term bulls, it's the narrative that could anchor L1s through the next bear winter.

Something Else? The Wild Card

Qw leaves room for "something else"—and crypto loves wild cards. Maybe it's composability (how L1s stack like Lego for cross-chain magic) or real-world adoption via tokenized assets. Or, tying back to our meme roots at Meme Insider, perhaps L1s become meme factories themselves, birthing viral tokens that redefine value.

Whatever emerges, the lesson is clear: In crypto, conviction pays when the herd follows. As Watkins and qw remind us, the L1 fog isn't lifting anytime soon. So, practitioners, sharpen your lenses. Track on-chain metrics, follow the smart money, and bet on the story that sticks.

What narrative are you banking on? Drop your take in the comments—bullish on network effects or secretly rooting for the next meme overlord?

For more on meme tokens riding L1 waves, check our knowledge base or latest reports. Stay ahead of the curve.