Crypto Market Shifts Toward Revenue-Driven Valuations
Bitwise Chief Investment Officer Matt Hougan believes that crypto is transitioning into a market where revenue plays a significant role in determining token valuations. He argues that one of crypto's longstanding weaknesses has been the limited connection between successful protocols and the value captured by their tokens.
Hougan highlighted Hyperliquid as an example of this shift, pointing out that it generated over $800 million in revenue last year and directs 99% of fee revenue toward buying HYPE on the open market. Since its launch, approximately $1.3 billion worth of HYPE has been bought and burned.
Other major protocols are adopting similar models, with Uniswap using protocol fees to buy and burn UNI, and Aave introducing automated AAVE buybacks funded by protocol and GHO stablecoin revenue. Hougan also mentioned Pump.fun and Lighter as projects directing substantial portions of revenue toward token repurchases and burns.
Hougan believes that investors have yet to fully price in this shift, which is why he thinks many crypto assets currently trade below their potential value.