Author: Marcus (@that1618guy), Delphi Digital Researcher

Compiled by: Jiahua, ChainCatcher

When screening projects, there is one question I keep pondering: If a project's revenue can cover its current market value within two years, why wouldn't you want to buy it?

The answer is almost never the revenue itself, but whether you believe this revenue can be sustained.

This is the xRev multiple, calculated as market value divided by annualized revenue, which truly measures something. It's not about how cheap it is, but about sustainability.

Two ongoing cases exemplify this well. PUMP and AERO have low single-digit multiples based on their recent revenues, at 2.3 times and 3.5 times respectively. However, in the past 30 days, PUMP has risen by 87%, while AERO has dropped by 14.5%.

Similar selection results, yet completely opposite trends.

In June of this year, the market valued PUMP at only 1.3 times, indicating that the market didn't even believe this protocol could sustain its current revenue for over 16 months. By July, this skepticism began to dissolve, and the subsequent rise was almost entirely due to valuation reassessment.

AERO, conversely, behaves exactly the opposite. Since its peak price in December 2024, its multiple has nearly doubled, not because the market has come to believe in it more, but because the rate of revenue decline has outpaced the market's repricing rate.

If this framework holds, then the trading logic is not "buy the lowest multiple." Instead, it is "buy the multiple that is about to no longer be doubted by the market." When a previously doubted revenue source proves it can sustain, even if the market value increases faster than revenue growth, the valuation reassessment itself can account for most of the increase.

What xRev Truly Measures

xRev is straightforward: market value divided by annualized revenue. When xRev is 1.0, it means the protocol's annual revenue equals its entire market value. Below 1.0 means it takes less than a year.

Upon seeing these numbers, the first reaction is often that the market pricing is wrong. But a more accurate understanding is that the market is applying a massive discount to the sustainability of this revenue. The market is essentially telling you: it believes this revenue is a temporary phenomenon, will decline, and will not recover.

Therefore, an extremely low xRev itself is not a buy signal; it is more like a way for the market to express doubt. The real Alpha lies in judging whether this doubt is right or not.

Before diving into the cases, a distinction needs to be made because the initial xRev level of a token determines what type of trading opportunities it might evolve into afterward. They can be classified into two categories.

Type A tokens are inherently cheap: a new protocol finds product-market fit in a high-fee lane, leading to a rapid revenue explosion, but the market still does not believe this revenue can be sustained, resulting in xRev being around 1 or even below 1 from the start. High revenue, low market value, with extreme market skepticism. The reason their market value is low is only one: the market has yet to believe its revenue story. Therefore, these tokens are most likely to become candidates for "belief reassessment."

Type B tokens are inherently expensive: from day one, the market treats them as future revenue giants, hence xRev starts high, and all optimistic expectations are already priced in. There is no "doubt" to compel a buy; only waiting for the project to fulfill the expectations that have been priced in.

AERO undoubtedly belonged to Category A at launch. PUMP, on the other hand, clearly fell into Category B at launch. Let's look at what happened with each of them.

Pump: Category B Project Begins to Realize Its Previously Paid Premium

PUMP is a typical Category B case.

After a round of $1 billion financing, PUMP issued tokens with a diluted valuation of $4 billion, which corresponds to more than nine years of revenue at that time; according to circulating market value, the opening xRev reached 4.5 times.

The market paid a premium for the belief in advance. Over the next year, the market continuously reclaimed this premium.

At that time, this was understandable. The trading volume of meme coins is cyclical, competitors are always vying for order flow, and no one can be certain if this platform can maintain its market share.

The xRev chart clearly shows how these pre-priced beliefs gradually vanished. For 11 consecutive months, xRev was almost constantly compressing, yet the protocol still generated over $200 million in total revenue each quarter.

Figure 1: PUMP's xRev since token issuance, using a 30-day revenue window.

There are two particularly noteworthy points on this chart.

First, the restructuring in April 2026 caused a mechanical xRev reduction, rather than just a change in market sentiment.

Pump burned all previously repurchased tokens, worth about $370 million, accounting for 36% of the circulating supply at that time. Subsequently, the protocol locked 50% of its net revenue into an irrevocable buyback and burn contract, which will last for a year.

This burning removed about one-third of the circulating market value overnight; therefore, from a calculation perspective, xRev had to decrease immediately.

What is truly noteworthy is that despite this, the market still continued to apply discounts.

After the burn, xRev dropped from about 1.7 times all the way down to 1.29 times on June 6. At this price, PUMP's market value was even less than its 16-month revenue, of which half was contractually determined to be used for purchasing and burning PUMP.

This is what the peak of market skepticism looks like.

Figure 2: PUMP's quarterly protocol revenue, indicating the portion used for buybacks.

Second, the valuation reassessment truly starts only when the revenue story begins to change.

The week of August 3 to 9 marked the first time in Pump's history that weekly fees exceeded $10 million, with $5.02 million used to buy and burn 2.15 billion PUMP.

The past 30 days saw revenue reach $37.9 million, corresponding to an annualized figure of about $460 million, while the past 12 months revenue was $457 million. The current operating rate is almost consistent with last year's level, and cumulative protocol revenue has surpassed $1.2 billion.

The market took a year to determine that this revenue was merely a coincidence, but it not only still exists, it's also turning upward again.

What is the result?

xRev has expanded by about 80% from the June low of 1.29 times to 2.3 times, while pushing PUMP up by 87% in the past 30 days, with a circulating market value reaching $1.07 billion. This doesn’t require explosive revenue growth.

Most of this surge comes from the market reevaluating the sustainability of the revenue. More and more people are starting to believe that at the current revenue levels, revenue equivalent to about 2.3 years aligns with the current market value, making them willing to pay a higher price. Even if revenue remains unchanged, this will push xRev up.

So my view is that the changing variable is not revenue, but the market's belief in this revenue. Of course, it must be noted that I am using the circulating market value.

If calculated using fully diluted valuation, PUMP's FDV is $2.3 billion, corresponding to an xRev of about 5 times, and the token unlock in August is continually narrowing the gap between these two figures. Moreover, regardless of how the buyback contract is designed, the revenue of meme coin issuance platforms remains cyclical.

If weekly fees drop below the $5 million to $6 million range maintained throughout the summer turbulence, then this valuation reassessment could reverse as quickly as it formed.

Aerodrome: When Low Multiples Are Actually Telling the Truth

AERO is exactly the opposite case.

On paper, AERO seems like a more favorable transaction.

With a market value of $404 million and $116 million in annualized revenue over the past 12 months, its xRev is only 3.5 times. Moreover, unlike most protocols, 100% of AERO's revenue goes to veAERO stakers. Real earnings, with no value leakage, and 54% of the supply is locked.

It sounds like a good buying opportunity. But the xRev chart will tell you why you shouldn’t buy now, at least for the moment.

Figure 3: AERO's xRev since January 2024, using a 30-day revenue window.

At the beginning of 2024, AERO was the most typical Category A project and the best bull case for the entire framework. This is a new protocol that just found product-market fit, riding the wave of explosive growth from Base, with revenues growing rapidly and far outpacing market confidence.

At one point, the market valued it at less than 1 times, or less than a year of revenue. This time, the market's skepticism was incorrect.

Revenue continued to grow, and market confidence followed suit. By the time AERO peaked in price in December 2024, xRev had expanded to 3.4 times, with a market value of $1.5 billion.

The real trading opportunity was to buy AERO when it was below 1 times xRev and then hold until the market's belief changed.

But let's see what happened next.

Since that high point, the token price has dropped 73%, while xRev has nearly doubled, reaching 8.8 times. This combination can only happen in one way: the speed of revenue decline has outpaced the speed of price decline.

AERO's annualized immediate revenue has fallen from a peak of about $443 million to about $46 million now. The quarterly total protocol revenue peaked at $106 million in the fourth quarter of 2024, but by the second quarter of 2026, it had dropped to $29.3 million, a decline of 72%.

Figure 4: Aerodrome's quarterly total protocol revenue.

This is the opposite of the PUMP case.

AERO's price drop is not the result of the market irrationally undervaluing a high-profit protocol.

In my view, the market is actually pricing a continuously declining revenue curve correctly; it’s just that the speed of price adjustment barely keeps pace with the deterioration in revenue.

In the past 30 days, AERO dropped by 14.5%, while the market pushed PUMP up by 87%. This is precisely where the "revenue sustainability discount" is at play. Of course, to be fair to AERO, there are currently several potential catalysts that might change the situation, including a merger with Velodrome, the predictive allocation upgrade launched in July, and listing on Binance.

Any one of these factors could reverse the revenue trend. If the revenue growth rate turns back upward, then the same valuation reassessment mechanism that pushed PUMP up could reappear, the very mechanism that occurred with AERO itself in 2024.

But that is exactly the point.

If you buy AERO now, what you're really betting on is a change in the revenue trend, not on the fact that the multiples of the past 12 months look cheap.

So, Under What Conditions is xRev Reasonable?

xRev is a ratio, so looking at whether it is rising or falling by itself does not tell you much.

Each change can be accurately broken down into two parts: from a log change perspective, xRev change = market value change - revenue change.

A compression in multiples may indicate that the speed of price decline surpasses revenue, or it may mean that the speed of revenue growth exceeds price. An expansion in multiples could mean that the speed of price increase surpasses revenue, or it could indicate that revenue is declining but is just decreasing at a slower rate.

The same chart shape may correspond to completely opposite trading opportunities.

Therefore, before interpreting any xRev change, we should first ask: which leg is actually driving it? This decomposition also provides a more experiential definition of "reasonable valuation."

When both market value and revenue are changing but xRev remains stable over the long term, a protocol can be considered to be trading at its reasonable multiple. This means the market is repricing the token one-to-one according to changes in fundamentals.

And the multiple that ultimately stabilizes during this phase is the market's valuation of the sustainability of that protocol's revenue. By observing the degree to which the price deviates from this level, we can further judge where the signals are.

The following is the xRev chart for AERO, divided into three continuous historical phases.

Figure 5: AERO's xRev history and its three phases.

The first phase occurs at the beginning of 2024 and is the belief reassessment phase.

The market value grew 58 times, while revenue grew 26 times. Both legs were exploding, but the price was running faster because the market began to believe the story.

The second phase represents the reasonable valuation range, which is also the most underappreciated part of the entire chart.

From May 2024 to March 2025, for 11 consecutive months, xRev maintained between 1.7 times and 3.0 times, with a median of 2.2 times. During the same period, market value fluctuated between $223 million and $1.57 billion, while annualized revenue changed from $141 million to $491 million.

In other words, both data points experienced significant fluctuations of 4 times to 7 times, but xRev hardly changed. This indicates that the market had formed its pricing consensus: a dominant Base DEX should have revenue worth approximately 2 to 3 years.

The third phase breaks this range.

Since April 2025, AERO's market value hardly changed, moving from $350 million to $404 million, but annualized revenue dropped by 67%. Hence, xRev nearly doubled, while the price side contributed almost nothing. If a similar phase analysis were performed on PUMP, we would see a completely different structure.

Figure 6: PUMP's xRev history and its different stages.

PUMP's chart is almost the mirror image of AERO’s, but with a very critical distinction.

It started from the typical B type project positioning, opening with an xRev of 4.5 times, as market confidence had been priced in long before.

Therefore, the first phase actually involves continuously reclaiming this pre-paid confidence.

During this period, market value dropped by 42%, while revenue only fell by 13%. However, PUMP's business itself did not encounter any structural issues. The market was merely reclaiming the premiums that were paid previously.

The shaded area in the chart represents approximately six months of subsequent phases, during which xRev fluctuated between 2.6 times and 4.4 times. It seemed that the market had found a stable level, but it actually had not.

By February, this range was broken again, primarily due to a sell-off on the price side, while the protocol's revenue recorded its best quarterly performance historically. Subsequently, the restructuring in April mechanically reset the numerator. Pump burned all previously repurchased tokens valued at about $370 million, accounting for 36% of the circulating supply.

Since market value is "price × circulating supply," deleting one-third of the circulating supply without anyone selling a single token would reduce the circulating market value by one-third overnight. Thus, xRev fell from about 3 times to about 1.7 times.

This part of the change does not contain any information about market belief. The next two months entered the surrender zone. Both market value and revenue slowly changed, ultimately causing xRev to reach a low point of 1.29 times.

This low point marks when a Category B token has fully transformed into a Category A structure: high-level, validated revenues, compressed market value, and the strongest market skepticism.

The third phase then showcases what happens after such skepticism is broken. Market value increased by 87%, and revenue rose by 43%.

This is exactly the same quadrant that AERO was in at the beginning of 2024.

Is Revenue Sustaining or Declining?

To more clearly determine whether the revenue behind a multiple is sustaining or declining, we can calculate xRev using two different revenue data points. The last 12 months' xRev uses market value divided by the cumulative revenue of the past 12 months.

Therefore, it actually aggregates all months of revenue from the past year, including both high and low revenue months. The instant running xRev uses the same market value, divided by the annualized result of the most recent 30 days of revenue.

This answers another question: How many years does it take at the current protocol's actual earning speed to generate revenue equivalent to the current market value?

Both calculations use the exact same numerator. Therefore, any difference between these two figures can only originate from one place: the revenue trend.

If revenue has remained stable, the earning speed of the recent 30 days should align closely with the average speed of the past year, thus both multiples will essentially match. However, if revenue is declining, the cumulative data from the past 12 months still includes high revenue months that no longer exist, and the past 12 months' xRev would then appear exceptionally cheap.

Figure 7: Past 12 months xRev vs current running speed xRev.

AERO is a typical case of this trap. Calculating its xRev over the past 12 months yields only 3.5 times, meaning about 3.5 years of revenue equates to its current market value.

But the premise of this conclusion is that it can still sustain the average earning speed of the past year. The issue is that the past year includes some revenue during quarters that are now two to three times higher. Based on today's true revenue speed, it actually requires 8.8 years.

You can think of it as a restaurant. This restaurant made $1.2 million in sales last year, but now can only make $30,000 per month. Someone shows you last year's number and says, "This restaurant is only worth 1 times its sales." However, based on its current actual operating level, you are really paying 3.3 times its current annual sales.

The approximately 2.5 times difference between the two xRev figures for AERO is fundamentally the same issue.

PUMP is completely different.

Whether calculated based on the past 12 months or the current running speed, its xRev is about 2.3 times. Today's revenue speed is essentially consistent with last year's average level. This means its revenue base has not been undermined. Therefore, regardless of how xRev changes next, the primary variable that truly alters will likely be the price side, which reflects market belief.

Conclusion

PUMP initially belonged to Category B. It took a year to digest the high premium at the time of the token issuance; now it has just transitioned from the phase where the market was most skeptical into a stage where it can realize returns through valuation reassessment, and its revenue foundation has essentially not changed.

AERO initially belonged to Category A. It underwent a valuation reassessment in 2024, but since then its multiple has been rising in the wrong way because the speed of revenue decline has outpaced the speed of price.

What is truly worth seeking are those tokens currently in an A-type structure. Validated high revenue, compressed market value, and more importantly: the market has yet to believe this story. This is the starting point that can allow valuation reassessment to account for most of the increase for you.

By the way, many newer revenue-generating projects are currently in Category A. They generate six-figure revenue daily, yet their xRev remains pressed below 1 times.

The market currently perceives all this revenue as just a temporary phenomenon. Just like the market believed when AERO was only at 0.7 times xRev, and as the market believed when PUMP was only at 1.29 times.

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