Video Title: Crypto's next winners won't be blockchains
Video Author: Bankless
Translation: Peggy, BlockBeats
Editor's Note: Against the backdrop of a prolonged valuation contraction and a repatriation of funds in the crypto market, discussions about token investment are shifting from "What is the next hot narrative?" to "Which projects have formed verifiable business models?". However, as income, buybacks, and burns gradually become the new valuation language, a more critical question arises: Can tokens be priced based on cash flows like stocks, and do their holders truly own the value created by protocol growth?
This episode of the Bankless podcast invites Austin Barack, founder and managing partner of Relayer Capital, to discuss valuation methods for application tokens around projects like Venice, Hyperliquid, Pump.fun, and ether.fi, as well as potential paths for the crypto market to migrate from an infrastructure cycle to an application cycle.
In this conversation, Austin does not simply seek the tokens with the highest revenue or the most aggressive buybacks; instead, he dissects token investment into a set of more fundamental structural questions: Does the product have real demand? Can revenue continue to grow? Can commercial value be reliably transmitted to tokens? And is the market still pricing changed businesses with old classifications?
First, the logic of selecting crypto assets is shifting from simply pursuing growth to seeking the intersection of "growth and value." In the past, the industry usually relied on new public chains, new protocols, and token incentives to create growth expectations, and valuations reflected more long-term narratives. The prolonged bear market has compressed this premium, leading to a gradual differentiation between a handful of projects that have found product-market fit with rapidly growing revenue and a large number of tokens lacking actual usage. This means that a downturn not only leads to price discounts but also provides investors with a window to identify real businesses: Projects worthy of attention need to possess both growth speed and reasonable valuation, rather than just occupying one end of the spectrum.
Second, token value is starting to shift from the abstract "utility" to observable value recirculation. Venice uses a portion of revenue from new subscriptions and point purchases to burn VVV; Hyperliquid uses most of its platform revenue to buy back HYPE; both Pump.fun and ether.fi have also established their buyback mechanisms. In the past, there was often a lack of clear correlation between protocol revenue and token performance; project growth did not necessarily translate into returns for token holders. Currently, programmatic buybacks and burns are establishing valuation anchors for tokens similar to cash flow discounting. However, this stock-like framework still has its limits: Buyback ratios may adjust, and the rights relationship between equity entities and tokens has not been fully institutionalized. What investors really need to evaluate is not just the scale of revenue but also the sustainability and credibility of the value recirculation mechanism.
Third, the quality of income is more important than the income itself. The market has long given Pump.fun a low valuation, partly because investors doubt whether the trading demand for meme coins can be sustained and find it difficult to understand the user groups that differ from their own profiles. As platform revenue has maintained resilience for over two consecutive years, this perception is changing. Similarly, Venice's valuation depends not only on current subscription revenue but also on whether it can expand from a multi-model entry to an AI application platform that connects developers with ordinary users. This means that valuation cannot blindly apply buyback multiples but also needs to assess whether revenue comes from temporary incentives and hype or from a type of user behavior that can occur repeatedly.
Fourth, the market's old classifications of projects may become new pricing biases. Ether.fi was previously seen as a liquidity re-staking protocol, but over 60% of its business now comes from Neo Bank products like credit cards and loans, further expanding into a comprehensive on-chain brokerage platform. If the market continues to price it based on the re-staking track, it may overlook the changes that have occurred in its revenue structure. More importantly, ether.fi can directly utilize the borrowing, stablecoin, and tokenized asset infrastructure on Ethereum, expanding its products with lighter organization and capital input. This indicates that the true value left by the infrastructure cycle may not continue to concentrate on the underlying protocols but could be captured by applications that best wrap these capabilities and serve users directly.
Fifth, application revenue can provide a valuation floor but cannot completely detach tokens from the crypto cycle. Projects with buyback mechanisms can form relatively independent pricing foundations based on business growth, but they still belong to the category of token assets and will be influenced by market capital flows, BTC and ETH trends, and changes in on-chain activity. The distinction is that during market uptrends, trading applications like Hyperliquid and Pump.fun may simultaneously gain from both capital inflow and business expansion; during market downturns, real revenue becomes an important buffer that distinguishes them from purely narrative assets.
If this conversation can be compressed into a judgment, it is this: The core of the next round of crypto asset revaluation may not lie in who has a grander infrastructure narrative but in who can convert real use into sustained income and reliably return part of it to the tokens. In this sense, the discussion here is not just about whether a few tokens are undervalued; it's about whether the crypto market can evolve from a narrative-driven financing system to an application economy based on products, cash flows, and value distribution.
Below is the original content (have been rearranged for readability):
TL;DR
· The core opportunity in the crypto market is shifting from underlying infrastructure to the application layer, fundamentally replacing block space narratives with revenue and users as new sources of value.
· Whether application tokens can be revalued depends not on how much the protocol earns, but whether income can be transmitted to the tokens through stable and transparent buyback or burn mechanisms.
· Venice combines AI application growth and token burn logic, but the $43.9 target price relies on optimistic assumptions like the launch of Minds and increased burn ratios, and should not be seen as a certain valuation.
· The low valuation of Pump.fun mainly reflects the market's doubts about the sustainability of meme coin revenue, but over two years of revenue resilience suggests that high volatility speculative demand may be a type of sustained consumer behavior.
· Hyperliquid is more cyclically reflexive than typical applications: capital inflows can both raise HYPE valuations and simultaneously boost trading volumes, fees, and buyback scales.
· Ether.fi is still priced based on its re-staking protocol, but its main revenue has shifted to payments and loans; the market's old classification of the project may not have kept pace with changes in its business structure.
· Buyback multiples cannot be directly equated to stock price-earnings ratios because tokens typically lack clear residual income rights, and the value distribution between equity and tokens remains a core risk.
· Fundamentals can reduce quality tokens' correlation to the overall market but cannot eliminate the crypto cycle; truly sustainable valuation still depends on revenue quality, value recirculation, and mechanism continuity.
Main Points
Investment methods in the crypto market have never been fixed.
A strategy that was effective in 2017 may not apply to 2021; sectors that become popular in 2021 or 2024 may lose their appeal in the next cycle. Austin Barack believes that one of the reusable approaches across cycles is to seek the intersection of growth and value: Projects should grow fast enough, but the market should not fully reflect this growth in its valuation.
This is not traditional undervaluation investment. Investors enter the crypto market not to seek out a mature company with 10% annual growth and a P/E ratio of only 4. The true attractiveness of crypto assets lies in their dramatic capital cycles that can create a combination seldom seen in traditional markets: business growth multiples while valuation remains suppressed due to overall market malaise.
Barack has founded Relayer Capital for about two and a half years, covering both early-stage investments and circulation market strategies. Initially, both areas occupied roughly equal amounts of attention, but now about 95% of his focus has shifted to circulating tokens, emphasizing two main lines: Crypto×AI and all-weather trading and asset tokenization.
The reason is not only that the crypto market might re-enter an upward cycle. Barack believes that the prolonged bear market has helped the market complete a round of screening: When most tokens lose their narrative premium, a few projects that have truly found product-market fit, are experiencing rapid revenue growth, and whose valuations remain relatively reasonable start to emerge.
From chasing narratives to calculating buybacks, tokens are acquiring a new valuation language
For a long time, valuations of crypto projects mainly relied on market space, network effects, and token utility as long-term hypotheses. Even when protocols generated revenue, there was often a lack of clear correlation between this income and the tokens.
Now, some applications are starting to convert business revenues directly into token buybacks or supply contractions through programmatic buybacks or burns. This allows investors to borrow some methods from stock valuations, observing the "profit yield" of tokens approximately by measuring the ratio of buyback amount to the token market value.
However, this method cannot be directly equated to price-earnings ratios.
Stocks typically represent legal rights to a company's residual earnings and assets, whereas token holders may not have equivalent rights. Project teams can change buyback ratios and may place new business under equity entities. Therefore, buyback multiples only possess stronger interpretative power when the rules for value recirculation are relatively clear and the business revenue has sustainability.
Venice is a key case discussed by Barack. It’s an AI application emphasizing privacy and censorship-resistant attributes, allowing users to access different cutting-edge and open-source models on the same platform. Its main revenue currently comes from paid subscriptions and the purchase of additional computing power credits.
Venice has also established two programmatic burn mechanisms for VVV: When users purchase different levels of subscriptions for the first time, corresponding amounts of VVV are burned; when users purchase additional credits, about 5% of the purchase amount is directed to token burns.
According to Barack's estimates, by August 2026, Venice's annualized revenue rate will be about $107 million, corresponding to an annualized token burn of about $8.3 million. He expects revenue to rise to $336 million by 2027, with the burn amount potentially increasing to $70 million. If given a 50x buyback multiple, the corresponding token valuation model would be about $3.5 billion; combined with projected circulation at the time, the target price for VVV would be around $43.9, while the price at the time of the show's airing was around $16.
This model carries clear optimistic assumptions and is not a definitive prediction of future income.
Out of the expected $70 million in burns, about $29 million comes from the yet-to-be-launched Minds product, accounting for over 40%. Minds plans to allow advanced users and developers to combine different models, prompts, and tools to create structured AI applications aimed at ordinary users, generating revenue through usage—a format similar to an AI application store.
Barack believes Minds is not a completely new product separate from Venice's existing business, as it still revolves around existing models, users, and usage scenarios. However, host David Hoffman points out that credit purchases are merely an extension of existing services, whereas Minds represents a new, untested business line in the market, and the risks between the two cannot be equated.
Barack acknowledges this concern and describes his model as "slightly above the benchmark scenario": If 0 represents extreme pessimism, 5 represents the benchmark, and 10 represents full optimism, he believes this prediction is roughly at a 6.
The model also assumes that Venice may include renewals in its burn scope in the future and that the burn ratio from credit income may rise from 5% to 10% by 2027. None of these measures currently come with a definitive commitment, so the $43.9 is better understood as a scenario valuation based on multiple business and mechanism assumptions rather than an unconditional price target.
The real dilemma for Venice: Why should a high-growth startup prematurely buy back tokens?
The Venice case also reveals a core contradiction faced by application tokens: Should a high-growth startup invest cash in product expansion or return it to token holders?
In traditional markets, high-growth companies typically allocate most funds towards R&D, hiring, and customer acquisition, seldom engaging in large-scale stock buybacks early on. Venice, however, has from its initial business development used some revenue for buybacks and burning of VVV, which sacrifices a certain amount of funds available for reinvestment.
Barack believes this practice relates to the dual structure of equity and tokens in the crypto market. Tokens can help projects quickly attract attention, launch networks, and design new product features, but in the absence of clear legal constraints, the market cannot naturally trust that all value created by the company will ultimately belong to the tokens.
Thus, programmatic burns serve not only as a method of value distribution but also as a mechanism for building trust. Teams need to prove through actual actions that business growth can translate into VVV value, rather than just being confined to the equity side.
Venice currently adopts a gradual approach: Initial burns have a degree of autonomy, followed by increased burn for first-time subscriptions, and then including 5% of credit purchase income for burns. Barack believes this arrangement provides value recirculation for tokens while retaining most funds for growth.
Venice previously raised $65 million, which has alleviated some conflict between buybacks and reinvestments. Barack understands this as external funding providing expansion capital, enabling more operational cash flow to be used for tokens; relevant investors hold token subscription rights that help reduce misalignment between equity investors and token holders.
However, this balance remains fragile. If business growth slows down, reasoning costs rise, or market competition intensifies, the company may need to retain more cash. Conversely, if the burn ratio remains too low for an extended period, tokens may struggle to fully share in business growth. Therefore, assessing the value of VVV should not only observe the total amount of burns but also track income growth rates, gross margins, operating expenses, and whether the company consistently meets its value recirculation commitments.
Pump.fun and Hyperliquid: The same income, why does the market assign different multiples?
Compared to Venice, the income of Pump.fun and Hyperliquid is more directly linked to the crypto trading cycle.
Barack states that based on market data at the time of airing, Pump.fun is valued at about 5 times its buyback amount, while Hyperliquid and Lighter have corresponding multiples of about 30 to 40 times. In his view, this gap reflects market biases toward different types of income.
Pump.fun's core business comes from the issuance and trading of meme coins. Many investors believe these activities rely on short-term speculative heat, with revenue sustainability not matching that of perpetual contract trading platforms. Such concerns are not unfounded: The crypto industry has seen products rapidly increase in revenue within one cycle, only to drop by over 90% later.
However, Barack believes that Pump.fun's performance over the past two-plus years shows its revenue has been more resilient than the market initially expected. The popularity of a single meme coin may quickly fade, but user demand for high volatility and high variance speculative products may persist in the long term.
He likens Pump.fun to casinos, lotteries, prediction markets, and super short-term options. The point here is not to equate meme coin trading with these products entirely but to explain a demand mechanism: Even when participants overall face negative expected returns, some users will continue participating due to high volatility and low probability of high returns.
Based on this judgment, Barack believes Pump.fun's buyback multiple could be revised upward from about 5 times to 10 times. If business scale remains constant, the expansion of multiples itself could correspond to about one fold of upside potential; if on-chain trading and meme coin activities recover simultaneously, revenue could further grow.
Nonetheless, the risk for Pump.fun also stems from the relationship between equity and tokens. The project had previously allocated all revenues towards buybacks, but then adjusted to use 50% of its revenues for buybacks over the next 12 months, directing the rest to business development. Whether to continue this ratio after 12 months will need to be decided again.
This means that the authenticity of Pump.fun's revenue can be observed through on-chain data, but there is no permanent guarantee of how much revenue tokens will be able to continue receiving. When valuing PUMP, investors need to factor in discounts for this institutional uncertainty rather than directly considering all platform profits as earnings for token holders.
Hyperliquid, on the other hand, has received higher valuation multiples. On one hand, its crypto perpetual contract business has already formed relatively high revenues; on the other hand, the HIP-3 market is expanding trading ranges to stocks, commodities, indices, and unlisted company-related contracts.
Barack believes Hyperliquid demonstrates the potential for blockchain to enable all-weather trading, instant settlement, and global price discovery. In the future, some unlisted assets may even form price signals on-chain first, which traditional financial institutions can then use as references for issuance pricing.
However, this judgment remains to be validated by the market. According to Barack, the recently added real-world asset market for Hyperliquid has contributed a significant amount of trading volume; however, due to still being in the expansion phase, it has yet to generate equivalent scale revenue growth. Current profit comes mainly from crypto asset trading.
Therefore, Hyperliquid exhibits a stronger cyclic reflexivity than typical applications: When crypto funds flow back, HYPE may not only benefit from an overall increase in token valuations, but platform trading volume, fees, and buyback scales may also simultaneously grow; if market activity declines, this mechanism could also operate in reverse.
ether.fi has changed, but the market classifications have not kept pace
ether.fi represents another valuation misalignment: The project's main business has changed, but the market continues to price it according to old labels.
ether.fi originally entered the market with liquidity re-staking services. During the peak of the re-staking narrative in 2024, its fully diluted valuation once reached about $8 billion. As the market's expectations for the re-staking track declined, ether.fi's valuation also fell, continuing to be regarded as an asset similar to staking protocols like Lido.
Barack believes this classification can no longer accurately reflect ether.fi's current revenue structure. According to the data he provided during the show, over 65% of revenue now comes from Neo Bank (digital new bank) products, including credit card transaction revenue and loans generated by users' account assets as collateral; earnings from staking and related businesses have dropped to about 35%.
As the platform increases tokenized stocks and more on-chain assets, ether.fi is further shifting from a digital new bank to a comprehensive on-chain brokerage platform. Users can hold and trade different assets, borrow against assets, and complete daily spending with credit cards.
The advantage of this model is that ether.fi does not need to build all financial infrastructure from scratch. For example, with lending services, the platform can utilize existing DeFi protocols like Aave and generate revenue through income sharing. The richer the stablecoins, lending markets, and tokenized assets are on Ethereum, the broader the range of services ether.fi can offer to users.
According to data provided by Barack, ether.fi's credit card daily transaction value has surged from about $300,000 a year ago to $3 million to $4 million, an increase of over 10 times; currently, only about 4% of its revenue comes from lending interest, whereas traditional digital bank Nubank generates about 60% to 70% of its revenue from this portion. He believes this suggests that ether.fi still has ample room to expand its revenue structure.
Based on an approximate $30 million potential buyback over the next 12 months and a 30x valuation multiple, Barack predicts that ETHFI prices could exceed $1, approximately double the price at the time of broadcasting. However, this $30 million figure exceeds the $21 million predicted by another model he referenced, and he assumed that ether.fi's future growth might accelerate, making this result also belong to an optimistic scenario.
The real focus of this case should not be the specific target price but whether the market classification is lagging. If the majority of ether.fi's income has already come from payments, lending, and brokerage, continuing to use the valuation framework of liquidity re-staking protocols may not reflect its current business; but if the growth of new businesses fails to sustain, the so-called "reclassification" may also fail to hold.
Fundamentals can reduce correlation but cannot eliminate the crypto cycle
Having real income does not mean that application tokens can completely detach from Bitcoin and the crypto market cycle.
Barack summarizes this relationship as "partially coupled, partially decoupled." On one hand, Venice, Pump.fun, Hyperliquid, and ether.fi can establish relatively independent valuation foundations based on their own user growth, revenue, and buybacks. Even if Bitcoin remains stagnant, as long as business continues to expand, tokens may still achieve revaluation.
On the other hand, they still belong to the category of crypto assets. When funds flow back into tokens from stocks, AI, and other markets, these fundamentals-backed projects may first enter the allocation range of institutional investors. Pump.fun and Hyperliquid may also gain additional income from increased trading activity, creating a positive feedback loop between asset prices and business fundamentals.
Venice's direct connection to the crypto trading cycle is relatively weak; its main external variable is AI usage. If multi-model invocation, privacy AI, and generative applications continue to grow, Venice may have demand sources differing from purely crypto applications; if user growth or payment conversions fall short of expectations, its tokens will not automatically realize the valuations in models solely due to a rise in the crypto market.
Barack ultimately understands this change within a longer industry cycle. According to the data he cited, during most of the crypto industry's historical periods, execution layer infrastructure once contributed over 95% of industry revenue; now, application revenue has increased to about two-thirds. He expects this ratio to continue tilting towards applications, ultimately exceeding 90%.
This prediction has yet to come true, but it points to core variables needing verification in the next phase: Whether income can continuously migrate from public chains and execution layers towards user-facing applications, whether cash flows generated by applications can be reliably transmitted to tokens, and whether buyback mechanisms can maintain continuity amidst business growth, market downturns, and regulatory changes.
If these conditions are met, the main valuation objects in the crypto market may shift from "infrastructure providing block space" to "applications utilizing blockchain to sell financial and digital services." At that point, the market will be looking not just for the next high-performance public chain but for which products genuinely connect the crypto world with external demand, and which tokens can continue to share in that growth.
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