300 to 2: A Valuation Experiment on Real Protocol Revenue

Written by: Edgy

Compiled by Chopper, Foresight News

I am looking for cryptocurrencies with valuation advantages. I applied three screening criteria to the top 300 tokens by market capitalization: revenue growth, valuation below that of comparable projects in the industry, and a price that has not yet reflected improvements in fundamentals.

In the end, only two projects fully met the criteria, and they shared common characteristics; the projects that were filtered out may warrant further investigation. Below are the findings of this research.

The goal of this screening is to identify projects that meet all three conditions simultaneously:

• Lower valuation compared to competitors in the same sector
• Revenue growth outpaces the market average.
• The token price has not yet reflected its fundamental bullish factors.

I compared the past 30 days of data with the previous 60 days, using CoinGecko's prices and DeFiLlama's revenue as benchmarks, and then asked Claude to help me analyze it.

This analysis makes a key adjustment: rankings are now based on the protocol's actual retained revenue, rather than total fees. Fees represent the total amount paid by users, while revenue reflects the actual profit retained by the protocol.

Using Jito as an example: for every $100 in fees generated, the protocol retains only about $6, with the vast majority distributed as MEV rewards to validators.

If valued based on total fees, Jito’s P/E ratio is only 4.5x, appearing highly cost-effective; however, when calculated based on the protocol’s actual retained revenue, the valuation reaches 73x.

Lido retains only about 6% in fees, while Uniswap retains 8%.

If you judge solely by transaction fees, the "undervalued opportunity" you found isn't real.

First-round screening identified 38 assets with valid statistical data:

• Initial sample: 300 tokens
• DeFiLlama can be used to query revenue data: 117.
• Excluding public chain projects and those with insufficient scale, 38 projects remain that have protocols capable of retaining revenue.

Projects like Morpho, Ondo, Celestia, The Graph, and EigenCloud are all excluded. Although these projects generate fees, the revenues do not flow back to the tokens themselves.

Then, apply three sequential screening thresholds, comparing each project to the median fully diluted valuation (FDV) of its respective sector (trading, lending, staking, and other sectors):

• Valued below peers → 18 remaining
• Revenue growth rate above the sector median → 9 remaining
• Price performance lags behind the sector median → 3 remaining

Added additional stress testing to exclude revenue anomalies caused by single-day pulse spikes, leaving only 2 remaining.

The industry median is an average revenue increase of 18% and an average token price increase of 25%. To qualify, the project must achieve a revenue growth rate exceeding 18% while the token price increase remains below 25%.

Bias introduced by fully diluted valuation (FDV)

Using FDV instead of market cap for valuation has directly eliminated many projects with solid fundamentals. Hyperliquid is the most typical example: based on market cap, its revenue multiple is 28x; however, when calculated using FDV, the valuation reaches 120x, as only one-quarter of the total supply is currently in circulation.

This evaluation criterion may not be entirely fair to HYPE, but this selection process uniformly applies these rules.

Undervalued with strong business growth, but the price has already fully reflected its value.

Pump remains the strongest business model among this round of selections. With $57 million in revenue over 30 days and a valuation under 6x, revenue has increased by 80% while the token price has risen by 61%. The market has fully priced in these factors, leaving no undervaluation opportunity. The market pricing for such tokens is efficient and reasonable.

Undervalued but not favored by the market, with the business no longer growing.

Value trap zone: low price does not equal undervaluation. Collector Crypt has a revenue multiple of only 2.4x, the lowest among the top 300 tokens, but its revenue has declined by one-third.

Business growth and market attention are weak, but the valuation is not cheap.

Revenue continues to rise, while the token price remains flat or declines, seemingly presenting an excellent opportunity to accumulate. However, when compared horizontally with competitors, their valuations are actually elevated.

If you look only at fee data, Jito can easily mislead investors: revenue increased by 44%, token price dropped by 13%, and the fee-based valuation appears at just 4.5x. This seems like an excellent opportunity, but when adjusted for actual retained revenue, the valuation reaches 73x.

Bonk faces another issue: after excluding the surge data from the past three days, its 57% revenue growth turns into a 17% decline, suggesting this growth was likely just a short-term spike driven by Solana’s market conditions.

Meet all three conditions simultaneously.

Aethir failed the revenue stability stress test, with 65% of monthly revenue concentrated in a single day. The underlying causes have not yet been thoroughly investigated, but preliminary data suggest a high level of risk.

In the end, Orca and Jupiter remain, both being decentralized exchanges on the Solana ecosystem.

It is essential to objectively provide context: In that month, SOL rose by as much as 42%. Part of the exchange’s revenue growth stems from the lagged effect of the Solana bull market, but there are also independent fundamental drivers. The revenue growth of both projects outpaced SOL itself, while their token price increases significantly lagged behind the blockchain.

Jupiter's business model is more mature:

• 30-day revenue of $6.4 million, with a revenue growth rate of 44%
• The fee retention rate is 34%, and this sample demonstrated outstanding profit quality among the selected criteria.
• The coin price increased by 22%, while the median for the sector is 25%, barely meeting the "price lag" screening criterion by a narrow margin.

Orca has a lower valuation and a smaller project size:

• Monthly revenue of $700,000, ranked 293rd in market capitalization
• Revenue doubled and was spread evenly throughout the month rather than concentrated in a single night, indicating genuine growth, though the project scale remains relatively small.

Meteora is worth noting. It fell short of its growth target by 0.04 percentage points, with revenue increasing by 18.33% against a target of 18.37%, and a P/E ratio of 7.9x.

The content of this article does not constitute any buy recommendation. I will use a comprehensive evaluation system to deeply identify truly undervalued assets, and further research across additional dimensions will be required.

This screening includes only projects with at least 60 days of revenue history, so the Robinhood Chain token, which has been listed for a shorter period, is not included in the statistics.

The core purpose of this list is to identify cryptocurrency projects that have achieved business growth but whose token prices have not yet reflected their upward potential.