Original title: "Exploratory Analysis on Top Streaming Public Chains and Their Ecological Valuation Model"
Original Author: Pima, Continue Capital
The hot ARB will be launched soon. This time the market has finally returned to rationality. After looking at various valuation models, it is basically reasonable. There is not much difference between 10 billion and 20 billion hubs. You can refer to other data (TVL/number of wallets/transfers/ active addresses, etc.). At present, the market’s valuation of the public chain is relatively stable, and the different perceptions of future technology evolution determine the future upside of the public chain, which is an alpha with a relatively high degree of difficulty. What's more, we must understand what is normal when we invest, just like when a person is sick, you don't necessarily know the name of the disease, but you can definitely feel some of your daily behaviors are different from normal people, such as normal people You defecate once a day, but you have three or four times. When a normal person sleeps until dawn, you wake up once a day from 1:00 am to 3:00 am. You don’t know what’s wrong, but you have to understand that this is not a normal state.
Going back to investment, you must also understand some valuation norms. For example, the long-term secondary valuation center of CEX represented by BNB is PE= 5. You can go to the financial report of Binance every quarter. Other HT/FTX can be retrospectively queried. There are data in the bull market and bear market. The median is basically around 5. Sometimes PE to 3 or bull market PE to 10 are normal. Interval, but here you need to understand the importance of industry perception parameters. The so-called industry cognition parameters mean that most people don’t understand a market segment in the early stage of development, but the prospects depicted are full of hope. At this time, good and bad people are often mixed, and the typical feature is that you don’t know who is the leader. , the growth rate of the industry is very fast, and the given PE will be very high; with the rapid growth of the market value, the improvement of industry awareness, and the penetration rate reaching the critical point of 30%, the growth rate will start to slow down, and the valuation will gradually stabilize. PE will return to the central line, the value mining is completed, the industry has entered a mature development period, and the market value is driven by profits rather than valuation. (The current L2/ZK is a typical early stage of industry development)
Regarding the public chain, after so many years of development, many data valuation models have basically stabilized.The purpose of this article is to discuss the public chain and ecological valuation system from another perspective.
Suppose we define that the Public Chain Market Cap of other top public chains in the same period except ETH is PMC, define Ethereum Market Cap as EMC, and define PE=PMC/EMC
At present, the market value of the top public chains in the normal and stable market: ADA 12 billion, MATIC 11 billion, SOL 8 billion; denominator ETH 210 billion
We select the market value of the top public chains in a certain period of time in the past (rough data)
ETH market value: 130 billion in 2017, 10 billion in 2018; 540 billion in 2021, 140 billion in 2022
ADA market value: 30 billion in 2017, 1 billion in 2018; 95 billion in 2021, 9 billion in 2022
EOS market value: 15 billion in 2018, 2 billion in 2018 (in these two time periods, the market value of ETH during the same period is 74 billion and 10 billion)
SOL market value: 90 billion in 2021, 4 billion in 2022
Let's look at the comparison of PE=PMC/EMC market value in different periods:
ADA PE: bull market 300/1300 = 23% bear market 10/100 = 10%; bull market 950/5400 = 17.5%, bear market 90/1400 = 6.4%
EOS PE: bull market 150/740 = 20%, bear market 20/100 = 20% (Of course, after a round of bull and bear, EOS will not belong to the top of the same period)
SOL PE: bull market 900/5400 = 16.6% bear market 40/1400 = 2.8% (need to consider the extreme factor of SOL bankruptcy due to FTX)
Current normalized market: ADA 120/2100 = 5.7%, MATIC 110/2100 = 5.2%, SOL 80/2100 = 3.8%
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Public chain valuation law 1: The PE normalization range of the optimal non-ETH smart contract platform falls within the range of 6% -20%
What is the use of the above law one?
Our statistics here are based on the market capitalization of the Market Cap, not the full circulation of FDV. During the last two rounds of the bull market, the investment of project institutions was relatively small, unlike most current projects that have a small proportion of circulation. I personally think that the law is bigger The function is to give you a valuation center at the beginning of the new project listing, that is, we use the market value of the new project FDV/ETH to measure the valuation.
Let’s look at the review: On 22.10.23, at the beginning of APT’s listing, FDV was 10 billion, and ETH was 160 billion during the same period. PE= 100/1600 = 16% When APT’s lowest point was 3 dollars, PE= 30/1400 = 2.1%; 2023.01. On the 26th, APT FDV was 20 billion, ETH was 200 billion in the same period, PE= 200/2000 = 10%, and the current APT PE= 130/2100 = 6.2%
OP, 2022.06.02, FDV 6.4 billion, ETH 210 billion in the same period, PE= 64/2100 = 3%, 2022.06.19, OP FDV 1.8 billion, ETH 120 billion, PE= 1.5%, currently OP 11 billion, PE= 5.2 %
Now we probably have a central concept. ARB is assumed to be listed according to 10 billion/20 billion/30 billion FDV, and the PE is 4.7%, 9.5%, and 14.2% respectively. It is clear at a glance whether the high range or the low range in the corresponding law of different prices. In the high range, it is suitable to replace the molecular end public chain with the denominator ETH.
It should be noted that the applicable condition of Law 1 is that it must be a non-ETH public chain that you think is the top. You can’t put it in this range. Don’t say 6% of many public links, maybe 1% of ETH’s market value is less than 1%. The question becomes which is the top public chain? This is essentially a question of buying. I’m sorry that Lu Xun didn’t say it, but the first law can provide an approximate selling point: that is, the closer to the upper limit of 20%, the more you can sell it for ETH. What needs to be distinguished is that this selling point is not an absolute unit price selling point. For example, if you sell your APT for 10 yuan, it will rise to 100 yuan in 25 years. You can’t compare it like this, but in 25 years, maybe ETH will be 1 W yuan , PE = 100 billion/1,200 billion = 8.3%, the essence of the first law is to measure the growth rate of the top public chain and ETH.
first level title
The second law of public chain ecological valuation: the DP normalization range of conventional DEXs in their respective public chain ecology falls within the range of 1% -3%
Suppose we define the DEX Fully Diluted Valuation of each ecological head as DFDV, and the Public Chain Fully Diluted Valuation as PFDV, then DP=DFDV/PFDV, that is, the total market value of DEX/the total market value of the public chain.
There are many kinds of public chain ecology. We will focus on the core part first. At present, the development of any public chain ecology is inseparable from DEX. The market value of DEX can be used as the value center of each public chain ecology, so as to measure the valuation of other types of projects. reference.
First of all, we still need to understand what is normal, and the current normal market value (3.20 FDV):
UNI 6.5 billion, ETH 210 billion DP= 65/2100 = 3%
CAKE 3 billion, BNB 68 billion DP= 30/680 = 4.4%
JOE 180 million, AVAX 12 billion DP= 1.8/58 = 3%
ORCA 80 million, SOL 12 billion DP= 0.8/120 = 0.6%
Quickswap 84 million, MATIC 12 billion, DP= 0.84/120 = 0.7%
Velodrome 150 million, OP 11 billion, DP= 1.5/110 = 1.3%
Camelot 400 million, ARB unknown
Secondly, let’s look at the valuation given to DEX by the market when DeFi is a new track environment and the whole market is in a bull market:
UNI, high point 40, corresponding to FDV 40 billion, ETH market value of 400 billion in the same period, DP= 400/4000 = 10%
In the SOL ecosystem, DEX ORCA reached 1.8 billion FDV twice in October and November 21, and the SOL FDV in the same period was 95 billion and 125 billion respectively, and the two DPs corresponded to 1.9% and 1.4% respectively
In the AVAX ecosystem, DEX JOE reached 2.2 billion FDV in September and November 21 respectively, and AVAX FDV in the same period was 54 billion and 96 billion respectively, and the two DPs corresponded to 4% and 2.2% respectively
We have seen that as the most typical project in the DeFi industry, UNI enjoys an exclusive monopoly premium and a high valuation in the early stage of the entire DeFi track development. The DP is up to 10%. Therefore, it is difficult for conventional DEXs to reach this valuation. value. In addition, we can see the unit price k-line chart of UNI/ETH, which has been in the range of 0.002-0.006 for a long time. Considering the difference in quantity between the two, the corresponding UNI circulation market value/ETH market value probably falls in the 2% -6% range. Considering the UNI Due to the current monopoly status and orthodoxy premium, I personally still believe that the DP normalization limit of conventional DEX in their respective public chain ecology is 3%.
first level title
The question is, what is the role of the second public chain ecological valuation law?
First, for the underestimated interval. We know that there must be a DEX that matches the market value of its public chain. For example, Velo currently has 150 million, OP 11 billion, DP= 1.5/110 = 1.3%, which can only be said to be reasonable. Similarly, there must be a DEX in zkSync/Starkware and other projects that are not online, and it will reach 1% -3% of the market value of zkSync/Starkware in the future. Although the two mainnets have not been launched yet, you can probably give a certain valuation according to the lower limit of Law 1, such as 8 billion, then the corresponding DEX FDV is about 800-240 million. As for which DEX it is, this requires deep cultivation Community, constantly observe its data/users/development capabilities and other conventional factors to make choices. The key here is that zkSync/Starkware has not issued coins, but its ecological DEX may have already issued coins, which means that you have the window to participate in advance, and the remaining All you need is patience;
Another example is that APT has already issued coins, but I don’t know which ecological DEX can run out, but it’s worth your participation when the DEX FDV is 500-1000w or even lower, because according to the second law, there will be an APT DEX reaches 1%-3% of its market cap.
Second, for the overestimated interval. You can also refer to the upper limit of the range of its law 2. The more it exceeds, the more suitable it is for the parent-public chain to be exchanged.
There is a DEX ZyberSwap in the ARB ecosystem, with a high point FDV of 400 million. Conventional DEXs are basically micro-innovations, and there is no big difference. The specific differences and details such as liquidity mining/ve/(3, 3) models are not Too concerned. Less short-term liquidity + rapid increase of tvl + airdrop expectations + short-term emotional capital surge, etc. have contributed to a wave of rise, but this is not important. The core is that the valuation is 400 million, which means that if ARB is 10 billion, then DP= 4 /100 = 4%, if ARB= 20 billion, then DP= 2%, conventional DEX will face the attacks of other competing products in an endless stream for a long time, and it is difficult to build a moat, so the closer to the upper limit of 3% of the second law, the more suitable it is to replace it with ARBs
When we have a valuation central system for the ecological DEX, there will be a suitable reference for extending from DEX to other tracks in the public chain ecology, just like having a weight, which can weigh most of the projects. .
When we have a valuation central system for the ecological DEX, there will be a suitable reference for extending from DEX to other tracks in the public chain ecology, just like having a weight, which can weigh most of the projects. .
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