Revenue-Routed Token Valuations on Track for Historic Surge

Bitwise's chief investment officer, Matt Hougan, believes that linking protocol revenue to tokens could double valuations in the crypto market. According to a memo from Bitwise, Hougan argues that the link between protocol revenue and token value is still not fully understood by investors. He points out that outside of Bitcoin, an increasing share of activity is translating into revenue that can directly create buy-side pressure for tokens.

Hougan cites several DeFi projects, including Hyperliquid, Uniswap, and Aave, which already use fees to reduce circulating supply through token burns or repurchases. He expects this approach to spread across DeFi applications and layer-1 ecosystems over the next 12 to 24 months.

Hougan attributes the growing interest in revenue-linked token economics to a more permissive US regulatory environment, which has reduced friction for revenue-sharing features. However, he notes that token holders do not have the same cash-flow rights as equity shareholders and that tokenomics can still change.