Bankless: Decoding the wealth code: Fundamental analysis of 23 cryptocurrencies

Author: David C, Bankless; Translator: Deng Tong, Golden Finance

While narratives and sentiment do play a huge role in the short-term price movements of tokens, the tide seems to be returning to fundamentals in this cycle.

There is a consensus that the upside for many of the most hyped tokens to fall was captured long ago when venture capital firms signed token warrant deals. This deepening disillusionment, along with multiple tokens being issued at fully diluted values ​​(FDV) of over $10 billion, has been the driving force behind this round of memecoin rise. While memecoins are only valuable if they attract attention, at least they don’t have a large number of tokens hidden away to be dumped on the market at a later date.

Older revenue-generating protocols with most tokens already in circulation have also received bids over the past month. While this may be partially attributed to the influx of institutional interest this cycle, there is value in keeping a close eye on tokens with solid fundamentals, whether they are revenue-generating, have most tokens unlocked, or ideally both.

This article will do just that, mapping out protocols and their tokens across all three categories to determine which ones may appeal to fundamentals-focused investors. This list of 23 tokens is far from exhaustive, but we think there is still a lot of value below.

Profitable and Mostly Unlocked

Let’s dive into a few of the most important tokens that fit this category. There are others! But these are the most recognized ones.

Lido:

Lido Finance is the largest provider of liquidity staking, with 29% of the total market share, and has been a key player in the Ethereum staking ecosystem. In the past year, it has generated $91 million in revenue, with 100% of its tokens unlocked and 89% in circulation.

While its market share has declined since 2023, when it staked a third of all ETH, its recent launch of the Lido Alliance, an initiative to make stETH a cornerstone of restaking, has put it back on center stage. Symbiotic, a multi-asset restaking protocol backed by Lido’s founders and part of the Lido Alliance, and Mellow Finance, a stETH-centric restaking service also part of the Lido Alliance, have restored momentum in Lido staking, with deposits back on an upward trend after a peak in February-May and subsequent decline — boosting the protocol’s revenue. Lido makes a living by charging a 10% fee on staking rewards, keeping half of that for itself. Lido is up 21% over the past week.

MakerDAO:

Founded in 2014, MakerDAO is a lending protocol and issuer of the decentralized stablecoin DAI. MakerDAO has made $271 million in revenue over the past year, with 92.5% of supply unlocked and in circulation.

Over the past year, Maker has doubled down on RWA integration, opening vaults, minting DAI with US Treasuries, and setting aside funds from the vaults to buy US Treasuries and corporate bonds - an investment that has paid off handsomely, at times accounting for half of their total revenue. Currently, MakerDAO's RWA holdings exceed $2.2 billion. In an effort to further scale, they have also announced the Spark Tokenization Grand Prix, an open competition to invest $1 billion in tokenized US Treasury products, with BlackRock, Securitize, and Ondo all expressing interest in participating. This will further increase their revenue, which comes from borrowing fees, liquidation fees, and of course, RWA deposits and holdings. Maker is up about 25% over the past week.

Aave:

Aave, the largest decentralized lending market in the crypto space, has made $55 million in revenue over the past year, with 91% of its tokens unlocked, 93% of which are currently in circulation.

In addition to having $13.7 billion in TVL, Aave's codebase accounts for 75% of the value of DeFi lending protocols, meaning that many other protocols have forked its code or incorporated it into their projects. In May, Aave unveiled its plans to launch its v4 in three years, featuring a unified cross-chain liquidity layer powered by Chainlink’s Cross-Chain Interoperability Protocol (CCIP). This will allow borrowers to access instant liquidity on all supported networks, expanding Aave into a fully cross-chain liquidity protocol. Additionally, it plans to launch the Aave Network chain, which will serve as a hub for the protocol and its GHO stablecoin. Like Maker, Aave generates revenue in a variety of ways, including interest for borrowers, fees for liquidations and flash loans (loans repaid within one transaction block), interest for depositors, and through GHO, all interest is paid directly to the Aave DAO treasury. Aave is up about 10% over the past week.

Projects that Earn Substantial Income

Over the past year, several new and old projects have earned substantial income by bringing innovation to the market or carving out their own specific markets. These projects include:

• Jito (JTO):In addition to occupying nearly half of Solana’s LST market share, the liquidity staking protocol with MEV boosting rewards has generated $176 million in revenue over the past year.

• Ethena (ENA):Despite only launching in late February this year, Ethena is the Ethereum-based protocol behind the delta-hedged stablecoin USDe and has generated $92.7 million in revenue.

• Aerodrome (AERO):Launched by the Velodrome team in 2023, the top DEX on Base has generated $90.7 million in revenue over the past year, fueled by the success of L2.

• dYdX (DYDX):Operating on its own chain, dYdX is a non-custodial trading and derivatives protocol that has generated $55 million in revenue over the past year.

• Pancake Swap (CAKE):BSC’s favorite DEX, originally forked from Uniswap and launched by an anonymous team in 2020, has generated $50.7 million in revenue over the past 365 days.

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• Uniswap (UNI):The largest and most popular DEX in the EVM, deployed on 11 chains, has generated about $42 million in revenue over the past year.

• Banana Gun (BANANA):The popular Telegram trading bot on Ethereum, Blast, Base, and Solana generated $34.7 million in revenue last year.

• Curve Finance (CURVE):Despite recent issues, the DeFi trading platform brought in $29 million in revenue over the past year.

• Velodrome (VELO):Launched by veDAO members and originally a next-generation DEX on Fantom, Velodrome is a DEX that runs primarily on Optimism and has earned $29.8 million in revenue over the past year.

• GMX (GMX):The most popular DEX on Arbitrum and Avalanche, GMX has netted $32 million in revenue over the past year.

Mostly Unlocked Supply

As the industry continues to mature, more and more protocols have completed their token vesting plans, releasing most (and in some cases all) of their token supply to the open market. Projects in this category include:

• Injective (INJ): Built on Cosmos’ DeFi L1, Injective has unique primitives such as a fully decentralized MEV-resistant order book with 100% of its supply unlocked and 97% in circulation.

• LooksRare (LOOKS):An anonymous NFT marketplace known for rewarding active users with LOOKS and WETH and supporting creator royalties, 100% unlocked and 99.5% in circulation.

• Synthetix (SNX):Founded in 2017, Synthetix is ​​a decentralized derivatives trading protocol on Ethereum. It recently ended inflation and moved to a deflationary model with buybacks and burns. 100% of its tokens are unlocked and 99.8% in circulation.

• Mask Network (MASK):Mask is a browser extension focused on connecting Web 2.0 and Web 3.0, integrating dApps into traditional social networks, and 100% of its tokens are unlocked and 100% in circulation.

• Kujira (KUJI):A survivor of the Terra collapse, Kujira spun out its own Cosmos-based L1, which has grown into a mature ecosystem with 100% of its supply unlocked and 99% of its supply in circulation.

• Polygon (MATIC):One of the first ETH L2s, Polygon not only has a suite of tools for scaling Ethereum, but is also 100% unlocked with 92.8% of its tokens in circulation.

• Yearn (YFI):A product of the DeFi summer of 2020, Yearn is a suite of decentralized yield products with 99.9% of its tokens unlocked and 91% of its supply in circulation.

• Cartesi (CTSI):Cartesi is an application-specific rollup protocol using virtual machines running Linux, 93% unlocked, 82% in circulation.

• 1inch (1INCH):The leading EVM DEX aggregator, 1inch’s tokens are 86% unlocked, with 82.6% in circulation.

• Liquity (LQTY):A decentralized lending protocol for 0% interest loans with ETH as collateral, Liquity’s supply is 97% unlocked, with 96.3% in circulation.

Summary

While it is still early days, the recent uptrend of blue chip DeFi protocols with significant revenues and a majority of supply in circulation may signal a shift away from a hype-driven narrative and toward a focus on fundamental metrics, partly in response to disappointment with outrageous launch-FDVs in this cycle.

In this cycle, fundamentally sound protocols, influenced by institutional investors and their traditional valuation processes, may see significant returns as the bull run continues, allowing the industry to mature and thus extend its longevity.