Video Title: Crypto's Next Winners Won't Be Blockchains Video Author: Bankless Compiled by: Peggy, BlockBeats

Editor's Note: Against the backdrop of prolonged valuation contraction and capital reflow in the crypto market, discussions around token investing are shifting from "what's the next hot narrative" to "which projects have already established verifiable business models." But as revenue, buybacks, and burns gradually become the new language of valuation, a more critical question is emerging: Can tokens be priced based on cash flows like stocks, and do their holders truly own the value created by protocol growth?

In this episode of the Bankless podcast, Austin Barack, founder and managing partner of Relayer Capital, joins the discussion around projects like Venice, Hyperliquid, Pump.fun, and ether.fi to explore valuation methodologies for application-layer tokens and the potential path of the crypto market shifting from an infrastructure cycle to an application cycle.

In this conversation, Austin isn't simply hunting for tokens with the highest revenue or the most aggressive buybacks. Instead, he breaks down token investing into a set of more fundamental structural questions: Does the product have genuine demand? Can revenue sustain growth? Can business value be reliably transmitted to the token? And is the market still pricing businesses that have already changed under outdated classifications?

First, the screening logic for crypto assets is shifting from purely chasing growth to seeking the intersection of "growth and value." In the past, the industry typically relied on new L1s, new protocols, and token incentives to manufacture growth expectations, with valuations reflecting long-term narratives. The prolonged bear market has compressed that premium, gradually separating the few projects that have found product-market fit and are seeing rapid revenue growth from the vast number of tokens lacking real usage. This means a downturn doesn't just bring price discounts—it also provides investors with a window to identify genuine businesses: projects truly worth attention need to possess both growth velocity and reasonable valuation, rather than occupying only one end of the spectrum.

Second, token value is shifting from abstract "utility" to observable value accrual. Venice uses a portion of revenue from new subscriptions and credit purchases to burn VVV; Hyperliquid allocates the majority of platform revenue to buy back HYPE; Pump.fun and ether.fi have also established their own buyback mechanisms. In the past, there was often no clear link between protocol revenue and token performance—project growth didn't necessarily translate into holder returns. Now, programmatic buybacks and burns are establishing valuation anchors for tokens similar to discounted cash flow models. However, this stock-like framework still has boundaries: buyback ratios can be adjusted, and the rights relationship between equity entities and tokens hasn't been fully institutionalized. What investors truly need to assess isn't just revenue scale, but also the sustainability and credibility of the value accrual mechanism.

Third, the quality of revenue matters more than the revenue itself. The market has long assigned Pump.fun a relatively low valuation, partly because investors doubt whether demand for Meme coin trading can persist and struggle to understand user demographics different from their own. As the platform's revenue maintains resilience for over two consecutive years, this perception is shifting. Similarly, Venice's valuation depends not only on current subscription revenue but also on whether it can expand from a multi-model gateway into an AI application platform connecting developers and everyday users. This means valuation cannot be mechanically applied through buyback multiples; it also requires judging whether revenue stems from temporary incentives and hype or from repeatable user behavior.

Fourth, the market's legacy categorization of projects may become a new source of pricing misalignment. ether.fi was previously viewed as a liquid restaking protocol, but over 60% of its business now comes from Neo Bank products such as credit cards and lending, with further expansion into an on-chain integrated brokerage platform. If the market continues to price it based on the restaking track, it may overlook the changes already underway in its revenue structure. More importantly, ether.fi can directly leverage Ethereum's lending, stablecoin, and tokenized asset infrastructure to expand its product offerings with relatively light organizational and capital investment. This suggests that the true value left behind by the infrastructure cycle may no longer be concentrated in underlying protocols, but could instead be captured by applications best positioned to package these capabilities and serve users directly.

Fifth, application revenue can provide a valuation floor, yet it cannot fully decouple tokens from the crypto cycle. Projects with buyback mechanisms can rely on business growth to form a relatively independent pricing basis, but they still belong to the token asset class and remain subject to market capital flows, BTC and ETH price action, and shifts in on-chain activity. The difference lies in that during market upturns, trading applications like Hyperliquid and Pump.fun may simultaneously benefit from both capital inflows and business expansion; during market downturns, real revenue serves as a crucial buffer distinguishing them from purely narrative-driven assets.

If this conversation were distilled into a single judgment, it would be this: the core of the next wave of crypto asset repricing may no longer be who holds the grandest infrastructure narrative, but rather who can convert real usage into sustained revenue and credibly return a portion of it to the token. In this sense, what this article discusses is not merely whether a few tokens are undervalued, but whether the crypto market can evolve from a narrative-driven fundraising system into an application economy built on products, cash flow, and value distribution.

The following is the original content (edited for readability):

TL;DR

·The core opportunity in the crypto market is shifting from underlying infrastructure to the application layer, with revenue and users beginning to replace the block space narrative as the new source of value.

· Whether application tokens can be revalued hinges not on how much revenue the protocol generates, but on whether that revenue can be channeled back to the token through stable, transparent buyback or burn mechanisms.

· Venice combines AI application growth with token burn logic, but the $43.9 target price relies on optimistic assumptions such as the Minds launch and higher burn ratios, and should not be treated as a definitive valuation.

· Pump.fun's low valuation primarily reflects market skepticism about the sustainability of Meme coin revenue, yet over two years of revenue resilience suggests that high-volatility speculative demand may be a persistent category of consumer behavior.

· Hyperliquid exhibits greater cyclical reflexivity than typical applications: capital inflows could lift HYPE's valuation while simultaneously driving up trading volume, fees, and buyback scale.

· ether.fi is still priced as a restaking protocol, but its primary revenue has already shifted toward payments and lending—the market's legacy classification may not yet reflect the change in business structure.

· Buyback multiples cannot be directly equated with stock P/E ratios, because tokens typically lack clear residual claim rights; the value distribution between equity and tokens remains a core risk.

· Fundamentals can reduce quality tokens' dependence on the broader market, but cannot eliminate crypto cycles; truly sustainable valuations still depend on revenue quality, value flowback, and mechanism continuity.

Key Takeaways

Investment approaches in the crypto market have never been static.

Strategies that worked in 2017 may not apply in 2021; sectors that were favored in 2021 or 2024 could lose their appeal in the next cycle. In Austin Barack's view, one idea that can be reused across cycles is finding the intersection of growth and value: projects growing fast enough, while the market's valuation has yet to fully reflect that growth.

This is not value investing in the traditional sense. Investors enter the crypto market not to find a mature company growing 10% annually with a P/E ratio of just 4x. What truly makes crypto assets attractive is that violent capital cycles can produce a combination rarely seen in traditional markets: business growing severalfold while valuations remain suppressed by an overall market downturn.

Barack founded Relayer Capital about two and a half years ago, with a strategy covering both early-stage investments and the liquid market. In the fund's early days, the two received roughly equal attention; today, about 95% of his focus has shifted to liquid tokens, centering on two main themes: Crypto×AI and 24/7 trading alongside asset tokenization.

The reason is not just that the crypto market may be re-entering an upward cycle. Barack believes the prolonged bear market of the past has already helped the market complete a round of filtering: after most tokens lost their narrative premium, a handful of projects that have truly found product-market fit, are seeing rapid revenue growth, and still have relatively reasonable valuations have begun to stand out.

From Chasing Narratives to Calculating Buybacks: Tokens Gain a New Valuation Language

For a long time in the past, valuations of crypto projects relied primarily on forward-looking assumptions such as market size, network effects, and token utility. Even when protocols generated revenue, there was often no clear link between that revenue and the token itself.

Now, some applications are beginning to use programmatic buybacks or burns to directly convert business revenue into token buying pressure or supply contraction. This allows investors to borrow certain methods from equity valuation, using the ratio of buyback amounts relative to token market capitalization as a rough proxy for a token's "earnings yield."

But this approach cannot be directly equated with a price-to-earnings ratio.

Stocks typically represent legal claims on a company's residual earnings and assets, while token holders do not necessarily hold the same rights. Project teams can change buyback ratios and may also place new business operations under equity entities. Therefore, buyback multiples only carry strong explanatory power when the rules for value flow-back are relatively transparent and business revenue is sustainable.

Venice is the case study Barack focused on. It is an AI application emphasizing privacy and censorship-resistance, allowing users to access different frontier models and open-source models on the same platform. Currently, its main revenue comes from paid subscriptions and additional compute credit purchases.

Venice has also established two types of programmatic burn mechanisms for VVV: when users first purchase different subscription tiers, the platform burns a corresponding amount of VVV; when users purchase additional credits, approximately 5% of the purchase amount is used to burn tokens.

According to Barack's estimates, as of August 2026, Venice's annualized revenue run rate is approximately $107 million, corresponding to an annualized token burn of around $8.3 million. He projects that by 2027, revenue could rise to $336 million, with the burn amount potentially climbing to $70 million. If a 50x buyback multiple is applied, his model implies a token valuation of roughly $3.5 billion; combined with the projected circulating supply at that time, the target price for VVV would be approximately $43.9, compared to around $16 at the time of the show's airing.

This model carries clearly optimistic assumptions and is not a definitive forecast of future revenue.

Of the projected $70 million in buyback-and-burn volume, approximately $29 million—over 40%—comes from Minds, a product that has not yet officially launched. Minds is designed to allow premium users and developers to combine different models, prompts, and tools to build structured AI applications for everyday users, earning revenue share based on usage—a format akin to an AI app store.

Barack argues that Minds is not entirely a new product detached from Venice's existing business, as it still revolves around current models, users, and use cases. However, host David Hoffman pointed out that credit purchases are merely an extension of existing services, whereas Minds represents a new business line that has yet to be validated by the market—the two carry different levels of risk.

Barack acknowledged this challenge and described his own model as "slightly above the base case": using 0 to represent extreme pessimism, 5 as the baseline, and 10 as full optimism, he believes his projection sits roughly at a 6.

The model also assumes Venice may eventually include renewals in the burn scope and raise the burn ratio on credit revenue from 5% to 10% by 2027. None of these measures have been definitively committed to at this stage, so the $43.9 figure is better understood as a scenario-based valuation built on multiple business and mechanism assumptions, rather than an unconditional price target.

Venice's Real Challenge: Why Would a Startup Buy Back Tokens Prematurely?

The Venice case also highlights a core tension facing application-layer tokens: should a high-growth startup channel cash into product expansion, or return it to token holders?

In traditional markets, companies in rapid growth phases typically allocate most capital to R&D, hiring, and customer acquisition, rarely executing large-scale buybacks early on. Venice, however, has been using a portion of revenue to buy back and burn VVV from the early stages of business development—sacrificing capital that could otherwise be reinvested.

Barack believes this approach is tied to the dual equity-token structure common in crypto markets. Tokens can help projects rapidly build attention, bootstrap networks, and design new product features, but without clear legal frameworks, the market cannot naturally assume that all value created by the company will ultimately accrue to the token.

Programmatic burning, therefore, is not just a value distribution mechanism—it is also a trust-building tool. Teams need to demonstrate through concrete actions that business growth can flow through to VVV, rather than remaining confined to the equity entity.

Venice is currently pursuing a gradual approach: early burns carry some discretion, followed by the addition of first-time subscription burns, and then incorporating 5% of credit purchase revenue into the burn. Barack believes this arrangement provides value accrual to the token while preserving most capital for growth.

Venice previously raised $65 million, which to some extent alleviated the conflict between buybacks and reinvestment. Barack's understanding is that external financing provides the company with expansion capital, allowing it to allocate more operating cash flow to tokens; the fact that related investors also hold token subscription rights helps reduce the misalignment of interests between equity investors and token holders.

However, this balance remains fragile. If business growth slows, inference costs rise, or market competition intensifies, the company may need to retain more cash. Conversely, if the burn ratio remains too low for an extended period, tokens will struggle to fully capture business growth. Therefore, assessing VVV's value cannot rely solely on total burn figures; it also requires tracking revenue growth, gross margins, operating expenses, and whether the company consistently honors its value-recycling commitments.

Pump.fun and Hyperliquid: Why Does the Market Assign Different Multiples to Similar Revenue?

Compared to Venice, Pump.fun and Hyperliquid's revenues are more directly tied to the crypto trading cycle.

Barack noted that based on market data at the time of the show's broadcast, Pump.fun was valued at roughly 5 times its buyback amount, while Hyperliquid and Lighter commanded corresponding multiples of approximately 30 to 40 times. In his view, this gap reflects the market's bias toward different types of revenue.

Pump.fun's core business stems from meme coin issuance and trading. Many investors believe such activity relies on short-term speculative hype, making revenue sustainability inferior to that of perpetual futures trading platforms. Such concerns are not unfounded: the crypto industry has seen products whose revenue surged rapidly within one cycle before collapsing by over 90%.

But Barack believes Pump.fun's performance over the past two-plus years shows its revenue is more resilient than the market initially expected. The hype around individual meme coins may fade quickly, but user demand for high-volatility, high-variance speculative products could persist long-term.

He draws an analogy between Pump.fun and casinos, lotteries, prediction markets, and ultra-short-term options. The point here is not to equate meme coin trading entirely with these products, but rather to explain a demand mechanism: even when participants face negative expected returns overall, some users will continue participating due to high volatility and the small probability of outsized gains.

Based on this assessment, Barack believes Pump.fun's buyback multiple could be re-rated from roughly 5 times toward 10 times. If business scale remains unchanged, multiple expansion alone could correspond to roughly double the upside; if on-chain trading and meme coin activity recover in tandem, revenue could grow further.

However, the risk of Pump.fun also stems from the relationship between equity and tokens. The project previously used all of its revenue for buybacks, then adjusted to using 50% of revenue for buybacks over the next 12 months, with the remaining funds allocated to business development. Whether this ratio will continue after 12 months still requires a new decision.

This means that while the authenticity of Pump.fun's revenue can be observed through on-chain data, there is no permanent guarantee of how much revenue the token will continue to receive. When valuing PUMP, investors need to apply a discount for this institutional uncertainty, rather than directly treating the platform's entire profit as token holder returns.

Hyperliquid, on the other hand, has commanded a higher valuation multiple. On one hand, its crypto perpetual futures business has generated substantial revenue; on the other hand, the HIP-3 market is expanding trading coverage to contracts related to stocks, commodities, indices, and pre-IPO companies.

Barack believes that Hyperliquid demonstrates the potential of blockchain for 24/7 trading, instant settlement, and global price discovery. In the future, some assets that are not yet publicly listed may first form price signals on-chain, which could then be used by traditional financial institutions as a reference for issuance pricing.

However, this assessment still awaits market validation. According to Barack, Hyperliquid's recently added real-world asset markets have contributed significant trading volume, but because they are still in the expansion phase, they have not yet generated revenue growth of the same scale. The current high-margin business remains primarily crypto asset trading.

Therefore, Hyperliquid exhibits stronger cyclical reflexivity than typical applications: when crypto capital flows back in, HYPE may not only benefit from a recovery in overall token valuations, but the platform's trading volume, fees, and buyback scale may also grow in tandem; if market activity declines, this mechanism could also operate in reverse.

ether.fi has changed, but the market's categorization hasn't kept up

ether.fi is another type of valuation mismatch: the project's core business has already shifted, yet the market continues to price it under its old label.

ether.fi initially entered the market with its liquid restaking business. At the peak of the restaking narrative in 2024, its fully diluted valuation once reached approximately $8 billion. As market expectations for the restaking sector declined, ether.fi's valuation also pulled back, and it continues to be viewed as an asset similar to staking protocols like Lido.

Barack believes this categorization no longer accurately reflects ether.fi's current revenue structure. According to the data he provided on the show, over 65% of the business now comes from

Since Neo Bank (digital neobank) products, including credit card transaction revenue and lending income generated from users pledging account assets as collateral, yield and staking businesses have dropped to approximately 35% of total revenue.

As the platform adds tokenized stocks and more on-chain assets, ether.fi is further transitioning from a digital neobank into an on-chain integrated brokerage platform. Users can hold and trade different assets, borrow against their holdings, and complete daily spending through credit cards.

The advantage of this model is that ether.fi does not need to build all financial infrastructure from scratch. Taking the lending business as an example, the platform can tap into existing DeFi protocols such as Aave and earn revenue through profit sharing. The richer the stablecoin, lending market, and tokenized asset ecosystem on Ethereum, the broader the range of services ether.fi can offer to its users.

According to data provided by Barack, ether.fi's daily credit card transaction volume has surged from approximately $300,000 a year ago to between $3 million and $4 million, representing a more than tenfold increase. Currently, only about 4% of revenue comes from lending interest, whereas traditional digital bank Nubank derives roughly 60% to 70% of its revenue from this segment. In his view, this indicates that ether.fi still has significant room to expand its revenue structure.

Based on a potential buyback of approximately $30 million over the next 12 months and a 30x valuation multiple, Barack estimates that the ETHFI price could exceed $1, roughly double the level at the time of the show's airing. However, the $30 million figure is higher than the $21 million projected in another model he cited, and he assumes ether.fi's growth rate may accelerate going forward, making this result a relatively optimistic scenario as well.

What truly deserves attention in this case is not the specific target price, but whether the market classification is lagging behind. If the majority of ether.fi's revenue already comes from payments, lending, and brokerage services, continuing to apply the valuation framework of a liquid restaking protocol may fail to reflect its current business. However, if new business growth fails to sustain, the so-called "reclassification" may also fail to materialize.

Fundamentals Can Reduce Correlation but Cannot Eliminate Crypto Cycles

Having real revenue does not mean application tokens can completely decouple from Bitcoin and the broader crypto market cycle.

Barack characterizes this relationship as "partially coupled, partially decoupled." On one hand, Venice, Pump.fun, Hyperliquid, and ether.fi can build relatively independent valuation bases driven by their own user growth, revenue, and buybacks. Even if Bitcoin trades sideways, tokens may still undergo revaluation as long as their businesses continue to expand.

On the other hand, they still fall under crypto assets. When capital flows back into tokens from equities, AI, and other markets, projects with fundamental support may be the first to enter professional investors' allocation scope. Pump.fun and Hyperliquid will also generate additional revenue from increased trading activity, creating a positive feedback loop between asset prices and business fundamentals.

Venice's direct connection to the crypto trading cycle is relatively weaker, with its primary external variable being AI usage. If multi-model calls, privacy AI, and generative applications continue to grow, Venice may possess a demand source distinct from pure crypto applications; if user growth or paid conversion falls short of expectations, its token will not automatically achieve the valuation in its model merely on the back of a crypto market rally.

Barack ultimately frames this shift within a longer industry cycle. According to the data he cites, for most of the crypto industry's history, execution-layer infrastructure once contributed over 95% of industry revenue; today, the share of application revenue has risen to roughly two-thirds. He expects this proportion to continue tilting toward the application side, eventually exceeding 90%.

This projection has not yet become reality, but it highlights the core variables that need validation in the next phase: whether revenue will continue migrating from public chains and execution layers to user-facing applications, whether the cash flows generated by applications can be stably transmitted to tokens, and whether buyback mechanisms can maintain continuity amid business growth, market downturns, and regulatory changes.

If these conditions hold, the primary valuation target in the crypto market may shift from "infrastructure providing block space" to "applications leveraging blockchain to sell financial and digital services." At that point, the market will no longer just be searching for the next high-performance public chain, but rather which products truly bridge the crypto world with external demand, and which tokens can sustainably share in that growth.

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