In equity markets companies are valued on forward earnings projections. In crypto, protocols are typically valued on trailing annualized revenue. There’s a valid reason for this but in my opinion those reasons are becoming increasingly out of date. Historically, in crypto revenue has been more volatile and less predictable. Moats have been smaller in open source environments so there has been a bias towards valuing tokens on what the protocol has achieved, not what it can/will. Also, unlike with equities, protocols don’t typically provide forward guidance and there aren’t hundreds of equity research analysts providing their own forward estimates. Today, however, we are seeing protocols build larger moats with more defensibility, predictable revenue growth, and more clear value capture. $SYRUP is a great example of such a protocol/asset that could quickly re-rate when investors adopt more traditional time tested valuation methodologies. Currently, @maplefinance is generating $18MM annualized revenue (using last month’s $1.5MM in revenue) and is being valued at a $413MM market cap, which is 22.9x revenue. This is despite revenue growing at a break neck pace (300% year over year growth). Now, approaching this from a more traditional valuation framework, what will it generate in earnings over the next 12 months? I project Maple could produce $40MM of revenue over the next year, with earnings of $30MM after deducting operating expenses. Applying a 40x P/E multiple, that is a $1.2B market cap or $1.08 per token. I would also argue that 40x earnings is conservative for a company growing earnings by more than 100% annually. That means that at Maple’s current token price of $0.37, it could be considered undervalued by 66% by not using forward earnings estimates. To be clear this of course assumes others agree with these projections and the corresponding multiple but there is a lot of evidence to support those estimates. As more fundamentals focused crypto investors along with traditional equity investors begin allocating to DeFi protocols generating real revenue and earnings, I believe we could see many of these assets materially re-rate. Happy to be patient in the meantime. (None of the above should be considered financial advice, solely my personal views on the topic)

Lanet