DeFi is not cool, a brief analysis of the reasons why Uniswap tokens are undervalued

Original title: "DeFi is not cool, a brief analysis of the reasons why Uniswap tokens are undervalued"

Original source: Overnight porridge, Babbitt

Written in the front: Although the development prospects of decentralized finance (Defi) are highly expected, the price of Defi tokens has fallen again and again recently, which is unavoidable. Disappointed, and as the leader of DeFi, Uniswap, its token UNI has experienced a "toe cut" after a "half cut", so does it have a future?

In this regard, Jeff Dorman, Chief Investment Officer of Arca, a New York investment management company, expressed his views.

The reason for holding ETH as an investment is that Ethereum is a clear market leader, Its growth and usage are strong, although ETH token holders have yet to capture the value. This is actually the same for UNI.

Uniswap has a clear leading position in the DEX trading market, just like "Ethereum vs other smart contract protocols", in the DEX field, no protocol can even Close to Uniswap (analysis from @DuneAnalytics)

For ETH, EIP-1559 and Ethereum 2.0 have been in the middle "future" state, but UNI's "fee switch" is almost certain, on February 26, 2021 (180 days after governance begins).

UNI will then join a small list of tokens such as HXRO, MKR, FTT, BNB that get real value from the proceeds.

Based on Uniswap's average daily trading volume of 360 million US dollars and 0.30% fee calculation, the Uniswap protocol generates The annual fee income is expected to be 380 million US dollars, and after the fee conversion (1/6 fees are distributed to UNI token holders), the UNI token holders will be distributed to 66 million US dollars in annual income, and its dividend rate -> 13%, compared to the S&P 500's forward price-to-earnings ratio of 25 and a dividend yield of 1.7%.

In my opinion, anything in DeFi (and digital assets in general) has higher multiples than the overextended stock market during the recession.

Once market participants start applying the same valuation criteria for UNI and ETH, UNI will be considered the cheapest of all digital assets.

Here are 5 reasons some people think you should not own UNI:

1 , The sales pressure of liquidity mining exceeds the demand, but the actual amount of UNI released per day is 770,000. Once the fee conversion is completed and income is generated (liquidity mining may end on November 18), value investors will It is easy to absorb these releases;

2. Do you think that Uniswap will not continue to maintain its leading position in the market, and its transaction volume will decline or lose competitiveness (like "ETH killer");

3. You don't believe that "fee switching" will happen (or you don't even know about it);

4. You believe that the fee switching will happen, but because there are still 3 months Time, you are still waiting for the best time to buy;

5. UNI is only a part of DeFi, and DeFi is no longer popular;

Uniswap is one of the few companies/projects in the field of digital assets with practical use and product market adaptability . Oddly enough, digital asset buyers are still chasing unproven future (L1 protocol) projects rather than projects that have actual traction today.

Uniswap (UNI) investors will also benefit from the lessons of history.

Remember the failed Facebook IPO? It was priced at $40, then dropped below $20 after launch, and everyone was afraid it was overpriced.

Smart investors don't bet against the leader.

UNI is often mistakenly called a "governance" token, while the market believes that "governance is worthless" ".

But in fact, UNI is a pass-thru token, meaning that its income will be passed on to token holders, UNI token holders Very good income stream coming in February 2021.

And all governance tokens, ultimately, need to become value transfer tokens, which is the main reason why voting is crucial - to guide the flow of funds.

In an industry where real growth is hard to come by, it seems crazy to be bearish on projects that are growing this way.

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