Written by: Matt Hougan, Chief Investment Officer of Bitwise

Translated by: Chopper, Foresight News

For years, the strongest criticisms of the crypto industry have revolved around valuation logic: “Blockchain technology is indeed innovative, but does that mean the underlying tokens have real value?”

This question is quite reasonable. Many projects have achieved rapid growth, boasting millions of users and generating billions in revenue, but the vast majority of earnings have not flowed to the tokens themselves or their holders. Even for a staunch bull like me, it can sometimes be hard to explain why some tokens have market capitalizations of billions of dollars.

That era has come to an end. Now, except for Bitcoin, the value of crypto assets will increasingly use the same metrics as stocks and bonds: income.

The good news is that many crypto projects have already taken the initiative to return significant revenue to token holders. Hyperliquid, for instance, generated over $800 million in revenue last year, using nearly 99% of its fee income to buy back and burn HYPE on the secondary market (a mechanism similar to a stock buyback by a publicly listed company). Projects like Uniswap, Aave, and Solana are following suit.

However, the broader investment community has yet to understand this transformation, which is one of the main reasons why crypto asset valuations remain persistently low in my eyes.

Why do people think crypto projects cannot generate income?

We need to acknowledge that the criticism of “crypto projects do not have earnings” was indeed valid in the past.

Bitcoin, as the first and largest crypto asset, was not designed to create cash flow for its holders. Bitcoin is a currency-type asset, which typically does not have “productive yield.” Imagine that very few people would ask how much yield gold can produce. However, this characteristic of Bitcoin has solidified investors' stereotypes about all other crypto assets.

From 2017 to 2025, the regulatory environment further reinforced this perception. During the tenure of Jay Clayton and Gary Gensler at the SEC, the regulatory stance strongly opposed the distribution of earnings to token holders. During that time, the U.S. SEC widely held that crypto projects distributing earnings to token holders constituted “illegal securities offerings.” Once labeled with that tag, founders could face unlimited joint liability or even criminal penalties. Imagine if all startups in Silicon Valley would be sued by the government as soon as they shared earnings with investors.

As a result, almost all new projects issued governance tokens. These tokens granted holders voting rights but no rights to claim earnings; this was the case for mainstream DeFi tokens like Uniswap and Aave.

What caused the turning point?

Everything changed in July 2023 when the SEC lost its landmark lawsuit against Ripple. The regulatory agency claimed that XRP constituted an illegal securities offering, but the Federal Court in the Southern District of New York ruled that XRP sold to ordinary investors does not constitute a security.

This ruling shocked the legal community and challenged the previous common interpretations of securities law. Many initially thought the ruling would be overturned in the appeals phase. However, a series of subsequent related rulings largely favored Ripple. By August 2025, both parties dropped their appeals, and the case officially came to an end.

At that time, Paul Atkins succeeded Gensler as SEC Chairman, introducing a more cryptocurrency-friendly regulatory approach. All of a sudden, distributing earnings to token holders became a feasible option.

Coincidentally, around the same time, a major new project centered on income capture was born.

Hyperliquid sets an industry benchmark

Hyperliquid is a decentralized exchange that launched perpetual contract trading in February 2023, later expanding into spot trading, real-world assets (RWA), and prediction markets. Since issuing its token in November 2024, it has been the best-performing top crypto asset, rising approximately 800%; during the same period, Bitcoin's price fell by about one-third.

Hyperliquid's success exists for multiple reasons, with the core highlight being that approximately 99% of network fee income (which directly depends on user activity) is used to buy HYPE on the open market. Since its launch, the project has repurchased and burned HYPE worth a total of $1.3 billion, permanently reducing the circulating supply and providing strong support for the token price. Investors can finally be assured that an increase in blockchain activity can be directly transmitted to token value.

This has made Hyperliquid a target sought after by capital. Over the past year, it is the asset that crypto insiders have discussed the most with me.

Major public chains and applications are following suit

With the regulatory environment no longer hostile to income distribution, combined with Hyperliquid's tremendous success, other projects have started to follow. Over the past year, a wave of transformation has emerged:

• Uniswap: In December 2025, the “UNIfication” governance proposal passed with a 99.9% approval rate. The project immediately burned 100 million UNI (accounting for 10% of the maximum supply, worth approximately $590 million at the time), officially opening the protocol's fee mechanism for the first time. It subsequently burned another 7 million UNI, with current annual revenue of about $100 million, all of which is used to repurchase and burn UNI.
• Aave: Since April 2025, it has started to use income to repurchase its native token AAVE weekly. To date, it is expected to burn AAVE worth $30 million annually (about 20% of annual revenue). In June 2026, it further introduced “Aavenomics 3.0,” automating the protocol’s fee and GHO stablecoin earnings into a buyback contract that cannot be manually interfered with. The total buyback volume has exceeded 1.2% of the total supply of tokens.
• shturl.c: This meme coin trading platform has the most aggressive actions. It launched in July 2025 and quickly initiated the buying back of PUMP tokens within days. By April 2026, it had burned tokens worth $370 million, equivalent to 36% of the circulating supply. Recently, it has locked 50% of net income for next year into an irreversible buyback and burn smart contract, with current annual revenue of $328 million.

Many new projects have built-in income capture mechanisms from inception. The fastest-growing perpetual contract trading platform on Ethereum, Lighter, launched earlier this year and immediately used trading income to buy back LIT tokens, having repurchased approximately 6% of the circulating supply so far, and promised to burn all purchased tokens, with annual revenue of $67 million.

The trend of income capture has even spread to layer 1 public chains. The Solana community has launched the SGP-0003 proposal, which plans to reduce the inflation rate and increase the fee burn scale by up to 14 times. Coincidentally, Aptos raised its gas fees tenfold earlier this year, optimizing the earnings model for token holders. Users did not leave in large numbers; on-chain trading activity increased nearly threefold, and the annual token burn amount rose from about 90,000 tokens to 1.9 million tokens.

Conclusion

I have over 25 years of investment experience in the technology sector, and the current development trajectory feels familiar, reminiscent of the early days when platforms like Facebook had not yet explored monetization through advertisements.

At that time, bears questioned the platforms' ability to charge: “Once ads are placed, users will leave.” Bulls could only rely on vague logic like traffic and Metcalfe’s law to argue for the value of the platforms.

Ultimately, leading platforms successfully began monetization, and users did not leave in large numbers. Investors realized that the truly critical metric was not traffic, but profitability. I believe the crypto industry will also replay this process. A transformation has already occurred: Uniswap opened its fee structure in December last year, and by July this year, its DEX market share has hit a record high; since July 1, tokens have risen by 35%.

I believe that whether it is DeFi applications or layer 1 public chains, pricing power far exceeds market expectations. The pattern of quality brands is solid, and trust resources in the industry are scarce. In the next 12 to 24 months, various platforms will continue to enhance their ability to generate income.

The key reason for the significant opportunities present right now is that investors outside the crypto industry have no awareness of this transformation. External observers have solidified the impression that “crypto assets have no cash flow”; reversing this perception will take a long time. Meanwhile, investors within the circle have been eroded in confidence by countless past narratives that fell flat, making it hard to believe that tokens and real earnings can stabilize their correlation, which has also resulted in the current low valuation levels.

Uniswap is already a globally recognized brand, with spot trading volumes matching Coinbase, yet its market capitalization is only $2.4 billion. Aave and another DeFi project optimizing token economics, Morpho, dominate the on-chain lending track, with a combined market cap also of $2.4 billion. Hyperliquid is one of the fastest-growing fintech companies I have ever seen, with a price-to-earnings ratio ranging from 17 to 60 times. For global platforms in high-growth tracks and continuous expansion, such valuations are indeed attractive.

Of course, risks need to be highlighted: crypto tokens are not equivalent to stocks. Token holders do not have legally protected claims to cash flow; the rules for distributing earnings are set through community governance and can change. Investors need to weigh the unique advantages of crypto assets against their special risks.

But if my judgment holds, the correlation between earnings and token value is continuously strengthening. As the market re-prices, the valuations of crypto assets have the potential to double or even grow higher. For a long time, the lack of cash flow has been the most powerful argument for shorting crypto assets; soon, it will turn into the most solid logic supporting the value of crypto assets.