Crypto valuations could double as protocols link revenue to tokens: Bitwise CIO
Bitwise’s Matt Hougan expects revenue-capture mechanisms to spread across DeFi applications and layer-1 networks over the next 12 to 24 months.
Crypto valuations could potentially double as protocols increasingly link revenue to tokens, according to Bitwise Chief Investment Officer Matt Hougan. The crypto market, excluding Bitcoin, is becoming more revenue-driven, with network activity directly impacting token value, Hougan told reporters. Investors have yet to price in this change, potentially undervaluing certain crypto assets.
Example protocols include Hyperliquid, Uniswap, Aave, Pump.fun, and Lighter, which utilize fees to repurchase or eliminate tokens from circulation. Hougan anticipates DeFi applications and layer-1 networks to adopt similar revenue-capture mechanisms within the next 12 to 24 months. This stronger connection between protocol revenue and token value could provide investors with conventional valuation metrics, despite token holders lacking legal claims to cash flow and community-set tokenomics being subject to change.
Hyperliquid, a decentralized exchange that generated over $800 million in revenue last year, used nearly all of it to buy and burn HYPE tokens. On August 6, Hyperliquid reported $169 million in second-quarter revenue, with $141 million directed toward HYPE buybacks. Uniswap also linked revenue to its token after its "UNIfication" overhaul approved the use of protocol fees to fund UNI burns on December 22, 2025.
Under this mechanism, collected fees can be used to burn UNI, tying protocol activity to a reduction in the token's supply. Aave DAO's buyback program purchased more than 205,000 AAVE during its first 10 months, with Aave founder Stani Kulechov stating that 100% of Aave Protocol and GHO revenue goes to the $AAVE token.
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