Thread by @thomsen_crypto

How can a project earning $1000 only each month have $ 1 billion valuation

Tomorrow is finally the full launch day for @WombatExchange.
Many people who are fans of @BNBCHAIN and #stableswap are crazy. But let me tell you the truth...
wombat.exchange

And the token $WOM is rising rapidly, from $0.075 at IFO at @PancakeSwap to about $1 at this moment, having $ 1 billion fully diluted valuation. Wombat seems to be a very legit project, having Binance Labs as the incubator and many good venture capital as investors

But is the token really worth to invest? I don't think so. IMO, the token is extremely overvalued, from the perspective of how much can Wombat, a stable swap earn, aka protocol revenue. As said in the documentation, docs.wombat.exchange/docs/understan…, the protocol mainly relies on swap fees

Like other DEX. Yes, Wombat has a very awesome analytics page for researchers. info.wombat.exchange/#/

However, this page tells us indeed in July and August Wombat does only have around $8m - $9m volume in one month. Meanwhile, Wombat only takes about 0.01% of the swap fees.

It means that Wombat is only having $9m*0.01% = $900 each month in total as revenue.

But now $WOM is at around $1, having $ 1 billion valuation.

We can take a reference from a similar stable swap in Avalanche called @Platypusdefi. It is having around $300m volume each month

Platypus is having around 30x volume more than Wombat. But the swap fees of Platypus is 2x over Wombat (Platypus takes around 0.02%-0.04%, let's take 0.02%)

It means that Platypus is having a 60x protocol revenue more than Wombat. But look at $PTP, it only has $40m FDV

Wombat is having 25x FDV more than Platypus, but 60x revenue less than Platypus.

In other words, if Wombat and Platypus two brothers are having the same ratio in terms of protocol revenue to Fully Diluted Valuation, referring to the Platypus ratio, Wombat will only value at=

Ratio:
Platypus: FDV 40m / Monthly revenue 60,000 = 666
Wombat: Monthly revenue 900 * 666 = $600,000 FDV

It is crazyyyyyyy
Coz it means that $WOM will be only trading at $0.0006, 99% decrease from now!!!!!!

Sure, I know that after the full launch,
Stablecoins in Wombat pool will have $WOM reward
= more TVL
= less slippage when swapping
= more Volume
= more fees
= more Protocol Revenue

Butttttt

At the same time,
$WOM will become a farm token, there will be definitely more and more selling pressure than now.
Not to mention whales like SBF will come to your pool and farm all your WOM tokens and dump them.

As Wombat depositor and supporter, I am trying not to criticize what Wombat is doing. But I really doubt how $WOM has a such high valuation.

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