HARVEST.FINANCE ($FARM) VALUATION
Here at Crypto Cartography, we love cash-flows, we love income. But with the anticipated decreasing importance of the U.S. Dollar ("USD") in the global economy, our love has expanded to saying we love crypto-flows too.
Legacy businesses with steady incoming cash-flows are often called "Cash Cows". If we were to look for the Cash Cows of the immature crypto market, we can look no further than Harvest Finance, and the other DeFi protocols who are competing for the greatest profit-generating-strategies to produce yield.
Here at Crypto Cartography, we also love valuations, and applying Venture Capital investment techniques to crypto organizations. As such, velow is a 13 minutes qualitative valuation valuation video of the cryptocurrency $FARM, and the Harvest Finance crypto organization with accompanying Investment Overview.
YOUTUBE VIDEO
QUANTITATIVE ANALYSIS
Below we built a public company comparables set ("comps") of Hedge Funds and aggregated their Revenue Multiples (Market Capitalization / Total Revenue) in order to compile a range of trading multiples. As you can see below, our range of Revenue Multiples is from 0.98x - 14.48x. Something interesting to note is that Blackstone Group (BX) and KKR & Co. Inc. (KKR) continue to trade above a 10 x revenue multiples even when they are valued above $29 billion.
Based on our revenue multiples range, we selected a reasonable multiples estimate of 6.00x, which constitutes the median of our range. We multiply 6.00x by our forecasted next-twelve-months (NTM) revenue of $15 million to estimate an Enterprise Value for the organization of $60 million.
Below find our measurements of success (Valuation Measurements) and our list of comparable organizations.
QUALITATIVE ANALYSIS (INVESTMENT 1-PAGER)
TLDR Investment Thesis
Automated yield farming dapp that yields higher rates of returns than any solo independent yield farmer through:
- Superior yield farming strategies
- leveraging economies of pooled liquidity to create significant gas costs savings
Your modern-day Web3.0 RoboInvestor.
What is it NOT - Not a fork, not a remake, has its own profit strategies, has its own Tokenomics, bootstrapped launch, no VCs or investors, no premine.
Historical Timeline Sept. 1, 2020 Bootstrapped Launch & Token Release Launched by anonymous team. ~$2,600 per token as Circulating supply at launch was 0 FARM with 690,420 issued over 4 years Sept. 27, 2020 Token Recapitalization 5M initial supply voted to change to 690,420 Oct 25, 2020 Arbitrage Attack $24M siphoned
Fundamental Valuation Propositions
- Yield Farming
Step 1: Deposit USDC, receive fUSDC tokens
Step 2: Stake fUSDC token, earn FARM
Step 3: Stake Farm, earn more Farm
Profit Sharing for FARM holders & Stablecoin Liquidity Providers
70% of the yield farming revenue to Liquidity Providers.
30% of the yield farming revenue is distributed to users who stake FARM in the Profit-Sharing contract.
No fees on withdrawing, depositing or yield farming revenue.
fTokens: fDAI, fUSDC, fDAI, fUSDC, fWBTC, etc. are the yield-bearing versions of these assets
Two APYs:
- The 1st APY listed is earned from the strategy that deposit is aligned to. (Curve, Swerve, Uniswap, Sushi) This APY is real in the sense that Harvest Finance does the compounding for you, multiple times a day
- The 2nd APY listed is the stacked earnings you can gain from depositing fTokens to earn $FARM. These assets are not automatically staked for you because the fAsset can be sold on the open market.
$FARM – Governance Token
- Vote on proposals for the Operational Treasury.
- Farm holders receive 30% of profits generated by the LPs when they stake $FARM in the Profit Share pool.
- The strategy profits are converted to USDC and used to market buy in masse the $FARM token, which are then sent to the Profit Share to be distributed proportionally to anyone staking $FARM tokens.
Investment Risks
Reputation Risk - Can they remain relevant & solvent after arbitrage?
Yield Farming Risk - Inflation, high gas costs, onchain exposure, unstable/falling yields
Liability Risk - Has an unofficial $24M liability on the books. Arbitrage handcuffs.
Execution Risk - Can novel profit strategies be continually developed?
Smart Contract Risk - Layered composability risk
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Please note: The material presented in all articles is for educational purposes only and is not intended to be investment advice. Do not invest in the organizations I provide analysis about. This is not investment advice. Crypto Cartography, including its principal, is not a financial advisor. Please seek professional investment & tax advice before investing.
