We view the flow of casino funds as akin to the recurring revenue of software.
Written by: Santiago R Santos
Translated by: Luffy, Foresight News
Currently, everyone in the crypto industry is focused on the same headlines:
Exchange-traded funds (ETFs) are live
Physical enterprises are integrating stablecoins
Regulatory attitudes are becoming increasingly friendly
Aren't these everything we've ever dreamed of? But why are prices still sluggish? Why has Bitcoin oscillated back and forth this year, giving up gains, while the U.S. stock market has risen by 15%-20%? Why, even though "cryptocurrency is no longer a scam" has become mainstream consensus, are the altcoins you are optimistic about still in a loss state?
Let's have a good discussion about this issue.
Adoption Rate ≠ Price Increase
There is a deep-seated assumption on crypto Twitter: "Once institutions enter, regulations are clear, and JPMorgan issues tokens… we will soar."
Now that institutions have arrived and we are in the headlines, cryptocurrency is still stagnant.
The core question in the investment world is: "Have these positive developments already been priced in?"
This has always been the hardest thing to judge, but market behavior is sending a disturbing signal: we have gotten everything we wanted, yet failed to drive prices up.
Could the market be inefficient? Of course. But why? Because most areas of the cryptocurrency industry have long been severely disconnected from reality.
$1.5 trillion market cap… what is it based on?
Let's take a step back. Bitcoin stands alone; it is like gold, a perfect symbol of consensus. Currently, Bitcoin's market cap is about $1.9 trillion, while gold's market cap is about $29 trillion, meaning Bitcoin's market cap is less than 10% of gold's. From the perspective of hedging tools and options value, its logic is clear enough.
The total market cap of all other crypto assets like Ethereum, Ripple, and Solana is about $1.5 trillion, but the narrative foundation behind them is much weaker.
Today, no one questions the potential of this technology, and few believe the entire industry is a scam; that phase has passed.
But potential does not answer the real question: is an industry with only about 40 million active users really worth trillions of dollars?
Meanwhile, there are rumors that OpenAI's IPO valuation is close to $1 trillion, and its user base is about 20 times that of the entire crypto ecosystem.
Think about this comparison. Such moments force us to confront the core question: what is the best way to gain exposure to cryptocurrency from now on?
Looking back at history: the answer is "infrastructure." Early Ethereum, early Solana, early DeFi—these types of investments worked.
But what about now? The pricing of these assets seems to assume that future usage and transaction fees will grow 100-fold. Perfect pricing, but with no margin of safety.
The market is not foolish; it is just greedy.
This cycle has given us all the headlines we wanted… but some truths have also become clear:
The market does not care about your narrative; it only cares about the gap between price and fundamentals. If this gap persists long-term, the market will eventually stop holding illusions about you, especially when you start disclosing revenue data.
Cryptocurrency is no longer the hottest investment target; artificial intelligence (AI) is. Funds chase trends; this is how modern markets operate. Currently, AI is the absolute star, while cryptocurrency is not.
Enterprises follow business logic, not ideology. Stripe's launch of the Tempo stablecoin is a warning signal. Perhaps enterprises will not choose to use public chain infrastructure just because they heard "Ethereum is the world's supercomputer" on Bankless; they will only choose the options that are most beneficial to them.
So, just because Larry Fink discovered that "cryptocurrency is not a scam," does that mean your holdings can rise?
When assets are perfectly priced, a careless remark from Powell or a subtle expression from Huang Renxun can destroy the entire investment logic.
Simple Calculation: Ethereum, Solana, Why Revenue ≠ Profit?
Let's roughly estimate the situation of mainstream public chains (L1). First, the staking rewards (note: this is not profit):
Solana: About 419 million SOL are staked, with an annual yield of about 6%, generating about 25 million SOL in staking rewards each year. At the current price of about $140 per SOL, the rewards are worth about $3.5 billion per year.
Ethereum: About 33.8 million ETH are staked, with an annual yield of about 4%, generating about 1.35 million ETH in staking rewards each year. At the current price of about $3100 per ETH, the rewards are worth about $4.2 billion per year.
Some people see the staking data and say: "Look, stakers can earn rewards! This is value capture!"
No, staking rewards are not value capture. They are token issuance and dilution, the cost of network security, not profit.
The real economic value = transaction fees paid by users + tips + maximum extractable value (MEV), which is the closest indicator to "profit" in blockchain.
From this perspective: Ethereum generated about $2.7 billion in transaction fees in 2024, ranking first among all public chains. Solana's recent network revenue performance is leading, generating hundreds of millions of dollars in revenue each quarter.
Therefore, the current market situation is: Ethereum has a market cap of about $400 billion, with annual transaction fees + MEV revenue of about $1-2 billion. This means that based on peak revenue calculations, its price-to-sales ratio (note: price-to-sales ratio PS = total market cap divided by main business revenue. The lower the price-to-sales ratio, the greater the investment value of the company's stock.) is as high as 200-400 times.
Solana has a market cap of about $75-80 billion, with annual revenue exceeding $1 billion. Depending on the method of annualization (note: do not use peak month data to estimate the entire year), its price-to-sales ratio is about 20-60 times.
These figures are not precise, nor do they need to be. We are not submitting documents to the SEC; we just want to judge whether the valuation is reasonable. And this has not yet touched on the real issue.
The Real Issue: This is Not Recurring Revenue
These are not stable, enterprise-level revenue streams. They are highly cyclical, speculative "recurrent cash flows":
Perpetual contract trading
Memecoin speculation
Fees generated from forced liquidations
MEV peak earnings
Frequent inflows and outflows of high-risk speculative funds
In a bull market, transaction fees and MEV will skyrocket; in a bear market, they will disappear in an instant.
This is not the recurring revenue of software as a service (SaaS); this is Las Vegas-style casino revenue.
You wouldn't assign a Shopify-level valuation multiple to a company that "only makes money when the casino is full every 3-4 years." This is a different business model and should correspond to different valuation multiples.
Returning to Fundamentals
In any reasonable logical framework: Ethereum, with a market cap of about $400 billion and annual revenue (highly cyclical fees) of only $1-2 billion, does not qualify as a value asset.
A price-to-sales ratio of 200-400 times, combined with slowing growth and value diversion from Layer 2 ecosystems, makes Ethereum less like a federal government in a tax system and more like a "federal government that can only collect state-level taxes while letting states (L2) take most of the revenue."
We think of Ethereum as the "world computer," but its cash flow performance is severely inconsistent with its market cap. Ethereum feels a lot like Cisco: it held a leading position early on, had an unreasonable valuation multiple, and may never reach historical highs again.
In contrast, Solana's relative valuation is not as outrageous; it is not cheap, but it is not at a crazy level either. With a market cap of $75-80 billion, it achieves billions in annual revenue, with a price-to-sales ratio of about 20-40 times. It is still high, still has a bubble, but compared to Ethereum, it is "relatively cheap."
Let's compare valuation multiples: Nvidia, the most sought-after growth stock globally, has a price-to-earnings ratio (note: the price-to-earnings ratio is one of the most commonly used indicators in stock valuation, used to measure how high the stock price is relative to the company's profitability. The formula is: price-to-earnings ratio = stock price / earnings per share.) of only 40-45 times, while it has:
Real revenue
Real profit margins
Global enterprise-level demand
Recurring contract sales
A large customer base outside the cryptocurrency casino (fun fact: cryptocurrency miners were once the first true drivers of rapid growth for Nvidia)
Again, it is emphasized: the revenue of public chains is cyclical "casino income," not stable, predictable cash flow.
Logically, these public chains' valuation multiples should be lower than those of tech companies, not higher.
If the entire industry's transaction fees cannot shift from "speculative fund turnover" to "real, sustainable economic value," then the valuations of most assets will be repriced.
We are still in the early stages… but not that kind of early
One day, prices will realign with fundamentals, but that time has not yet come.
The current situation is:
There are no fundamentals to support the high valuation multiples of most tokens.
Once token issuance and airdrop arbitrage are removed, many networks' value capture capabilities will cease to exist.
Most "profits" are tied to speculative activities of casino-like products.
We have built infrastructure that enables low-cost, instant cross-border transfers around the clock… yet we have defined its best use as "slot machines."
Short-term greed, long-term laziness. To quote Netflix co-founder Marc Randolph: "Culture is not what you say, but what you do."
When your flagship product is "Fartcoin 10x leveraged perpetual contracts," don't talk to me about decentralization.
We can do better. This is the only way for us to upgrade from an overly financialized niche casino to a truly sustainable long-term industry.
The End of the Beginning
I do not believe this is the end of cryptocurrency, but I do believe this is the end of the beginning.
We have invested too much in infrastructure, with over $100 billion sunk into public chains, cross-chain bridges, Layer 2, and various infrastructure projects, while severely neglecting application deployment, product development, and real user acquisition.
We always boast about:
Transactions per second (TPS)
Block space
Complex Rollup architectures
But users do not care about these at all. They only care about:
Is it cheaper?
Is it faster?
Is it easier to use?
Does it really solve their problems?
Returning to cash flow, returning to unit economics, returning to the essence: who are the users? What problems are we solving?
Where is the real growth potential?
For over a decade, I have been a staunch bull on cryptocurrency, and that has never changed.
I still believe that:
Stablecoins will become the default payment channel.
Open and neutral infrastructure will support global finance behind the scenes.
Enterprises will adopt this technology because it makes economic sense, not ideological.
But I do not believe that the biggest winners of the next decade will be the mainstream public chains or Layer 2 solutions of today.
History shows that the winners of each technology cycle emerge at the user aggregation layer, not the infrastructure layer.
The internet reduced the costs of computing and storage, but wealth ultimately flowed to Amazon, Google, and Apple—those companies that leveraged cheap infrastructure to serve billions of users.
Cryptocurrency will follow a similar logic:
Block space will become a commodity
The marginal benefits of infrastructure upgrades will diminish
Users will always be willing to pay for convenience
User aggregators will capture most of the value
The biggest opportunity right now is to integrate this technology into already scaled enterprises. By replacing the financial pipelines of the pre-internet era with cryptocurrency infrastructure, as long as it can genuinely reduce costs and improve efficiency, it will quietly upgrade all industries from retail to industrial, just like the internet did.
Enterprises adopt the internet and software because it makes economic sense. Cryptocurrency is no different.
We can wait another decade for all of this to happen naturally. Or we can start taking action now.
Updating Our Understanding
So, where do we go from here? The technology is viable, the potential is enormous, and we are still in the early stages of real adoption.
Reassessing everything will be a wise move:
Evaluate network value based on real usage rates and the quality of transaction fees, not ideology
Not all transaction fees are equivalent: distinguish between recurring revenue and speculative cash flows
The winners of the last decade will not dominate the next decade
Stop viewing token prices as a scoreboard for technological effectiveness
We are still at such an early stage that we still consider token prices as a measure of whether the technology is working. But no one chooses AWS over Azure just because Amazon or Microsoft’s stock went up that week.
We can wait another decade for enterprises to adopt this technology proactively. Or we can start taking action now to bring real GDP on-chain.
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