Crypto Market Shifts Focus to Application-Layer Projects as Revenue and Users Gain Prominence

The crypto market is shifting its focus from underlying infrastructure to application-layer projects, where revenue and users are becoming the new sources of value. This shift is driven by a prolonged valuation contraction and capital reflow in the market, causing investors to reassess token investing strategies.

Austin Barack, founder and managing partner of Relayer Capital, advocates for a more fundamental approach to valuing application tokens. He looks beyond revenue growth rates or buyback programs, instead focusing on whether products have real demand, can sustainably grow revenue, and can transmit business value to the token.

Barack identifies several key trends in the market, including the rise of programmatic buybacks and burns, which are establishing a valuation anchor for tokens similar to discounted cash flow. However, he cautions that these mechanisms have boundaries and require careful assessment of sustainability and credibility.

The conversation also highlights the importance of revenue quality over revenue itself. For instance, Pump.fun's low valuation may be due to market skepticism about the sustainability of Meme coin revenue, but its two consecutive years of revenue resilience suggest a changing perception.