Too much shitposting today, but here's a bit of sub-70-IQ alpha. DeFi continues to look shit against BTC. But if I had to hold one DeFi token now, it'd be ZRX. For a long-term I thought SUSHI was the most undervalued DeFi asset. ZRX is about to take over that position for me.
The Coinbase re-rating trade may or may not have played out. I don't know. But if it hasn't, ZRX has this nice tail wind.
Anyways, not investment advice. You'll lose all your money on these valueless governance tokens.
It's very hard to compare P/S between something like 0x and something like Sushi because the two protocols are too different. But you could look at, for instance, trading volume vs. FD market cap. I still love SUSHI, but ZRX is also up there for me.
If you ask 10 different DeFi funds about valuation you'll get 15 different answers. So this is not an exact science. Massive margin of error.
At the end of the day, valuation metrics are just memes. The $10T digital gold as BTC's total addressable market is a meme. P/S ratios for DeFi protocols are memes. The hope is that over time the market can form consensus around one or few memes.
And then, in addition to quantitative metrics which paint a picture of the status quo, you also want to think about long-term value accrual. Are AMMs here to stay? Will RFQs work? How fast can the team ship? These are even harder questions.
I got several responses that are skeptical of my view. I think that proves exactly the point that the market hasn't at all come to consensus around what valuation metrics to use. Again, huge margin of error.
Final thing I would add. The 0x team is easily 90 percentile in this space. Best team doesn't always mean best product-market-fit. But it gives you a nice margin of safety.
Ok one more thing. I have a very long term thesis that top trading trading platforms won’t be AMMs. I know this is controversial, but shouldn’t surprise my long time followers. I think the 0x team has what it takes to get there. Great retail flow, great institutional integration.
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