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A return to fundamentals?
Chart: sun.pump vs. pump.fun
A return to fundamentals?
Through my recent adventures during Token2049/Breakpoint week, one idea that consistently came up among builders and especially investors was a return to "fundamentals."
It’s a recent narrative in the amorphous zeitgeist of Crypto Twitter, slowly percolating for the last few months.
The idea is that crypto markets are becoming less speculative as they scale the "slope of enlightenment" in the Gartner hype cycle. In this framework, capital allocation is increasingly tethered to "real" business metrics that accurately reflect product-market fit rather than market trends.
Let’s test the theory. The following are the top-10 price gainers in the last 60 days, filtered by the top-100 market cap tokens.
We’ll look at just the top five today, starting with the fifth: Fantom.
Fantom was a hyped L1 blockchain in 2021 that rebranded earlier this year to Sonic. Evaluating the "profitability" of an L1 network typically involves a simple calculation: revenue (transaction fees) minus expenses (token issuance) = profit (though that methodology has been disputed).
On that basis, Fantom’s price rally isn’t justified by strong fundamentals given its net losses in the last three quarters.
In fourth place is the DePIN network Helium. Helium’s price rally seems justified by strong fundamentals. The decentralized wireless network has seen a 4.4x growth of subscribers to 115,264 in the past year. That translates to an annual recurring revenue (ARR) of $3.5 million, and the network saw a record high burn for data credits for network usage two days ago. Data credits are the gas token for the Helium network and swappable from its native HNT token, indicating strong value accrual to the latter.
In third place is Bittensor, the golden child token of the Crypto/AI sector.
Bittensor has a somewhat confusing business model. But you can think of it as a layer-0 blockchain that powers a marketplace of layer-1 "subnets" where users can be paid to perform various AI tasks, from fine-tuning and pretraining to inference.
Bittensor’s tokenomics mirrors Bitcoin’s four-year halving model, which means there is heavy token issuance to subnet miners, at least in its early years: about $1.5 billion annually. Suffice to say: Bittensor is not making that much in revenue.
How about Aave? In the five examples we looked at, AAVE’s price rally is probably the most strongly backed by key investor metrics.
The DeFi lending OG gives out almost no token incentives yet has managed to hold on to 63% market share (measured by active loans), far outpacing its closest competitor Spark at 12.7%. Its TVL has doubled to $20.6 billion on a YTD basis, and total revenue generated across Ethereum, Polygon, Arbitrum, Avalanche and Optimism in the last year is $66.6 million. This sum even exceeds revenue numbers from the peak of the last bull cycle in 2021.
Finally, we come to the MoveVM L1 blockchain, Sui. Its TVL growth has seen an impressive rise from $242 million to $1.2 billion on a YTD basis, but TVL is easily gamified and not quite a "fundamental" metric.
Assuming 747 million transactions and an average transaction cost of 0.003 SUI (at today’s price of $1.57), the network has generated $3.51 million in transaction fees for the last three months. It’s not clear how much token incentives the Sui Foundation is giving out, so it’s hard to tell how "profitable" the Sui blockchain is. But we do know that the network has been unlocking a huge amount of vested tokens since the beginning of 2024, from $1.13 billion to $2.83 billion today.
Are we at a return to "fundamentals" yet? You decide.
— Donovan Choy (X: @donovanchoy | Farcaster: @donovan)
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Sun.pump vs. pump.fun:
TRON’s attempt at eating Solana’s memecoin market share was off to a bright start, but is now seemingly tapering off.
As of yesterday, Sun.pump has generated 3% of all memecoins, compared to 97% of Solana’s pump.fun. In absolute numbers, Sun.pump generated about 201 tokens against pump.fun’s 6,576.
— Donovan Choy
SKALE is a modular network of EVM-compatible chains with pooled security. As the pioneer of the chain subscription model, its main value proposition is offering a gas-free blockchain experience for end users. SKALE chain growth will be a key metric to follow as the network’s economic sustainability depends on new chains joining the network and paying a monthly subscription fee.
Sanko Game Corp (DMT) is a crypto-native gaming and social media studio building a suite of products ranging from Animal Crossing-style games to an onchain Twitch competitor. They raised funds publicly, have high float and could pose as an antithesis to low-float, high-FDV crypto gaming infrastructure projects with less organic activity if they are able to deliver on their next suite of upgrades, new games and expansions.
SKALE is a network of EVM-compatible chains with pooled security. SKALE stands out by offering a gas-free blockchain experience for end-users. It is able to do this by shifting validator compensation to developers. This business model has allowed SKALE to find traction in the gaming sector, demonstrated by the activity in the Nebula and Calypso hubs. As the network matures, SKALE chain growth will be a key metric to follow as the network’s economic sustainability depends on new chains joining the network and paying their monthly subscription fee.
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The insights, views and outlooks presented in the report are not to be taken as financial advice. Blockworks Research analysts are not registered broker/dealers or financial advisors. Blockworks Research analysts may hold assets mentioned in this report, further outlined in the Firm’s Financial Disclosures.
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