Crypto Asset Value Shifts Towards Revenue-Driven Model

According to Bitwise's Chief Investment Officer Matt Hougan, the crypto market is shifting towards a new model where asset value will increasingly depend on revenue generated by underlying protocols. This means that as user activity grows, a portion of fees collected by protocols is used to reduce supply.

Hougan cited Hyperliquid as one of the leading examples of this approach. The protocol generated over $800 million in revenue last year and about 99% of that amount was used to buy back and burn HYPE tokens.

Other projects such as Uniswap, Aave, pump.fun, Lighter, and Solana are also adopting similar approaches by directing a portion of their revenue towards buying back and burning their own tokens. Hougan believes this link between protocol revenues and token prices will lead to the market repricing crypto assets.

Hougan notes that the situation began to change after the court ruling in the SEC v. Ripple case and the subsequent shift by the US regulator toward a more favorable approach to cryptocurrencies. He expects further growth in protocol revenues over the next 12-24 months, with DeFi protocols and L1 blockchains generating more revenue.