Crypto Investing Shifts to Data-Driven Approach with Revenue Reports

Crypto investing is evolving into a more structured and data-driven endeavor, moving away from its previous narrative-driven approach. This shift is evident as more protocols generate revenue and distribute it to token holders, providing investors with tangible metrics to evaluate. This development is significant because it allows for a more nuanced and informed investment strategy, aligning crypto investing more closely with traditional financial markets.

Historically, crypto investing has been characterized by a lack of quantifiable data, making it reliant on speculative narratives. However, the landscape is changing as protocols like Ethereum and Solana begin to generate and report revenue. For instance, Ethereum recorded $21 million in token holder net income for April, while Solana reported $36 million. These figures provide a clearer picture of the financial health and potential of these protocols, allowing investors to make more informed decisions.

The availability of these metrics is enhancing the storytelling aspect of crypto investing. Investors can now back their narratives with data, making the investment process more rigorous and less speculative. For example, the revenue generated by Solana apps is about 1.8 times greater than the revenue collected by Solana itself, indicating a high take rate that could suggest either overearning or a strong business moat. This data-driven approach allows for a more detailed analysis of the underlying value of these protocols.

Hyperliquid, a semi-decentralized crypto exchange, exemplifies this trend. The protocol earns significant revenue and distributes virtually all of it to token holders, creating consistent buy pressure. This model, while unusual in traditional finance, has helped the HYPE token outperform recently. The token trades at about 17x annualized revenue, which, given the revenue distribution model, seems reasonable if one believes in the protocol's continued success.

Jupiter, a Solana DEX aggregator, returns 50% of its revenue to token holders and is positioned as the default router on Solana. With an estimated $280 million in revenue over the next 12 months, the JUP token offers an 11.5% yield based on market cap. This yield, while high, does not necessarily indicate a distressed business but rather a protocol in a hyper-growth phase. Jupiter's strategic maneuvers and its position as a premier crypto super-app suggest significant upside potential.

Helium, a decentralized telecom provider, has been a long-standing crypto story but is now backed by accelerating revenue growth. With a 43% quarter-over-quarter increase in revenue, driven largely by Mobile Offload, Helium's HNT token is priced for this growth, trading at about 120x annualized sales. The surge in data credit use through AT&T is expected to further accelerate revenue, potentially leading to unprecedented and stable price appreciation for the HNT token.

Pendle, a yield trading protocol, is introducing a new offering called Boros, which will allow users to speculate on any off-chain or on-chain yield. This implementation, similar to a classical interest rate swap market, enters an enormous and untapped market with perpetual futures markets settling nearly $60 trillion annually. Pendle's token, in a bull case, might be trading on just 1.6x earnings, a valuation that is unusually low in traditional finance but could indicate significant growth potential in the crypto space.

In conclusion, the evolution of crypto investing towards a more data-driven approach is enhancing the storytelling aspect of the investment process. With more protocols generating and reporting revenue, investors have access to tangible metrics that allow for a more nuanced and informed evaluation of these investments. This shift is making crypto investing a more structured and less speculative endeavor, aligning it more closely with traditional financial markets.