Why isn't your token rising?
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Why isn't your token rising?
We view casino cash flows just like recurring revenue in software.
Navigating Web3 tides with focused insightsBy: Santiago R Santos
Translated by: Luffy, Foresight News
Right now, everyone in crypto is watching the same headlines:
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Exchange-traded funds (ETFs) have launched
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Real-world companies are integrating stablecoins
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Regulators are becoming more friendly
Isn't this everything we once dreamed of? Then why are prices still depressed? Why has Bitcoin swung wildly throughout the year, giving back gains, while U.S. equities rose 15%-20%? And why are your favorite altcoins still underwater—even as "crypto is no longer a scam" becomes mainstream consensus?
Let’s talk about this.
Adoption ≠ Price Increase
There's a deeply ingrained assumption on Crypto Twitter: “Once institutions show up, regulation becomes clear, and JPMorgan issues tokens… we’ll go to the moon.”
Now institutions are here. We're making headlines. Yet crypto remains stuck in place.
There's only one real question in investing: “Have these positives already been priced in?”
This has always been the hardest thing to judge—but market behavior is sending an unsettling signal: We got everything we wanted, yet failed to drive price appreciation.
Can markets be inefficient? Of course. But why? Because much of the crypto industry has long been severely disconnected from reality.
$1.5 Trillion Market Cap… Based on What?
Let’s zoom out. Bitcoin stands alone—it's like digital gold, a perfect symbol of consensus. Bitcoin currently has a market cap of about $1.9 trillion, versus gold’s ~$29 trillion. Bitcoin sits under 10% of gold’s value. That makes sense purely as a hedge and options play.
All other crypto assets—Ethereum, XRP, Solana, etc.—collectively sit around $1.5 trillion in market cap, but their narrative foundations are far more fragile.
No one seriously questions the technology’s potential anymore. Few believe the entire industry is a scam—that phase is over.
But potential doesn’t answer the real question: Is an industry with roughly 40 million active users really worth trillions in valuation?
Meanwhile, rumors suggest OpenAI’s IPO could near a $1 trillion valuation—with user numbers around 20x that of the entire crypto ecosystem.
Think about that comparison. Moments like this force us to confront the core question: From here, what’s the best way to gain exposure to crypto?
Historically, the answer was “infrastructure.” Early Ethereum, early Solana, early DeFi—those bets worked.
But today? These assets are priced as if future usage and fees will grow 100x. Perfectly priced, but with zero margin of safety.
The Market Isn’t Dumb—It’s Just Greedy
This cycle gave us all the headlines we wanted… but some truths are becoming clear:
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The market doesn’t care about your story—it cares about the gap between price and fundamentals. If that gap persists, the market eventually stops believing, especially when you start disclosing revenue.
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Crypto is no longer the hottest investment theme—artificial intelligence (AI) is. Money follows trends. Right now, AI is the undisputed star. Crypto isn’t.
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Companies follow business logic, not ideology. Stripe launching Tempo stablecoin is a warning sign. Maybe firms won’t adopt public blockchain infrastructure just because they heard “Ethereum is the world computer” on Bankless—they’ll pick whatever works best for them.
So, does your portfolio go up just because Larry Fink said “crypto isn’t a scam”?
When an asset is perfectly priced, a careless remark from Powell or a subtle facial expression from Jensen Huang can destroy your entire investment thesis.
Simple Math: Ethereum, Solana—Why Yield ≠ Profit
Let’s do a rough calculation on major Layer 1 blockchains. First, staking yield (note: this is NOT profit):
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Solana: ~419 million SOL staked, ~6% annual yield, generating ~25 million SOL in staking rewards per year. At ~$140 per SOL, that’s ~$350 million in annual reward value.
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Ethereum: ~33.8 million ETH staked, ~4% annual yield, generating ~1.35 million ETH in staking rewards per year. At ~$3,100 per ETH, that’s ~$4.2 billion in annual reward value.
People see staking stats and say: “Look, stakers earn yield! That’s value capture!”
No. Staking rewards aren’t value capture. They’re token inflation, dilution, and the cost of network security—not profit.
True economic value = transaction fees + tips + Maximum Extractable Value (MEV). This is blockchain’s closest equivalent to “profit.”
From that perspective: Ethereum generated ~$2.7 billion in transaction fees in 2024—more than any other chain. Solana recently led in net revenue, earning hundreds of millions per quarter.
So the current picture looks like this: Ethereum’s market cap is ~$400 billion, with annual fee + MEV revenue of ~$1–2 billion. Even using peak-cycle revenue, its price-to-sales ratio (Note: PS ratio = market cap divided by revenue. A lower PS ratio indicates higher investment value.) ranges from 200x to 400x.
Solana’s market cap is ~$75–80 billion, with annualized revenue exceeding $1 billion. Depending on how you annualize (and please don’t extrapolate full-year numbers from peak months), its PS ratio is ~20x–60x.
These figures aren’t exact—and don’t need to be. We’re not filing with the SEC. We’re just trying to assess whether valuations make sense. And this doesn’t even touch the real issue.
The Real Problem: This Isn’t Recurring Revenue
This isn’t stable, enterprise-grade income. It’s highly cyclical, speculative “recurring cash flow”:
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Perpetual contract trading
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Memecoin speculation
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Fees from liquidations
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Peak MEV extraction
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Frequent inflows/outflows of high-risk speculative capital
In bull markets, fees and MEV explode. In bear markets, they vanish overnight.
This isn’t Software-as-a-Service (SaaS) recurring revenue. It’s Las Vegas-style casino revenue.
You wouldn’t give a company that only profits “when the casino is full every 3–4 years” a Shopify-level valuation multiple. These are different business models and deserve different multiples.
Back to Fundamentals
Under any reasonable framework: Ethereum, with a ~$400 billion market cap and only $1–2 billion in annual revenue (highly cyclical fees), is not a value asset.
A 200x–400x PS ratio, combined with slowing growth and value leakage to Layer 2 ecosystems, means Ethereum resembles less a federal government collecting taxes and more a “federal body that only collects state-level taxes while letting states (L2s) keep most of the revenue.”
We call Ethereum the “world computer,” but its cash flow doesn’t match its market cap. Ethereum feels to me like Cisco: dominant early, overvalued, possibly never returning to all-time highs.
In contrast, Solana’s relative valuation isn’t as extreme—not cheap, but not insane. With a $75–80 billion market cap and billions in annualized revenue, its PS ratio is ~20x–40x. Still high, still frothy—but “relatively cheap” compared to Ethereum.
Compare this to valuation multiples: NVIDIA, the most coveted growth stock globally, trades at just 40x–45x P/E (Note: P/E ratio, or price-to-earnings, is one of the most common metrics in stock valuation, measuring stock price relative to earnings per share.), and it has:
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Real revenue
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Real profit margins
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Global enterprise demand
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Recurring contract sales
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A massive customer base beyond crypto casinos (fun fact: crypto miners were NVIDIA’s first real wave of high-growth demand)
Again: L1 revenue is cyclical “casino income,” not stable, predictable cash flows.
Logically, these chains should trade at lower multiples than tech companies—not higher.
If the industry’s fees don’t shift from “speculative churn” to “real, sustainable economic value,” most assets will face repricing.
We’re Still Early… But Not That Early
Eventually, price will realign with fundamentals. But that time hasn’t come yet.
The current reality is:
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No fundamentals justify the high multiples on most tokens.
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Strip away token emissions and airdrop farming, and many networks’ value capture vanishes.
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Most “profits” are tied to gambling-like speculative activity.
We’ve built infrastructure for low-cost, instant, cross-border payments available 24/7… and decided its best use case is slot machines.
Short-term greed, long-term laziness. As Netflix co-founder Marc Randolph said: “Culture is not what you say, it’s what you do.”
When your flagship product is “10x leveraged Fartcoin perpetuals,” don’t lecture me about decentralization.
We can do better. This is the only path from niche, over-financialized casinos to a real, sustainably growing industry.
The End of the Beginning
I don’t think this is the end of crypto. But I believe it’s the end of the beginning.
We’ve poured too much capital into infrastructure—over $100 billion sunk into L1s, bridges, L2s, and various infra projects—while severely underinvesting in application deployment, product building, and real user acquisition.
We keep boasting about:
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Transactions per second (TPS)
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Blockspace
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Complex rollup architectures
But users don’t care. They care about:
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Lower costs
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Faster speeds
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Ease of use
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Whether it actually solves their problems
Return to cash flow. Return to unit economics. Return to basics: Who are the users? What problem are we solving?
Where Is Real Growth Potential?
For over a decade, I’ve been a strong crypto bull. That hasn’t changed.
I still believe:
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Stablecoins will become the default payment rails.
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Open, neutral infrastructure will quietly power global finance.
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Enterprises will adopt the tech—not because of ideology, but because it makes economic sense.
But I don’t believe the biggest winners of the next decade will be today’s dominant L1s or L2s.
History shows that in every tech cycle, the real winners emerge at the user aggregation layer—not the infrastructure layer.
The internet reduced compute and storage costs, but wealth flowed to Amazon, Google, Apple—companies that used cheap infrastructure to serve billions.
Crypto will follow the same pattern:
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Blockspace will become commoditized
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Marginal returns from infra upgrades will diminish
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Users will always pay for convenience
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User aggregators will capture most of the value
The biggest opportunity now is embedding this tech into large-scale enterprises. Replace pre-internet financial plumbing with crypto infrastructure wherever it genuinely reduces costs and improves efficiency—just as the internet quietly upgraded everything from retail to manufacturing.
Companies adopted software because it made economic sense. Crypto is no different.
We can wait another ten years for this to happen naturally. Or we can act now.
Update Your Mental Models
So where do we go from here? The tech works. The potential is huge. We’re still in the early days of real adoption.
Reassessing everything is wise:
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Evaluate network value based on real usage and fee quality—not ideology
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Not all fees are equal: distinguish recurring revenue from speculative churn
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The winners of the last decade won’t dominate the next
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Stop treating token prices as a scorecard for technological success
We’re so early that we still treat token prices as proof of tech efficacy. But no one picks AWS over Azure because Amazon’s stock went up this week.
We can wait another ten years for enterprises to adopt. Or we can act now—and put real GDP on-chain.
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