🥛 Does revenue really matter? 🤔

GM. This is Milk Road, the crypto newsletter that's more dependable than a validator with 100% uptime.

Here’s what we’ve got for you today:

✍️ Crypto is priced like it has no revenue.
🎙️ The Milk Road Show: Bitwise x Base: How Crypto Could 2,000x Sooner Than Anyone Expects.
🍪 NEAR Intents lost $3.8M to a bridge exploit.

Prices as of 2:00 p.m. ET. Powered by CoinGecko.

CRYPTO IS PRICED LIKE IT HAS NO REVENUE 🧾

Ethereum is worth ~$326B.

Over the past 12 months, it brought in ~$64M in chain revenue, according to DefiLlama.

That's ~5,100x revenue (i.e. at that pace, it would take ~5,100 years of revenue to add up to what ETH is worth today).

… and most of the other big chains aren't far behind:

Source: DeFiLlama

For chains, DefiLlama's "revenue" only includes fees that get burned or sent to the chain's treasury. The payouts to validators (the operators who secure the network) don't count.

For Ethereum, revenue = ETH burned (permanently destroyed).

And Ethereum burns very little by design. Its 2024 Dencun upgrade made it super cheap for L2s to use Ethereum, so most of the fees now stay with the L2s.

Robinhood Chain is a good example:

In its first two weeks, Robinhood Chain (built with Arbitrum's tech) grossed ~$816K in fees:

Robinhood kept ~89%.
Arbitrum took ~10%.
Ethereum got $1,538 (~0.15%).

Which leaves a question for anyone holding ETH:

If Ethereum barely gets paid for the activity it hosts, what exactly is the market paying ~$326B for...

What’re people buying Ethereum for?

Depends who you ask, because the two main camps disagree on what ETH even is.

Lorenzo Valente (director of research at ARK Invest) laid out both sides himself. If you think ETH is money, Robinhood building on Ethereum is very bullish (more activity, more ETH used as collateral, more demand for ETH).

If you think ETH is a revenue asset, on the other hand, it's the bear case.

Fundstrat's Tom Lee sits in the money camp.

As John explained it in a PRO post last month, Tom compares ETH to scarce land under a growing city. The buildings get torn down and rebuilt, but the land keeps getting more valuable as activity piles up on top of it.

John's with Tom on this one, and his view is that modeling ETH like a software company "will keep looking disappointing for a while."

(He's also self-aware about it. The same post ends with ETH becoming one of the best assets of all time, "either that or it's worth like twenty bucks.")

But for apps built on Ethereum, revenue is the whole case.

Greg Viverito (general partner at TAG Capital) made that point on The Milk Road Show last week. For a while, he said, you could count the protocols earning revenue and passing it to token holders on one hand.

But the ones that did get paid stood out fast, kicking off the revenue meta.

Source: DeFiLlama

Hyperliquid kept ~12x more revenue than Ethereum burned last month, at ~1/16th of the market cap.

That's the same filter John uses on his app picks:

UNI turned on its fee switch, so a slice of trading fees now buys back and burns UNI.
AERO sends all of its protocol revenue to holders who lock up their tokens.

Revenue only helps holders if it outpaces the new tokens a protocol hands out as rewards (which dilute everyone else).

But if you pick them right, they can pay off.

E.g. check out John’s recent picks:

UNI: +85% since late August.
AERO: +68% since Aug 31.
SKY: +56% since late June.

(Btw - PRO members get to see every one of John's trades, and the reasoning behind them, the moment he buys.)

So where does that leave us?

We essentially have two classes of crypto tokens:

The land (aka: the ecosystem tokens that everyone builds on, like Ethereum).
The buildings (aka: the rent generating apps built within those ecosystems, like Uniswap and Sky).

The takeaway:

Just because a token doesn’t pull in crazy revenues doesn’t mean it can’t/won’t catch a bid.

(Hell - look at ETH over the past decade.) 👇