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As DeFi matures, quantifiable metrics will supplant vaporware memes in determining valuations for cryptoassets.
A brief look at some of the major protocols today
A brief look at some of the major protocols today
1/ While liquidity is highly mercenary and hence TVL is a poor benchmark for protocol value, it is a serviceable benchmark.
More sophisticated approaches will likely use trailing 6m average TVL to factor in retention.
Here are the DeFi aggregators:
More sophisticated approaches will likely use trailing 6m average TVL to factor in retention.
Here are the DeFi aggregators:
2/ One note here is that there's option value with auxiliary products not reflected here - e.g. $ALPHA has an upcoming perpetual swaps product which may warrant another way of ascertaining a multiple.
Such as the one below...
Such as the one below...
3/ For decentralized exchanges, the meaningful KPI is volume.
A more sophisticated way to do this would be to use say 3m revenues, or fees captured by token.
The following is just a 24h snapshot.
A more sophisticated way to do this would be to use say 3m revenues, or fees captured by token.
The following is just a 24h snapshot.
3/ Few observations:
- Among DeFi peers, $SUSHI seems to be grossly undervaluing its volumes on a fully diluted basis
- People have high expectations for Synthetix's Optimism implementation (can't wait!)
- For tokens with long dilution schemes this metric is less useful
- Among DeFi peers, $SUSHI seems to be grossly undervaluing its volumes on a fully diluted basis
- People have high expectations for Synthetix's Optimism implementation (can't wait!)
- For tokens with long dilution schemes this metric is less useful
4/ For lending protocols, borrow volumes is the meaningful KPI as that is where fees are extracted.
Following is in line with my expectations that people are pricing $AAVE as the higher growth counterpart to $COMP.
Following is in line with my expectations that people are pricing $AAVE as the higher growth counterpart to $COMP.
5/ Just like tradfi multiples, a lower multiple does not necessarily mean the token is better value, and a higher multiple does not imply the token is overvalued.
I'd rather pay 2x the price for a team that ships 10x as a fast than pay a discount for a product with no PMF.
I'd rather pay 2x the price for a team that ships 10x as a fast than pay a discount for a product with no PMF.
6/ One day we'll get to a point where @DuneAnalytics is this industry's 10-K but until then narratives probably matter more than fundamentals in a bull market.
But narratives can go as quickly as they come...
But narratives can go as quickly as they come...
fin/ Disclaimer: not financial advice; writer is long multiple assets in the post above
