I recently read an excellent article from Arthur Hayes called "Floaters" and was intrigued by the Price-to-Earnings ratio applied to Crypto valuation:
I will make use of the Token Terminal service to chart Price-to-Earnings (P/E) multiples for all the projects discussed.
Price = Fully Diluted Market cap
Earnings = Last 30 days of onchain fees that accrued to the protocol, annualised. E.g., if the shitcoin protocol earned $100 of fees in the last 30 days, that would annualise to $100 * 365/30 = $1,267.
This P/E can be calculated for several tokens in Ethereum (ETH) ecosystem, for instance:
Curve (CRV)
Curve has currently a P/E ratio of 108, which is still very high compared to the stock exchange market - the current S&P500 10-year P/E ratio is 29.5.
SushiSwap (SUSHI)
SushiSwap (SUSHI) has currently a P/E ratio of 20, which is lower than the current S&P500 P/E ratio.
GMX.io (GMX)
GMX.io is a decentralized exchange platform on Arbitrum (Ethereum layer-2 chain). Its P/E ratio can also be calculated:
GMX has currently a P/E ratio of 5... It is one of the lowest P/E ratios of the DeFi market. It concretely means that the GMX token is quite cheap compared to the earnings (decentralized exchange fees) which are collected by the platform.
In summary
It is worthwhile to calculate the P/E ratio for various DeFi platforms and to compare it with the current P/E ratios of the stock exchange market. This analysis leads us to consider Curve (CRV) as very expensive (compared to its earnings), SushiSwap (SUSHI) as relatively cheap and GMX as very cheap.
Please note: this is not a financial advice. Do Your Own Research.
Please find below a few links to earn a few coins...
