Thread by @JackNiewold

Remember when you promised yourself you'd buy the dip back in May 2021?

It's here.

Tons of projects with strong cash flows, good earnings, and ludicrous P/E ratios are all on sale.

Here are the 5 most undervalued protocols by P/E ratio:

🧵👇

First, a finance lesson: P/E ratio means price-to-earnings ratio.

It basically means how much you pay for $1 of yearly cash flow. A low one is generally considered good, a high one is generally considered bad.

Shiba Inu's P/E: Infinity
GM's P/E: 7.29
Tesla's P/E: 136

5. GMX | P/E: 11.6

Every degen's favorite perpetual exchange, GMX is already doing about $6 million a month in revenue that gets distributed to holders via staking.

Since the token launched just five months ago, GMX has continually trended up in price, volume, and revenue.

The craziest part?

The exchange only supports two pairs, BTC and ETH. Once they add support for other assets, it's easy to imagine that exchange volume and revenue both spike.

4. Nexus Mutual | P/E: 11.5

The first of the Top 5, Nexus Mutual is a small-cap ($80 million) insurance protocol that allows DeFi users to insure against smart contract risk and exploits.

Launched exactly a year ago, it insures about $0.5 billion in assets.

How does it work?

Users buy 'cover,' paying a percentage (typically 2%-20%) of the funds they lock to insure themselves against risk.

If the user gets their funds hacked, Nexus covers losses from the exploit. If it isn't hacked, the premium goes to token holders.

They profit ~$1 million/week.

3. dYdX | P/E: 9.4

I love dYdX: it's an exchange for perpetual contracts, allowing users to lever up to 10x on nearly 30 assets (including

With short and long positions available, it's hugely popular with traders. It's on a zk-Rollup, meaning it's crazy cheap to trade.

Why's it such a good deal? In the last month, it earned about $55,000,000, which puts it on pace for $660m a year.

Coinbase earns $1.3 billion a year.

dYdX is valued at just $6.6 billion (fully diluted), while Coinbase is valued at 41.3b.

1/2 the revenue, but 1/6th the price.

2. Spookyswap | 3.7x

All the Fantom gigabrains already know that Spookyswap moves major weight, but relative to volume AND P/E, Spookyswap is the most undervalued major spot exchange out there.

Stake your Spookyswap ($BOO) to earn the fees generated, currently $100m/year.

With Fantom ecosystem growth, a quick interface, and a built-in bridge (that also collects fee revenue) this protocol is primed to capitalize on new money flowing into $FTM.

Good P/E ratio + ecosystem growth = 🌙 ?

1. LooksRare | P/E: 0.4

That's right, the cheapest protocol by P/E is NFT marketplace LooksRare, which has been controversial lately.

It's on track to DOUBLE its market cap in earnings this year. If it were a USA stock, it would be the 2nd-lowest stock by P/E on the market!

It pays out all of its earnings in $ETH, currently earning about 241% per year.

Even if you don't like the token there's a trick to take advantage of the fees it pays out.

1. Buy and stake $LOOKS, earning fees in $ETH
2. Short $LOOKS on another platform

This means you can make money on the protocol revenue alone, while not being exposed to the price movements (the short cancels out your staked position).

If they can keep revenue up, you can earn 2.41 $ETH yearly for each 1 $ETH worth of $LOOKS you've got staked.

Gigabrains buy value when it's on sale.

So why are you aping into microcaps, anon?

This is just one way to measure the fundamental value of a protocol. It doesn't take into account token inflation rate, emissions, growth, or team.

But it's one of the most popular financial ratios used.

I think it can help us find undervalued projects. Others might disagree.

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https://twitter.com/JackNiewold/status/1494451294261624835?s=20&t=3TrxAiGCZJX5XmTWqbDYBA