Author: Matt Hougan, Bitwise Chief Investment Officer
Compiled by: Chopper, Foresight News
For years, the most potent criticism of the crypto industry has always revolved around valuation logic: "Blockchain technology is novel, sure, but does that mean the underlying tokens have real value?"
This is a perfectly reasonable question. Many projects have achieved rapid growth, boasting millions of users and generating billions in revenue, yet the vast majority of that revenue does not flow to the tokens themselves or their holders. Even as a staunch bull like myself, it was sometimes difficult to explain why certain tokens could command multi-billion dollar market caps.
That era is over. Now, aside from Bitcoin, the value of crypto assets will increasingly be measured by the same standard as stocks and bonds: revenue.
The good news is that numerous crypto projects are already ahead of the curve, returning significant revenue to token holders. Hyperliquid generated over $8 billion in revenue last year, dedicating nearly 99% of its fee income to repurchase and burn HYPE on the secondary market (a mechanism similar to stock buybacks by public companies). Projects like Uniswap, Aave, and Solana are following suit.
However, the broader investor community has yet to grasp this shift, which, in my view, is a major reason why crypto asset valuations remain persistently low.
Why People Think Crypto Projects Can't Generate Revenue
We must acknowledge that the criticism "crypto projects have no revenue" was indeed valid in the past.
Bitcoin, as the first and largest crypto asset, was designed from the outset not to create cash flow for holders. Bitcoin is a monetary asset, and such assets typically do not possess "productive yield." Consider, few people ask how much yield gold produces. But this characteristic of Bitcoin has solidified investors' stereotypical view of all other crypto assets.
From 2017 to 2025, the regulatory environment further reinforced this perception. Under the leadership of Jay Clayton and Gary Gensler at the SEC, regulatory attitudes strongly resisted tokens distributing revenue to holders. During that period, the U.S. SEC generally deemed crypto projects that allocated revenue to token holders as "illegal securities offerings." Once slapped with that label, founders could face unlimited liability and even criminal penalties. Imagine if all Silicon Valley startups faced government lawsuits the moment they shared profits with investors.
As a result, nearly all new projects issued governance tokens. These tokens only grant voting rights to holders, with no claim to any revenue streams. Major DeFi tokens like Uniswap and Aave are prime examples.
What Caused the Turning Point?
The change began in July 2023 with the SEC's loss in its landmark lawsuit against Ripple. The regulator argued XRP was an illegal securities offering, but the U.S. District Court for the Southern District of New York ruled that XRP sold to general investors did not constitute a security.
This ruling shook the legal world, challenging previous common interpretations of securities laws. Many believed the ruling would be overturned on appeal. However, a series of subsequent related rulings mostly favored Ripple. In August 2025, both sides dropped their appeals, formally concluding the case.
Around that time, Paul Atkins replaced Gensler as SEC Chair, introducing a more crypto-friendly regulatory approach. Suddenly, distributing revenue via tokens became feasible again.
Coincidentally, almost at the same time, a major new project with a revenue capture mechanism at its core was born.
Hyperliquid Sets the Industry Template
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 its token launch in November 2024, it has been one of the best-performing major crypto assets, up approximately 800%; during the same period, Bitcoin's price fell by about one-third.
Hyperliquid's success has multiple factors, with a core highlight: about 99% of the network's fee revenue (directly tied to user activity) is used to buy HYPE on the open market. To date, the project has cumulatively repurchased and burned $13 billion worth of HYPE, permanently reducing circulating supply and creating strong support for the token price. Investors can finally be confident that increased blockchain activity translates directly into token value.
This has made Hyperliquid a magnet for capital. Over the past year, it's the asset crypto insiders and I have discussed the most.
Major Layer-1s and Applications Follow Suit
With a regulatory environment no longer hostile to revenue sharing, coupled with Hyperliquid's massive success, other projects began to follow. The past year has seen a wave of changes:
- Uniswap: In December 2025, the "UNIfication" governance proposal passed with 99.9% support. The project immediately burned 100 million UNI (10% of the max supply, worth ~$5.9 billion at the time), formally activating a protocol fee mechanism for the first time. It has since burned an additional 7 million UNI, with current annualized revenue of ~$100 million entirely directed towards UNI buyback and burn.
- Aave: Began using revenue to weekly repurchase its native AAVE token in April 2025. To date, it's estimated to burn ~$30 million worth of AAVE annually (~20% of annual revenue). In June 2026, it went further with "Aavenomics 3.0," routing protocol fees and GHO stablecoin revenue into an automated, non-custodial buyback contract. Cumulative buybacks have now exceeded 1.2% of the total token supply.
- shturl.c: The most aggressive mover. This meme coin trading platform launched in July 2025 and initiated PUMP token buybacks within days. By April 2026, it had cumulatively burned $370 million worth of tokens, equivalent to 36% of circulating supply. Recently, it even locked 50% of next year's net income into an irreversible buyback-and-burn smart contract. Current annualized revenue is $328 million.
Many new projects now build revenue capture mechanisms in from the start. Lighter, the fastest-growing perpetual exchange on Ethereum, which launched earlier this year, immediately began using trading revenue to repurchase LIT tokens. It has repurchased ~6% of circulating supply so far, committing to burn all purchased tokens, with annualized revenue of $67 million.
The revenue trend has even spread to Layer-1 blockchains. The Solana community introduced SGP-0003, a proposal to lower the inflation rate and potentially increase the scale of fee burns by up to 14x. Similarly, Aptos earlier this year raised its Gas fees tenfold, optimizing the revenue model for token holders. Users didn't flee en masse; on-chain transaction activity nearly tripled, and annualized token burn increased from ~90k to 1.9 million tokens.
Conclusion
With over 25 years of experience investing in tech, this unfolding narrative feels familiar, reminiscent of the early days when platforms like Facebook hadn't yet explored monetization through ads.
Back then, bears argued the platforms couldn't charge: "Users will leave if ads appear." Bulls had to rely on vague logic like traffic and Metcalfe's Law to argue for their value.
Eventually, the leading platforms successfully commercialized, and users didn't leave in droves. Investors realized the key metric wasn't traffic, but profit. I believe the crypto industry is replaying this script. The shift is already underway: since Uniswap activated fees last December, its DEX market share hit an all-time high by July of this year; the token is up 35% since July 1st.
I believe the pricing power for both DeFi applications and L1 blockchains is far greater than the market anticipates. Strong brands are entrenched, and industry trust is a scarce resource. Over the next 12-24 months, platforms will continue to enhance their ability to capture revenue.
A key reason a huge opportunity exists today is that investors outside the crypto industry are completely unaware of this shift. External observers are long stuck with the impression that "crypto assets have no cash flow," and reversing that perception takes time. Meanwhile, within the industry, investors, worn down by countless failed narratives, struggle to believe tokens can be stably linked to real revenue. This has created the current state of depressed valuations.
Uniswap is a globally recognized brand with spot trading volume rivaling Coinbase, yet its market cap is only $24 billion. Aave and another DeFi project, Morpho, which also optimized its tokenomics, dominate the on-chain lending space, with their combined market cap also around $24 billion. Hyperliquid is one of the fastest-growing fintech companies I've ever seen, trading in a P/E range of just 17-60x. For global platforms in high-growth sectors that are still expanding, these valuations are attractive.
Of course, risks must be noted: crypto tokens are not equivalent to stocks. Token holders do not have legally guaranteed claims to cash flows; revenue distribution rules are set by community governance and can be changed. Investors must weigh the unique advantages and special risks of crypto assets.
But if my thesis holds, and the link between revenue and token value continues to strengthen, crypto asset valuations could double or more as the market reprices them. For so long, "lack of cash flow" has been the most powerful bearish argument against crypto assets; soon, it may become the strongest bullish argument in their favor.
