Protocol revenue is tied to token value, and Bitwise expects crypto asset valuations to at least double

Comparing news, Matt Hougan, chief investment officer at crypto asset management firm Bitwise, said that crypto asset valuations could at least double as agreements use revenue to buy back or destroy tokens. With the exception of Bitcoin, the crypto market is turning revenue-driven, but investors have yet to fully account for this change, and some assets are undervalued as a result.

Hougan pointed out that Hyperliquid, Uniswap, Aave, Pump.fun, and Lighter have repurchased or removed tokens out of circulation through fees, and it is expected that DeFi applications and Layer-1 networks will adopt similar mechanisms within the next 12 to 24 months.

Hyperliquid earned more than $800 million last year, about 99% to buy back and destroy HYPE; its second-quarter revenue was $169 million, of which $141 million was used to buy back HYPE. The Aave DAO buyback program purchased over 205,000 AAVE in the first 10 months.

Aave founder Stani Kulechov said that the team is designing an automated buyback mechanism, and all revenue from Aave Protocol and GHO will go to AAVE tokens. Hougan believes that the US regulatory environment is becoming more relaxed, and regulatory guidelines may support the continued expansion of the crypto market without passing the CLARITY Act.