Video title: Crypto’s Subsequent Winners Will not Be Blockchains
Video writer: Bankless
Compiled by: Peggy, BlockBeats
Editor’s word: In opposition to the backdrop of a chronic valuation contraction and capital reflow within the crypto market, discussions on token investing are shifting from “what is the subsequent sizzling narrative” to “which tasks have already fashioned verifiable enterprise fashions.” However as income, buybacks, and burns steadily turn out to be the brand new language of valuation, a extra essential query emerges: Can tokens be priced based mostly on money circulation like shares, and do their holders actually possess the worth created by protocol progress?
On this episode of the Bankless podcast, Austin Barack, founder and managing accomplice of Relayer Capital, joins to talk about valuation strategies for software tokens and the potential path for the crypto market to transition from an infrastructure cycle to an software cycle, specializing in tasks like Venice, Hyperliquid, Pump.enjoyable, and ether.fi.
On this dialog, Austin doesn’t merely search for tokens with the best income or the most important buyback packages. As a substitute, he breaks down token investing right into a set of extra elementary structural questions: Does the product have actual demand? Can income develop sustainably? Can enterprise worth be stably transmitted to the token? And is the market nonetheless utilizing outdated classifications to value companies which have already modified?
First, the screening logic for crypto belongings is shifting from purely chasing progress to discovering the intersection of “progress and worth.” Previously, the trade sometimes relied on new blockchains, new protocols, and token incentives to create progress expectations, with valuations reflecting long-term narratives. The extended bear market compressed this premium, inflicting a divergence between the few tasks which have discovered product-market match and are rising income shortly, and the huge variety of tokens missing actual utilization. This implies a downturn cycle does not simply supply value reductions; it additionally supplies traders a window to establish actual companies: tasks actually value watching want each progress pace and cheap valuation, not only one or the opposite.
Second, token worth is starting to shift from summary “utility” to observable worth accrual. Venice makes use of a portion of income from new subscriptions and credit score purchases to burn VVV; Hyperliquid makes use of most of its platform income to purchase again HYPE; Pump.enjoyable and ether.fi have additionally established their very own buyback mechanisms. Previously, there was usually a scarcity of clear connection between protocol income and token efficiency; venture progress did not essentially translate into holder returns. Now, programmatic buybacks and burns are establishing a valuation anchor for tokens comparable to discounted money circulation. Nevertheless, this stock-like framework nonetheless has boundaries: buyback ratios might be adjusted, and the rights relationship between the fairness entity and the token shouldn’t be absolutely institutionalized. What traders actually want to assess is not simply the size of income, but in addition the sustainability and credibility of the worth accrual mechanism.
Third, income high quality is extra essential than income itself. The market has lengthy given Pump.enjoyable a decrease valuation, partly as a result of traders doubt the sustainability of Meme coin buying and selling demand and battle to perceive consumer demographics totally different from their very own. This notion is altering because the platform’s income exhibits resilience for over two consecutive years. Equally, Venice’s valuation relies upon not solely on present subscription income but in addition on whether or not it could actually increase from a multi-model entry level into an AI software platform connecting builders and odd customers. This implies valuation can’t mechanically apply buyback multiples; it additionally requires judging whether or not income comes from momentary incentives and hype or a repeatable consumer habits.
Fourth, the market’s outdated classification of tasks can turn out to be a brand new pricing anomaly. ether.fi was beforehand considered as a liquid restaking protocol, however at present over 60% of its enterprise comes from Neo Financial institution merchandise like bank cards and lending, and it’s additional increasing into an on-chain complete brokerage platform. If the market continues to value it based mostly on the restaking monitor, it could overlook the modifications in its income construction. Extra importantly, ether.fi can immediately name upon the lending, stablecoin, and tokenized asset infrastructure on Ethereum to increase its merchandise with a lighter organizational and capital footprint. This implies that the true worth left by the infrastructure cycle might not proceed to be concentrated within the underlying protocols, however might be captured by functions that greatest bundle these capabilities and immediately serve customers.
Fifth, software income can present a valuation flooring, but it surely can’t fully decouple tokens from the crypto cycle. Tasks with buyback mechanisms can kind a comparatively unbiased pricing foundation via enterprise progress, however they nonetheless belong to the token asset class and are affected by market capital flows, BTC and ETH value traits, and on-chain exercise ranges. The distinction is that when the market is rising, buying and selling functions like Hyperliquid and Pump.enjoyable may additionally obtain a twin increase from capital inflows and enterprise growth; when the market weakens, actual income turns into an essential buffer distinguishing them from pure narrative belongings.
If this dialog had been condensed into one judgment, it will be: The core of the following crypto asset revaluation might not be who has the grandest infrastructure narrative, however who can convert actual utilization into sustainable income and credibly return a portion of it to the token. On this sense, this text discusses not simply whether or not a number of tokens are undervalued, however whether or not the crypto market can evolve from a narrative-driven fundraising system into an software economic system based mostly on merchandise, money circulation, and worth distribution.
The next is the unique content material (edited for readability):
TL;DR
·The core alternative within the crypto market is shifting from underlying infrastructure to the applying layer, primarily as income and customers start to substitute block house narratives as the brand new supply of worth.
·Whether or not software tokens might be revalued relies upon not on how a lot cash the protocol makes, however on whether or not income might be transmitted to the token via secure, clear buyback or burn mechanisms.
·Venice combines AI software progress with a token burn logic, however the $43.9 goal value depends on optimistic assumptions just like the Minds launch and elevated burn ratio, and can’t be thought-about a definitive valuation.
·Pump.enjoyable’s low valuation primarily displays market skepticism in regards to the sustainability of Meme coin income, however over two years of income resilience suggests high-volatility speculative demand could also be a long-term shopper habits.
·Hyperliquid has extra cyclical reflexivity than typical functions: capital inflows can each carry HYPE’s valuation and concurrently increase buying and selling quantity, charges, and buyback scale.
·ether.fi continues to be priced as a restaking protocol, however its foremost income has shifted to funds and lending; the market’s outdated classification of the venture might not but have caught up with the enterprise construction change.
·Buyback multiples can’t be immediately equated to inventory P/E ratios as a result of tokens often lack clear residual declare rights; the worth distribution between fairness and tokens stays a core threat.
·Fundamentals can scale back high-quality tokens’ dependence on the broader market however can’t get rid of the crypto cycle; actually sustainable valuation nonetheless is determined by income high quality, worth accrual, and mechanism continuity.
Key Factors
Funding strategies within the crypto market have by no means been static.
Methods that labored in 2017 might not apply in 2021; tracks well-liked in 2021 or 2024 might lose their enchantment within the subsequent cycle. In Austin Barack’s view, one thought reusable throughout cycles is discovering the intersection of progress and worth: tasks rising quick sufficient, however whose valuations have not absolutely mirrored that progress.
This isn’t conventional worth investing. Buyers enter the crypto market not to discover a mature firm rising 10% yearly with a P/E of 4x. The actual enchantment of crypto belongings lies of their violent capital cycles doubtlessly creating a mixture not often seen in conventional markets: enterprise progress multiples, whereas valuation is suppressed by an general market downturn.
Barack based Relayer Capital about two and a half years in the past, with a method protecting each early-stage and liquid markets. Initially, effort was roughly break up between the 2; now, about 95% of his focus has shifted to liquid tokens, concentrating on two foremost themes: Crypto×AI and 24/7 buying and selling & asset tokenization.
The explanation is not simply that the crypto market could be getting into an upcycle. Barack believes the extended bear market has helped full a spherical of screening: after most tokens misplaced their narrative premium, a number of tasks which have actually discovered product-market match, are rising income shortly, and nonetheless have comparatively cheap valuations have begun to stand out.
From Chasing Narratives to Calculating Buybacks, Tokens Start to Have a New Valuation Language
For a very long time, crypto venture valuations relied primarily on long-term assumptions like market dimension, community results, and token utility. Even when protocols generated income, there was usually a transparent hyperlink lacking between that income and the token.
Now, some functions are beginning to use programmatic buybacks or burns to immediately convert enterprise income into token shopping for strain or provide contraction. This permits traders to borrow some strategies from inventory valuation, utilizing the ratio of buyback quantity to token market cap to approximate the token’s “earnings yield.”
However this technique can’t be immediately equated to a P/E ratio.
Shares sometimes symbolize authorized rights to an organization’s residual earnings and belongings; token holders don’t essentially have equal rights. Undertaking groups can change the buyback ratio or place new enterprise beneath an fairness entity. Subsequently, the buyback a number of is barely strongly explanatory when the principles for worth accrual are comparatively clear and enterprise income is sustainable.
Venice is a key case mentioned by Barack. It’s an AI software emphasizing privateness and censorship resistance, permitting customers to entry totally different frontier and open-source fashions on the identical platform. Its foremost income at present comes from paid subscriptions and extra compute credit score purchases.
Venice has additionally established two sorts of programmatic burn mechanisms for VVV: when a consumer purchases a subscription tier for the primary time, the platform burns a corresponding quantity of VVV; when a consumer purchases extra credit, roughly 5% of the acquisition quantity is used to burn tokens.
In accordance to Barack’s estimate, as of August 2026, Venice’s annualized income run price is roughly $107 million, corresponding to an annualized token burn of roughly $8.3 million. He expects that by 2027, income might enhance to $336 million, and the burn quantity might rise to $70 million. If a 50x buyback a number of is utilized, the mannequin’s corresponding token valuation is roughly $3.5 billion; mixed with the projected circulating provide at the moment, the goal value for VVV is roughly $43.9, whereas the value on the time of this system’s broadcast was roughly $16.
This mannequin carries clear optimistic assumptions and isn’t a definitive prediction of future income.
Of the projected $70 million in burn quantity, roughly $29 million comes from the Minds product, which has not but formally launched, accounting for over 40%. Minds plans to enable superior customers and builders to mix totally different fashions, prompts, and instruments to create structured AI functions for odd customers, incomes income shares based mostly on utilization, in a format comparable to an AI app retailer.
Barack believes that Minds shouldn’t be a totally new product indifferent from Venice’s present enterprise, because it nonetheless revolves round present fashions, customers, and use circumstances. Nevertheless, host David Hoffman identified that credit score purchases are merely an extension of present providers, whereas Minds is a brand new enterprise line but to be validated by the market, and the dangers of the 2 can’t be equated.
Barack acknowledged this problem and described his mannequin as “barely above the bottom case”: utilizing 0 for excessive pessimism, 5 for the bottom case, and 10 for full optimism, he believes this projection is roughly at a 6.
The mannequin additionally assumes that Venice might embody renewals within the burn scope sooner or later and enhance the burn ratio for credit score income from 5% to 10% in 2027. None of those measures have been definitively dedicated to but, so $43.9 is best understood as a state of affairs valuation based mostly on a number of enterprise and mechanism assumptions, fairly than an unconditional value goal.
Venice’s Actual Problem: Why Ought to a Startup Purchase Again Tokens Prematurely?
The Venice case additionally reveals a core contradiction going through software tokens: ought to a high-growth startup allocate money to product growth or return it to token holders?
In conventional markets, firms in a high-growth section sometimes make investments most of their funds in R&D, hiring, and buyer acquisition, not often participating in large-scale share buybacks early on. Venice, nonetheless, has been utilizing a portion of its income to purchase again and burn VVV from the early phases of enterprise growth, which to some extent sacrifices capital that might be used for reinvestment.
Barack believes this follow is said to the twin equity-token construction of the crypto market. Tokens may help tasks shortly appeal to consideration, launch networks, and design new product options, however with out clear authorized constraints, the market can’t naturally belief that each one worth created by the corporate will in the end accrue to the token.
Subsequently, programmatic burning shouldn’t be solely a technique of worth distribution but in addition a mechanism for constructing belief. The group wants to exhibit via concrete actions that enterprise progress might be transmitted to VVV, fairly than remaining solely inside the fairness entity.
Venice is at present adopting a gradual method: early burns have some discretion, adopted by including first-time subscription burns, after which incorporating 5% of credit score buy income into the burn. Barack believes this association supplies worth circulation again to the token whereas retaining a lot of the funds for progress.
Venice’s earlier $65 million fundraising additionally alleviates the battle between buybacks and reinvestment to some extent. Barack’s understanding is that exterior financing supplies the corporate with growth capital, permitting it to allocate extra working money circulation to the token; associated traders additionally holding token subscription rights helps scale back the misalignment of pursuits between fairness traders and token holders.
Nevertheless, this stability stays fragile. If enterprise progress slows, inference prices rise, or market competitors intensifies, the corporate might have to retain extra cash. Conversely, if the burn price is just too low for an prolonged interval, the token might battle to absolutely share in enterprise progress. Subsequently, assessing VVV’s worth requires not solely observing the entire burn quantity but in addition monitoring income progress price, gross margin, working bills, and whether or not the corporate persistently fulfills its worth return commitments.
Pump.enjoyable and Hyperliquid: Similar Income, Why Do Markets Give Totally different Multiples?
In contrast to Venice, the income of Pump.enjoyable and Hyperliquid is extra immediately linked to the crypto buying and selling cycle.
Barack acknowledged that based mostly on market knowledge on the time of the present’s airing, Pump.enjoyable was valued at a buyback a number of of roughly 5x, whereas the corresponding multiples for Hyperliquid and Lighter had been round 30 to 40 instances. In his view, this hole displays the market’s bias in the direction of various kinds of income.
Pump.enjoyable’s core enterprise comes from meme coin issuance and buying and selling. Many traders imagine this exercise depends on short-term speculative hype, and its income sustainability is inferior to that of perpetual contract buying and selling platforms. Such issues will not be unfounded: the crypto trade has seen merchandise the place income quickly rises inside one cycle after which declines by over 90%.
Nevertheless, Barack believes Pump.enjoyable’s efficiency over the previous two years suggests its income is extra resilient than the market initially anticipated. The hype round a single meme coin might fade shortly, however consumer demand for high-volatility, high-variance speculative merchandise might persist long-term.
He compares Pump.enjoyable to casinos, lotteries, prediction markets, and ultra-short-term choices. The purpose right here shouldn’t be to equate meme coin buying and selling fully with the above merchandise, however to clarify a requirement mechanism: even when contributors face a destructive anticipated return general, some customers will proceed to take part due to excessive volatility and the small likelihood of excessive returns.
Based mostly on this judgment, Barack believes Pump.enjoyable’s buyback a number of might be revalued from round 5 instances to 10 instances. If the enterprise scale stays unchanged, the a number of growth itself might correspond to roughly a doubling in value; if on-chain buying and selling and meme coin exercise recuperate concurrently, income might develop additional.
Nevertheless, Pump.enjoyable’s threat additionally stems from the connection between fairness and tokens. The venture beforehand used all its income for buybacks, then adjusted to utilizing 50% of its income for buybacks over the following 12 months, with the remaining funds used for enterprise growth. Whether or not this ratio will proceed after 12 months stays to be determined.
Which means whereas the authenticity of Pump.enjoyable’s income might be noticed via on-chain knowledge, there isn’t a everlasting assure of how a lot income the token will proceed to obtain. When valuing PUMP, traders want to apply a reduction for this institutional uncertainty and can’t immediately deal with all platform income as token holder returns.
Hyperliquid, then again, instructions a better valuation a number of. On one hand, its crypto perpetual contract enterprise has generated substantial income; then again, the HIP-3 market are increasing buying and selling to contracts associated to shares, commodities, indices, and unlisted firms.
Barack believes Hyperliquid demonstrates the potential of blockchain for twenty-four/7 buying and selling, on the spot settlement, and world value discovery. Sooner or later, some at present unlisted belongings may even kind value indicators on-chain first, which conventional monetary establishments might then use as a reference for issuance pricing.
Nevertheless, this judgment nonetheless awaits market validation. In accordance to Barack, Hyperliquid’s just lately added real-world asset markets have contributed vital buying and selling quantity, however as a result of they’re nonetheless in an growth section, they haven’t but generated a comparable scale of income progress. The at present most worthwhile enterprise stays primarily crypto asset buying and selling.
Subsequently, Hyperliquid possesses stronger cyclical reflexivity than typical functions: when crypto funds circulation again, HYPE might not solely profit from the general valuation restoration of tokens, however the platform’s buying and selling quantity, charges, and buyback scale may additionally develop concurrently; if market exercise declines, this mechanism might additionally function in reverse.
ether.fi Has Modified, However the Market’s Classification Hasn’t Saved Up
ether.fi represents one other valuation mismatch: the venture’s foremost enterprise has modified, however the market nonetheless costs it based mostly on its outdated label.
ether.fi initially entered the market with a liquid restaking enterprise. On the peak of the restaking narrative in 2024, its absolutely diluted valuation as soon as reached roughly $8 billion. As market expectations for the restaking sector declined, ether.fi’s valuation additionally fell, and it continues to be considered as an asset comparable to staking protocols like Lido.
Barack believes this classification not precisely displays ether.fi’s present income construction. In accordance to knowledge he offered on the present, over 65% of the enterprise now comes from Neo Financial institution merchandise, together with bank card transaction income and lending earnings generated from customers utilizing their account belongings as collateral; income from yield and staking companies has dropped to about 35%.
Because the platform provides tokenized shares and extra on-chain belongings, ether.fi is transitioning from a Neo Financial institution additional in the direction of an on-chain complete brokerage platform. Customers can maintain and commerce totally different belongings, borrow in opposition to their belongings, and full each day spending via bank cards.
The benefit of this mannequin is that ether.fi does not want to construct all monetary infrastructure from scratch. For instance, for its lending enterprise, the platform can make the most of present DeFi protocols like Aave and earn earnings via income sharing. The richer the stablecoins, lending markets, and tokenized belongings on Ethereum, the broader the vary of providers ether.fi can supply its customers.
In accordance to knowledge offered by Barack, ether.fi’s each day bank card transaction quantity has risen from roughly $300,000 a yr in the past to $3-4 million, a rise of over 10 instances; at present, solely about 4% of its income comes from lending curiosity, whereas conventional digital financial institution Nubank derives about 60-70% of its income from this supply. In his view, this means ether.fi nonetheless has vital room for income construction growth.
Based mostly on a possible buyback quantity of roughly $30 million over the following 12 months and a 30x valuation a number of, Barack estimates the ETHFI value might exceed $1, roughly double the value on the time of the present. Nevertheless, $30 million is larger than the $21 million predicted by one other mannequin he cited, and he assumes ether.fi’s future progress price might speed up, so this outcome additionally falls beneath a comparatively optimistic state of affairs.
What is actually noteworthy about this case shouldn’t be the particular goal value, however whether or not the market classification is lagging. If nearly all of ether.fi’s income already comes from funds, lending, and brokerage providers, then persevering with to use the valuation framework for liquid restaking protocols might fail to mirror its present enterprise; nonetheless, if the brand new enterprise progress fails to maintain, the so-called “reclassification” may additionally fail to materialize.
Fundamentals Can Cut back Correlation however Can’t Get rid of the Crypto Cycle
Having actual income doesn’t imply that software tokens can fully decouple from Bitcoin and the crypto market cycle.
Barack summarized this relationship as “partially coupled, partially decoupled.” On one hand, Venice, Pump.enjoyable, Hyperliquid, and ether.fi can set up a comparatively unbiased valuation foundation via their very own consumer progress, income, and buybacks. Even when Bitcoin trades sideways, so long as their companies proceed to increase, their tokens should be revalued.
However, they continue to be crypto belongings. When capital flows again into tokens from shares, AI, and different markets, these basically supported tasks would be the first to enter the allocation vary {of professional} traders. Pump.enjoyable and Hyperliquid may additionally acquire extra income from elevated buying and selling exercise, forming a optimistic suggestions loop between asset costs and enterprise fundamentals.
Venice’s direct connection to the crypto buying and selling cycle is comparatively weaker; its foremost exterior variable is AI utilization. If multi-model calls, privateness AI, and generative functions proceed to develop, Venice might have a requirement supply totally different from pure crypto functions. If consumer progress or paid conversion falls in need of expectations, its token is not going to routinely obtain the valuation within the mannequin merely due to a crypto market rally.
Barack in the end understands this alteration inside an extended trade cycle. In accordance to the information he cited, for a lot of the historical past of the crypto trade, execution layer infrastructure as soon as contributed over 95% of trade income. At this time, the share of software income has risen to about two-thirds. He expects this proportion to proceed shifting towards the applying aspect, finally exceeding 90%.
This prediction has not but turn out to be actuality, but it surely factors to the core variables that want to be verified within the subsequent section: whether or not income will proceed to migrate from public chains and execution layers to user-facing functions, whether or not the money circulation generated by functions might be stably transmitted to tokens, and whether or not the buyback mechanism can preserve continuity amid enterprise progress, market downturns, and regulatory modifications.
If these circumstances maintain, the primary valuation goal of the crypto market might shift farther from “infrastructure offering block house” to “functions utilizing blockchain to promote monetary and digital providers.” At that time, the market will not be on the lookout for simply the following high-performance public chain, however fairly which merchandise actually join the crypto world with exterior demand, and which tokens can sustainably share on this progress.
