Will crypto ever value DeFi on cash flows? I've been digging through @valueverse_ai data recently, and two metrics changed how I look at DeFi valuations. > The first is Effective Market Cap. Many DeFi tokens have emission schedules that dilute supply for years. Comparing revenue to FDV often tells you very little. A more useful approach is comparing revenue to the tokens actually circulating and locked in the market today. > The second is FCFM. It compares recent revenue to annualized revenue, helping distinguish between sustainable cash flows and short-term spikes. A good example is @yieldbasis. Recent volatility caused fees to surge, with a large portion of its annualized revenue generated in just a few days. Then you have @VelodromeFi and @AerodromeFi. Their revenue is far less exciting on a week-to-week basis, but it's remarkably consistent. I own some VELO because I find that type of predictability valuable. However, what's most surprising is how little the market seems to care. Crypto still prices assets based on narratives, momentum, and liquidity cycles. Meanwhile, some protocols are generating recurring cash flows while trading at valuations that would look absurdly cheap in traditional markets. At some point, fundamentals have to matter.

There's a metric I use to find undervalued assets on the market. It's MC/ANN rev (market cap/annualized revenue). The ratio compares how much the market values an asset vs. the revenue the protocol is currently generating. Protocol revenue doesn't determine token value on its own, but a lower ratio can suggest an asset is cheap relative to what it earns. I decided to see if that holds. Already bought $1,000 each of the assets below, and I will personally test their price performance over the coming weeks. Stay tuned.

Tokens are better than stocks Every step of the way, even raising funding is more streamlined and transparent Our space was just filled with scammers who pretended to be good actors by using our good faith tools But if genuine people used these tools to build real companies it would be an unlock in a lot of ways... As collateral, borrowing, liquidations, getting liquidity, seeing revenues, accounting, etc. Thankfully we have hyperliquid - the golden star that proved this In the coming year, a few more projects will shine through and we can stop being a blackpilled gambling scammer crime fuelled branded industry Because in the last few years everyone that got attracted was dumped on with valueless not even governance tokens So whats gonna bring them back when the stock market is the new casino with better “investor protections”? More hyperliquids Strap in, prove you're not a scammer, and be rewarded with the cleanest financial instrument in history: tokenization

DeFi Monk explains why Hyperliquid shouldn’t be valued using FDV “Right now we think it should probably be somewhere in between, if not closer to circulating” “That’s a massive shift in the story if all of a sudden Hyperliquid is not worth like $60B. I’ve had a background in equities before and there is no such thing as an FDV for the average stock” “No one ever sits down and goes what is the maximum amount of shares Nvidia could ever issue over the entire history of the stock. I think now that we’re introducing HYPE to this more traditional investor, we kind of need to speak on their terms” “The reality is the 40% or so of supply allocated for future incentives, I just don’t think that makes sense to be including in any sort of real market cap discussion” “One, we have no idea when and if that supply will ever come online and two, if it does, I think there’s a real chance Jeff and the team decide to use it in an accretive way where let’s say a dollar worth of HYPE incentives generates a dollar or more of HYPE buybacks” “So what is inflation really? It’s probably just staking rewards and team unlocks. That’s basically what investors should be focusing on”

Only 17 protocols paid their token holders last month. Here they are, ranked by holder revenue: 1. @HyperliquidX: $50.8M 2. @edgeX_exchange: $22.0M 3. @Pumpfun: $20.4M 4. @chainlink: $4.5M 5. @AerodromeFi: $3.8M 6. @Uniswap: $3.2M 7. @OREsupply: $2.4M 8. @PancakeSwap: $2.2M 9. @lighter_xyz: $2.1M 10. @JupiterExchange: $2.0M 11. @helium: $1.4M 12. @THORChain: $1.4M 13. @SkyEcosystem: $1.1M 14. @Raydium : $866K 15. @GEODNET : $700K 16. @pendle_fi: $625K 17. @gmx: $550K Out of over 1400 protocols, only 1.3% of the industry actually pays you.