Digital Dives
The cryptocurrency market has evolved rapidly, but no trend better defines its current state than hypertokenization. Meme coins, forks, and experimental tokenomics flood exchanges, making it increasingly difficult for both newcomers and experienced investors to navigate. With millions of tokens available, how can one separate meaningful projects from fleeting hype?
As crypto matures, with growing institutional participation and clearer regulations in key markets like the U.S., value-driven investment strategies are gaining traction. This edition of Aquanow’s Digital Dives explores how investors can cut through the noise by focusing on emerging value metrics. DeFi, in particular, stands out as an area where revenue generation, sustainability, and growth offer tangible indicators of long-term potential—an approach reminiscent of traditional value investing, adapted for the digital asset economy.
Consider what follows as a loose adaptation of the traditional value investing framework employed by legends like Warren Buffett, but stylized for the nascent digital asset ecosystem birthed by Satoshi Nakamoto.
At its core, the proliferation of tokens reflects a double-edged sword. While it democratizes access and fosters open networks, it has also led to market oversaturation, where true innovation competes with speculative excess. With millions of new tokens, information overload is a growing challenge.
For many, meme coins serve as an entry point, but their explosive rise is often followed by sharp declines as hype fades and liquidity dries up. Tokens that surge on speculation, rather than genuine utility or adoption, leave investors questioning whether the broader crypto space offers sustainable, long-term growth.
The challenge isn’t just about avoiding bad bets—it’s about creating a structured approach to identifying projects capable of compounding capital over time. This is where value-driven frameworks come into play.
The digital asset industry’s historic disconnect between token holders and project revenue is shifting. Previously, legal constraints limited the ability of protocols to pass along economic benefits to token holders. However, evolving regulations in jurisdictions like the U.S. are opening doors for more structured value-sharing mechanisms.
This is especially relevant to DeFi, where users already pay for services like lending, trading, and liquid staking. Unlike meme coins, many DeFi platforms generate real revenue through transaction fees and lending spreads. In a value-oriented framework, these cash flows offer a foundation for assessing long-term viability. Protocols capable of redistributing economics to token holders—whether through buybacks, staking rewards, or dividends—can create more sustainable growth models.
With so many tokens in circulation, filtering for projects with real economic viability requires a data-driven methodology. The following key metrics help investors separate value-generating projects from speculative distractions.
Since blockchains function as networks, fundamental evaluation must start with user and developer engagement. A strong startup should show consistent demand for its product and a growing community of contributors.
To illustrate the potential of value-driven metrics, let’s examine the performance of established DeFi projects such as Aave, Aerodrome, and Lido. These protocols represent three non-stablecoin projects in crypto which have generated among the most fee revenue over the past year. Their success highlights how sustainable business models, combined with effective tokenomics, can create a foundation for long-term growth.
Together, these examples show that DeFi protocols with robust fee generation and efficient token economics can deliver consistent value to token holders. Let’s have a look at the various metrics above for these three projects to see if we can uncover anything interesting.
Here we see positive growth trends in Aave and Aerodrome overall, but lately the two have diverged with the former taking the lead as the latter falters. Lido’s user trend has been flat for several months, which might make sense as many may stake their ETH passively through the platform, not needing to engage with the smart contracts regularly.
This is a good chart to represent the open source ethos of digital assets. Aerodrome shares resources with and is a fork of Velodrome which has 6x more devs and is the most popular DEX on the Optimism chain. Velo is in turn a fork of Solidly, one of the most imitated projects in DeFi. As such, Aero may not have as much engineering investment as the other, more novel projects. Lido’s dominance in the chart above likely points to the idea that maintaining a decentralized staking service across multiple chains requires a broader team of developers, particularly those focused on protocol security, upgrades, and cross-chain integrations.
Token Terminal’s definition of Fees is the aggregate levies paid by users to access a protocol. This chart is helpful in the context of on-chain activity. Aerodrome had commanded the highest number of users for several months, but during that time, they earned the least amount of fees. Conversely, Lido sees relatively less activity, but its users are more willing to pay.
Net Revenue shows what percentage of the fees the protocol captures for itself (and its token holders) while expenses can be generalized as the token emissions paid by protocols to incentivize activity. Lido has been around longer than Aerodrome, but its economics look significantly more attractive as the project is consistently profitable. The latter has yet to achieve this milestone, but the trend is headed in the right direction.
Older projects like Aave and Lido have largely tapped out their incentive treasuries and most of the tokens that were generated are in circulation today. This isn’t the case for Aerodrome, whose market cap is about 50% of its fully diluted valuation. This presents an additional risk for $AERO holders who believe in the long term prospects of the project because the market will need to digest this new supply, which is significant.
Bringing it all together, we can see that the fast-growing Aerodrome project has enjoyed spectacular appreciation of its $AERO token. However, the broader crypto market has weakened since December and the asset has lost nearly 60% of its value, which compares to $AAVE and $LDO at -5% and -24% respectively. The takeaway is that strong project fundamentals can drive actual value to token holders, and it’s likely that there’s increased focus on this idea going forward.
We’d be remiss not to consider a price-to-earnings ratio for the projects above. For completeness, Aave trades at 91x its annualized last three months of profit, while Lido trades at 31x. On the surface, LDO appears more attractive, but this simple multiple doesn’t capture off-chain operational costs, making direct comparisons less straightforward. Aerodrome, meanwhile, remains unprofitable, rendering its P/E ratio inapplicable. As in equity markets, a single multiple isn’t enough to draw conclusions. While not an exhaustive valuation framework, our broader analysis offers a more nuanced perspective on protocol value drivers.
Market participants faced with an onslaught of new tokens can try to chase narratives, but perhaps we’d be better served to remember the wise words of Warren Buffett: “Price is what you pay. Value is what you get.”
As crypto markets evolve, so too must the frameworks used to evaluate opportunities. The hypertokenization of the ecosystem presents challenges, but it also sets the stage for a more sophisticated investment environment, where value metrics play a crucial role in separating signal from noise. By focusing on user growth, developer activity, fee generation, tokenomics, and operational efficiency, investors can identify projects with sustainable long-term potential.
While growth remains paramount, the emergence of value-based metrics represents an essential evolution—one that can help investors cut through the noise and identify sustainable opportunities. As regulations modernize and projects gain more flexibility in sharing economic benefits, the digital asset market is poised to shift toward long-term value creation as its defining investment principle.
