Messari report: What is the appropriate valuation for HYPE?

Messari Report: What is the appropriate valuation of HYPE?

Author: MONK, Messari researcher; Translation: Jinse Finance xiaozou

The following are the highlights of my latest Messari report article.

My latest valuation of the HYPE token (with a maximum supply of 1 billion) is that its FDV is around $13 billion, and may be higher than $30 billion under the right market conditions.

Let’s take a deeper look:

The end of incentives did not stop Hyperliquid’s growth momentum. We saw market share reach an all-time high in October, and open interest also hit a record high of more than $1.5 billion.

Hyperliquid will also launch HyperEVM through TGE (Token Generation Event), and more than 35 teams plan to participate in this new ecosystem. This makes Hyperliquid closer to a general L1 and away from the application chain.

Here is a market chart I made:

The new Hyperliquid deserves a new valuation framework. Usually, killer applications and their L1 networks are separate entities. Application fees go to application tokens, and L1 fees go to network validators. Hyperliquid consolidates these revenue streams.

Therefore, Hyperliquid owns both the leading perp DEX in the crypto world and its underlying L1. We chose the sum-of-the-parts valuation method to better reflect the vertical integration of the protocol. Let’s start with perp DEX.

Below I will go into detail about one key driver.

Our overall view of the derivatives space is highly consistent with Multicoin Capital and ASXN, except for one thing, which is Hyperliquid’s market share.

I believe the perp DEX market is a winner-take-all market. This is because:

* Any perp DEX can list any perpetual contract, without the problem of blockchain fragmentation.

* Unlike centralized exchanges, using a DEX is permissionless.

* There is a network effect flywheel in terms of order flow and liquidity.

I think Hyperliquid's dominance will only grow stronger. In the base case, we think Hyperliquid can capture nearly half of the on-chain market share.

This will bring in $551 million in revenue in 2027. Currently, trading fees go to the community, so we count them as real revenue.

Magnifying the DeFi standard by 15 times, we get a valuation of $8.3 billion for perp DEX as a standalone business. If you are an enterprise customer, you can see our full model. Now let's look at L1:

DeFi application premiums are usually used for L1 valuation. As Hyperliquid continues to grow activity on its network, its valuation is likely to continue to move higher.

Note that the opportunity here is getting bigger:

Hyperliquid has become the 11th largest TVL chain. Smaller networks like Sei and Injective have valuations of $5 billion and $3 billion, respectively. Parallel high-performance networks of similar size, such as Sui and Aptos, have valuations of $30 billion and $12 billion, respectively.

Given that HyperEVM has not yet been launched, we use a conservative $5 billion L1 premium for Hyperliquid's valuation. In reality, if we price L1 at current market prices, this may be closer to $10 billion or more.

So the base case is:

Hyperliquid's perp DEX is worth $8.3 billion and the underlying L1 is worth $5 billion. The base case FDV is $13.3 billion. The bear case is about $3 billion and the bull case is about $34 billion. One point I must emphasize is that we have yet to see a leading crypto app vertically integrated with a high-performance early alt-L1.