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Bitwise Chief Investment Officer: Revenue is King, Crypto Valuation Logic is Being Rewritten

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Most investors have not yet realized that the cryptocurrency market is transitioning into a market driven by revenue-based valuation.

Original Article Title: Crypto's Revenue Revolution
Original Article Author: Matt Hougan, Chief Investment Officer at Bitwise
Article Translation: Chopper, Foresight News

For years, the most potent criticism of the crypto industry has always revolved around valuation logic: "While blockchain technology is indeed innovative, does this mean that the underlying tokens have real value?"

This question is very reasonable. Many projects have seen rapid development, amassed millions of users, and generated tens of billions of dollars in revenue, but the vast majority of profits have not flowed back to the token itself and its holders. Even for a staunch bull like myself, it is sometimes difficult to explain why certain tokens can have a market capitalization of tens of billions of dollars.

That era has now passed. Today, apart from Bitcoin, the value of crypto assets will increasingly be measured using the same yardstick as stocks and bonds: revenue.

The good news is that many crypto projects have already taken the lead in returning a significant portion of their revenue to token holders. Hyperliquid generated over $800 million in revenue last year, with nearly 99% of fee income used for buybacks on the secondary market and burning of HYPE (similar to stock buybacks by public companies). Projects like Uniswap, Aave, Solana, and others are following suit.

However, a widespread lack of understanding of this transformation among investors is a major reason why, in my view, crypto asset valuations continue to be undervalued.

Why People Believe Crypto Projects Can't Generate Revenue

We must acknowledge that the criticism that "crypto projects have no revenue" was indeed valid in the past.

Bitcoin, as the first and largest crypto asset, was not designed to generate cash flow for holders. Bitcoin falls into the category of currency-type assets, which typically do not have "productive returns." Think about it, few would ask how much return gold can generate. However, this characteristic of Bitcoin cemented investors' stereotypical view of all other crypto assets.

Between 2017 and 2025, the regulatory environment further reinforced this perception. During Jay Clayton and Gary Gensler's tenure at the SEC, the regulatory attitude strongly opposed projects that distributed income to holders. During that time, the U.S. SEC generally considered crypto projects that distributed income to token holders as engaging in "illegal securities issuance." Once labeled as such, founders could face unlimited joint liability and even criminal penalties. Just imagine: if all Silicon Valley startups were to be sued by the government as soon as they shared revenue with investors.

As a result, almost all new projects are issuing governance tokens. These tokens only grant holders voting rights and do not entitle them to any revenue share. Mainstream DeFi tokens such as Uniswap and Aave follow this model.

What Caused the Turning Point?

Everything started to change in July 2023 when the SEC suffered a landmark defeat in its lawsuit against Ripple. The regulatory agency claimed that XRP was an illegally issued security, but the Southern District of New York federal court ruled that XRP sold to retail investors did not constitute a security.

This ruling shook the legal world and challenged the traditional interpretation of securities regulations. Many had initially expected the ruling to be overturned in the appeals process. However, subsequent related rulings mostly favored Ripple. In August 2025, both parties dropped their appeals, and the case was officially closed.

At that time, Paul Atkins took over as SEC chairman from Jay Clayton and introduced a more crypto-friendly regulatory approach. Suddenly, token distribution rewards became feasible again.

Coincidentally, around the same time, a groundbreaking new project was born, with a core mechanism centered around revenue capture.

Hyperliquid Sets an Industry Example

Hyperliquid is a decentralized exchange platform that launched perpetual futures trading in February 2023, later expanding to spot trading, real-world assets (RWA), and prediction market services. Since the token's issuance in November 2024, it has been the best-performing top cryptocurrency, with an approximately 800% increase, while Bitcoin's price fell by about a third during the same period.

Several factors have contributed to Hyperliquid's success, with a key highlight being that around 99% of network transaction fee revenue (directly linked to user activity) is used to buy back HYPE from the open market. Since its launch, the project has accumulated and burned HYPE tokens worth $1.3 billion, permanently reducing the circulating supply and providing strong support for the token price. Investors can now be confident that increased blockchain activity can directly translate into token value.

This has made Hyperliquid a sought-after asset by investors. Over the past year, it has been the most talked-about asset within the crypto community.

Major Blockchains and Applications Follow Suit

With the regulatory environment no longer hostile to revenue distribution and following Hyperliquid's tremendous success, other projects have begun to follow suit. The past year has seen a wave of transformation:

· Uniswap: In December 2025, the "UNIfication" governance proposal was passed with a 99.9% approval rate. The project immediately burned 100 million UNI tokens (10% of the total supply, valued at approximately $5.9 billion at the time), officially initiating the protocol fee mechanism. Subsequently, 7 million UNI tokens were burned, with the current annualized revenue around $1 billion, all used for buybacks and token burns.

· Aave: Starting in April 2025, Aave began utilizing revenue to buy back the native token AAVE on a weekly basis. As of now, it is expected to burn $30 million worth of AAVE per year (around 20% of annual revenue). In June 2026, they further introduced "Aavenomics 3.0," where protocol fees and GHO stablecoin earnings are channeled into an automated, tamper-proof buyback contract. The total buyback amount has now exceeded 1.2% of the total token supply.

· shturl.c: Took the most aggressive action. This meme coin exchange platform went live in July 2025 and initiated a PUMP token buyback within a few days. As of April 2026, a total of $3.7 billion worth of tokens have been burned, equivalent to 36% of the circulation. Recently, they have locked 50% of next year's net income into an irreversible buyback and burn smart contract, with current annual revenue at $3.28 billion.

Many new projects have implemented a revenue capture mechanism since their inception. The fastest-growing perpetual contract trading platform on Ethereum, Lighter, immediately started using trading revenue to buy back the LIT token upon its launch earlier this year. They have so far bought back around 6% of the circulating supply and committed to burning all purchased tokens, with an annual revenue of $67 million.

The revenue trend has even spread to layer-one blockchains. The Solana community introduced the SGP-0003 proposal, planning to reduce the inflation rate and increase the fee burning scale by up to 14 times. Similarly, earlier this year, Aptos hiked gas fees by 10 times to optimize holder revenue models. Users did not significantly drop off; instead, on-chain transaction activity almost tripled, and the token's annual burn rate increased from around 90,000 to 1.9 million.

Conclusion

With over 25 years of experience in the technology investment field, the current development trend feels familiar, reminiscent of the early stages when platforms like Facebook had yet to explore advertising monetization.

At that time, skeptics doubted that platforms could ever charge fees: "Once ads are displayed, users will leave." Proponents could only rely on vague arguments like traffic and Metcalfe's Law to justify platform value.

Eventually, the top platforms smoothly transitioned into commercialization, without major user attrition. Investors realized that the real key metric was not traffic but profit. I believe the crypto industry will go through a similar evolution. The shift has already begun: Uniswap introduced fees in December last year, and by July this year, its DEX market share hit an all-time high; tokens have seen a 35% increase since July 1st.

I believe that both DeFi applications and layer-one blockchains are significantly undervalued, with a pricing power far exceeding market expectations. Established high-quality projects have a strong market position, while industry trust is a scarce resource. Over the next 12–24 months, various platforms will continue to enhance their revenue-generating capabilities.

The key reason why there is currently a massive opportunity is that investors outside the crypto industry are completely unaware of this transformation. External observers have long held the belief that "crypto assets have no cash flow," and changing this perception will take time. Meanwhile, insiders have had their confidence eroded by numerous failed narratives, finding it hard to believe that tokens can be stably linked to real returns, thus leading to the current undervaluation.

Uniswap is already a globally recognized brand, with spot trading volume on par with Coinbase, yet its market capitalization is only $2.4 billion. Aave, along with another DeFi project, Morpho, leading the on-chain lending track with an optimized tokenomics, have a combined market capitalization of the same $2.4 billion. Hyperliquid is one of the fastest-growing fintech companies I have seen, with a P/E ratio ranging from 17 to 60. For globally expanding platforms in high-growth lanes, such valuations are attractive.

Of course, a risk warning is necessary: Cryptocurrency tokens are not equivalent to stocks. Token holders do not have a legally protected right to claim cash flows, and distribution rules depend on community governance that is subject to change. Investors need to weigh the unique advantages and specific risks of cryptocurrency assets.

However, if my assessment is correct, the strengthening correlation between returns and token value is ongoing. With the market undergoing repricing, cryptocurrency asset valuations are poised for doubling or even higher growth. For a long time, the "lack of cash flow" argument has been the most compelling reason to short cryptocurrency assets; soon, it will turn around to become the most robust logic supporting cryptocurrency asset value.