1/ A thread on why we're building Token Terminal 🧵👇
2/ What is Token Terminal?
A data analytics platform for crypto assets.
3/ Why should you care?
4/ A useful analogy for thinking about crypto:
Blockchains are global computers that host Internet-scale applications.
5/ Key takeaway:
Crypto makes it possible to build organisations that operate at global scale from day one.
6/ Note: blockchains & applications built on top of them are NOT traditional companies.
7/ Traditional companies are a set of pen & paper contracts.
These contracts are enforced by local jurisdictions --> limited scale.
8/ Blockchain-based applications consist of a set of open-source (smart) contracts.
These contracts are enforced by a blockchain (global computer) --> Internet scale.
9/ For example, Compound can be thought of as a bank built on the Ethereum blockchain.
Compound's open-source contracts contain the business logic for lending & borrowing.
10/ Key takeaway:
By modifying the business logic of an application's open-source contracts, we can build all kinds of businesses in a highly scalable manner directly on the Internet.
11/ This opportunity has not gone unnoticed by entrepreneurs.
A parallel financial system (and beyond) is being built on top of Ethereum and other blockchains.
12/ Why now?
13/ Key takeaway:
While still a fringe technology, blockchains and the applications built on top of them are starting to operate at significant scale.
14/ Blockchains like Bitcoin & Ethereum are Internet-native economies:
Currently, they’re both settling transactions for over $10 billion each day.
15/ Uniswap is an exchange built on Ethereum:
Launched only a few years ago, the daily trading volumes on Uniswap already exceed $1 billion.
16/ Compound is a lending market built on Ethereum:
Launched only a few years ago, there’s currently over $6 billion worth of loans outstanding on Compound.
17/ MakerDAO is a central bank built on Ethereum:
Launched only a few years ago, there’s currently over $2 billion worth of DAI (stablecoin) in circulation.
18/ Increasingly, the only way to participate in the upside of these organisations is to own tokens:
Tokens represent ownership in these Internet-native organisations or DAOs.
19/ What's next?
20/ The above apps are primarily built on Ethereum.
In the next phase, we’ll see apps expand to multiple different blockchains, each with its own unique set of features.
These novel features, like scalability, file storage & privacy, will enable new kinds of apps to be built.
21/ The problem is how to separate signal from noise?
In crypto, anyone anywhere can build a blockchain-based application.
The only thing you need is an Internet connection.
22/ Focus on blockchains & applications that are widely used:
In crypto, users can track the performance of DAOs from day one.
fin/ Thus, The Token Terminal community is
well-positioned to capture the upside of this opportunity.
While the P/E ratio is a great starting point for cryptoasset valuation, it should not be used in isolation.
- What's driving 'E'? Token incentives / organic adoption?
- What does the rev. composition look like? One or multiple sources?
- Is the revenue share % sustainable?
- The rise of @AxieInfinity is clearly visible
- Also the rapid emergence of @PancakeSwap
- @synthetix_io relative share has gone down (launch on Optimism might reverse this?)
3/ Looking at the Total Revenue (supply-side + protocol) dashboard:
- @ethereum's share of total fees has gone down
- Even here, @AxieInfinity's recent growth is clearly visible
- We can also see that even @binance smart chain has to charge its users meaningful tx fees 😄
2/ The 'E' in the P/E ratio will initially be based on protocol revenue, i.e. money generated from the protocol’s business & subsequently allocated to its treasury or distributed to its token holders.
*In the beginning, the P/E ratio won't take into account a protocol's costs.
3/ How should I use the P/S and P/E ratios when analyzing a protocol?
We’ll go through 3 different scenarios, which highlight the possible revenue distributions of a protocol, and how the distribution affects the two ratios.
• Protocol revenue chart shows you which protocols are generating money for their token holders.
• With the toggle, you'll get similar charts for Total Revenue & Price to sales ratio.
• The customisable data table lets you choose metrics & sort the results.
1/ Why the price to sales ratio (P/S) is a useful tool for crypto investors 👇
The price to sales ratio compares a protocol’s market cap to its revenues. A low ratio could imply that the protocol is undervalued and vice versa.
2/ The P/S ratio is an ideal valuation method for early-stage protocols, which often have little or no net income.
Instead, the P/S ratio focuses on the usage of a protocol, by tracking the total fees paid (revenue) by the users of its service. More info: tokenterminal.com/faq
3/ We’re in a historically unique position, with early-stage & high-growth startups operating transparently on-chain.
This transparency makes it possible to find protocols with high usage relative to market cap.