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"100% of the information you have about any business reflects the past, and 100% of the value of that business depends on the future."

— Bill Miller

‘Crypto value’ is no longer an oxymoron

ETH went down over the weekend, but it didn’t get any cheaper.

Ethereum’s revenue is denominated in ETH, so however much the price of ETH goes down, the dollar value of its revenue goes down by the same amount.

To a TradFi person like myself, this makes the price of ETH feel arbitrary — whether it goes up or down, its valuation (measured as a multiple of revenue) doesn’t change.

This applies to memecoins as well, which, having no revenue at all, cannot get more or less expensive in any meaningful sense.

Bitcoin, for example, is always infinitely expensive, no matter what price it trades at.  

I think that’s partly why crypto is prone to the type of sudden crash it experienced this weekend — if tokens don’t get cheaper when they go down, what’s the point of buying them when they do?

I ask myself that every time and have never had a good answer — until recently.

My reason for owning a crypto token has almost always been that I think it’s going up — so as soon as it starts going down, my investment thesis (such as it is) is invalidated.

This weekend, however, I noticed there were a number of tokens that looked more interesting to me at lower prices, a few of which I list below. 

I own experimentally small amounts of some of these tokens, but none of what follows is investing advice because I truly do not know a lot about them.

(For actual investment advice, you’ll have to subscribe to Blockworks Research.)

But these tokens all got cheaper over the weekend in a conventional, valuation-metrics kind of way — and just the fact that that’s possible makes me want to learn more about them as possible investments.

It’s been a while since I wanted to learn more about the investment merits of a crypto token as opposed to just its trading merits. 

Here are a few I think are worth learning about:

Grass: The Grass protocol is a "decentralized web scraper" and "user-owned network for obtaining real-time web data," as Blockwork Research analyst Daniel Shapiro describes it. 

I’m still not 100% clear on what that means, but the important thing is that AI developers will need a lot of real-time data "to keep their models competitive," Shapiro notes, and Grass will be able to sell it to them.

If nothing else, Grass has my attention simply because it sells data for US dollars and the demand for that data is unrelated to crypto markets.

So, when the GRASS token gets caught up in a crypto selloff, as it did this weekend, it gets cheaper — and potentially for no good reason.

How much cheaper is hard to say, because Grass doesn’t tell investors how much money it’s making.

"Although Grass keeps network revenue data private," Shapiro notes, "one can make some educated assumptions from publicly available data licensing deals to estimate the value of the network."

When he published his note just a couple of weeks ago, Shapiro’s educated assumption (which must have required a ton of work) was that GRASS traded on about 22x revenue (based on market cap). 

If so, when the token briefly collapsed to $1 on Sunday, it was probably trading below 10x revenue.

That might still not be cheap enough for a company that makes analysts guess at how much money it’s making.

But crypto investors are so starved for revenue — and especially for revenue that’s unrelated to crypto trading — that I think we can allow it.

Geodnet: Like Grass, Geodnet is a DePIN that earns revenue blissfully unrelated to the crypto market — it’s an "RTK" network that provides real-time corrections for GPS data. 

As niche as that sounds, RTKs are "critical to enabling a world of ubiquitous autonomous drones, vehicles and industrial robots," as Blockworks’ Ryan Connor explained in a recent note.  

The GEOD token currently trades on 25x its annualized revenue and that seems pretty reasonable to me given that its revenue is 1) recurring (like a SAAS business) and 2) growing:

If I'm right in thinking that Geodnet is a SAAS-like business, GEOD might be the rare token that would get a higher multiple from stock market investors than it does from crypto investors.

Kamino: In an October note, Blockworks Research analyst Carlos Gonzalez Campo concluded that Kamino’s KMNO token, trading on about 17x fees, offered "a good risk/reward profile" due to its growth prospects.

The token price is about unchanged since then (after round-tripping a big rally), but revenues are up quite a lot:

This is interesting because the most encouraging way for a stock or token to get cheaper is for revenue to go up (rather than the price go down) — and that’s what’s happening here. 

You’ll want to discount those earnings, however, because they’re crypto-related (and therefore volatile) and also backward-looking.

But Kamino, being a Solana-based lender, earns more fees when crypto gets volatile, so when the price of KMNO is going down with everything else, as it did this weekend, you can take some comfort knowing that its revenue is going up. 

Jito: A larger play on crypto activity is Jito, the liquid-staking protocol, which has just turned on its "TipRouter" to collect fees for prioritizing transactions — roughly $3.3 billion worth, if you annualize recent results.

The Jito DAO takes 2.7% of those tips and that puts its JTO token on approximately 17x revenue (assuming you’re willing to annualize). 

Blockworks’ Carlos Gonzalez Campo thinks that valuation compares favorably to stocks like HOOD and COIN, which trade on similar price-to-sales ratios, but are not growing as fast as Jito seems likely to.

Also, JTO holders can collect additional tip fees by staking their tokens, which will probably annualize to a yield of about 20% — not something you can do with your HOOD or COIN shares (yet).

Tensor: I include this one as a cautionary tale.

I bought the Tensor token about a week ago because it looked cheap based on its suddenly booming activity — it was trading at roughly 28x its trailing 30-day revenue.

But the below chart is a reminder that annualizing trailing revenue, as crypto investors typically do, is not an exact substitute for making an informed estimate of forward revenue, as equity investors do.

It might still work out. 

Vector is a "social-trading app" that monetizes people’s interest in trading memecoins, and this weekend’s crash notwithstanding, people seem to really like trading memecoins. 

But what its forward valuation is remains anyone’s guess.

JLP: I’m really getting out over my skis now because I don’t have any Blockworks research to lean on for this one. 

But if I understand it correctly, the Jupiter Perpetuals Liquidity Provider Token (JLP) is a pool of crypto assets that takes the other side of leveraged trades made by users of the Jupiter protocol.

This is a good business to be in because crypto traders are bad at trading crypto.

Here’s how traders on the Hyperliquid perps protocol have been doing lately:

Buying JLP (or HLP, for the Hyperliquid version) makes you the beneficiary of all that bad trading. 

It’s not risk free — crypto traders could, in theory, start making money and the pool of crypto assets JLP that holds (SOL, ETH, wBTC) could obviously go down.

But being long the major cryptos and short crypto traders while collecting a 35% yield might be something close to the ideal digital asset.

Maybe — these are not exact estimates, or even awfully good ones, and trailing revenue is always old news.

But the bittersweet truth is that "crypto value" no longer belongs among these oxymoronic cliches.

— Byron Gilliam

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