Grayscale: These 15 Profitable Crypto Protocols Are Severely Undervalued

Original Author: Zach Pandl (Head of Grayscale Research)

Original Translation Compiled by: TechFlow

Editor's Note: Grayscale Research has released its latest report, listing the top 15 on-chain protocols by revenue and comparing their valuation multiples. The core finding: a significant number of protocols generating hundreds of millions of dollars in annual revenue are trading at single-digit or even 1x revenue multiples. The market capitalization of Pump.fun, PancakeSwap, and Meteora is nearly equal to their one-year revenue. Grayscale believes the CLARITY Act could pass as early as next month, potentially opening the door for institutional capital to flow into these DeFi financial protocols. However, it's crucial to note that Grayscale is itself a crypto asset management company, and its conclusion of "undervaluation" aligns with its commercial interests; investors should form their own independent judgment.

After an extended bear market, many revenue-generating on-chain applications look quite cheap from a fundamental perspective.

For the vast majority of the top 15 ranked on-chain protocols by revenue (including Hyperliquid), their trailing twelve-month revenue multiples have fallen to single digits, with many sitting at just 1x. Given that most of these protocols have low operating expenses, they appear equally cheap when measured by profit or cash flow.

Grayscale believes that the potential passage of the CLARITY Act (possibly as soon as next month) could help unlock this value. The rationale: if enacted, this law would introduce a traditional financial regulatory framework to crypto assets, which would be a significant positive catalyst for these applications.

Specifically, the CLARITY Act would drive the growth of tokenized assets and on-chain finance. Nearly all of the top 15 revenue-generating protocols are tied to financial use cases or closely related infrastructure (such as oracles and staking). Grayscale argues that these protocols would benefit substantially from the anticipated increase in on-chain transaction activity following the Act's passage.

Grayscale's 'Bargain List': A Look at 15 Protocols

Note: Top 15 ranking of on-chain protocol revenue. Data as of June 24, 2026. Source: DefiLlama, Artemis, Grayscale Investments. Excludes projects with insufficient data coverage. Chainlink is excluded due to having both on-chain and off-chain revenue.

This table is information-dense; let's break it down layer by layer.

The '1x Club': Market Cap ≈ One Year of Revenue

The most noteworthy aspect of the table is the four protocols with a revenue multiple of just 1x:

Pump.fun (PUMP) — $459 million in trailing twelve-month protocol revenue, with a circulating market cap of $456 million. A software business generating nearly $500 million annually with negligible operating costs, yet its market cap equals only one year of revenue. In traditional markets, this would immediately attract value investors. However, Pump.fun's revenue is highly dependent on meme coin speculation; trading volumes could evaporate quickly if sentiment shifts. The 1x valuation could signify the market is overlooking real cash flow, or it could correctly discount unsustainable revenue.

PancakeSwap (CAKE) — $322 million in revenue, $425 million market cap, 1x multiple. The largest DEX on BNB Chain, with business lines spanning AMM trading, liquidity mining, prediction markets, and more. Its revenue sources are more diversified than Pump.fun's, and it has a solid user base in the Asia-Pacific region.

Meteora (MET) — $62 million in revenue, $78 million market cap, 1x multiple. A liquidity infrastructure project on Solana, co-created by Jupiter founder Meow. It's worth noting the team risk following the resignation of co-founder Ben Chow due to financial misconduct allegations.

Collector Crypt (CARDS) — $49 million in revenue, $68 million market cap, 1x multiple. Falls under the "Consumer & Culture" category and is the least well-known among the top 15 protocols.

The Middle Tier: Single-Digit Multiples, Genuine DeFi Protocols

Raydium (RAY) — $46 million in revenue, $158 million market cap, 3x multiple. A core AMM on Solana, benefiting from trading activity and new token issuance within the Solana ecosystem.

Lido Finance (LDO) — $77 million in revenue, $216 million market cap, 3x multiple. The largest liquid staking protocol on Ethereum, representing the on-chain staking infrastructure in the "Tools & Services" category.

Aerodrome (AERO) — $124 million in revenue, $471 million market cap, 4x multiple. The DEX with the highest TVL and trading volume on the Base chain. It employs a ve(3,3) tokenomics model combined with concentrated liquidity, serving as the liquidity hub for Coinbase's L2 ecosystem.

Sky (SKY) — $248 million in revenue, $1.241 billion market cap, 5x multiple. Formerly MakerDAO, an on-chain lending and stablecoin protocol.

Jupiter (JUP) — $130 million in revenue, $716 million market cap, 6x multiple. The largest DEX aggregator on Solana, having recently surpassed Uniswap and PancakeSwap in daily fee revenue on multiple occasions.

Ether.fi (ETHFI) — $56 million in revenue, $314 million market cap, 6x multiple. A representative protocol in the restaking sector.

Lighter (LIT) — $50 million in revenue, $381 million market cap, 8x multiple.

Aave (AAVE) — $125 million in revenue, $1.169 billion market cap, 9x multiple. The largest lending protocol on-chain. Grayscale conducted a detailed DCF (Discounted Cash Flow) analysis for AAVE in another report—a methodological breakthrough in the crypto industry, detailed later.

The High-Multiple Zone: Paying for Narrative and Option Value

Hyperliquid (HYPE) — Topping the list with $871 million in revenue, a circulating market cap of $13.456 billion, and a 15x multiple. Its revenue scale far exceeds the second-place protocol, but its valuation multiple is also significant. Hyperliquid's story extends beyond being just a perpetual exchange: the HIP-3 proposal, launched in October 2025, allows third parties to permissionlessly deploy perpetual markets on Hyperliquid, expanding the underlying assets to stocks, commodities, indices, and pre-IPO shares. In March of this year, S&P Dow Jones Indices licensed the S&P 500 Index to an HIP-3 deployer, creating the first S&P 500 perpetual product. The peak open interest for HIP-3 markets reached $3.2 billion, with cumulative trading volume around $200 billion. 99% of protocol fees are returned through buybacks. Grayscale has already launched a staking ETF (HYPG) listed on Nasdaq for HYPE.

World Liberty Financial (WLFI) — $105 million in revenue, $1.82 billion market cap, 17x multiple. This valuation appears significantly elevated, likely reflecting its political association with the Trump family and market visibility rather than fundamental output.

Uniswap (UNI) — $49 million in revenue, $1.778 billion market cap, 37x multiple. Ranking second-lowest in revenue, it has the highest valuation multiple on the entire table. This highlights a long-standing structural issue: the premium paid by UNI holders primarily reflects governance rights and the option value of the "fee switch" (allocating protocol revenue to token holders), rather than current cash flow. The market is pricing UNI for what it "could become," not for what it "is now."

The CLARITY Act: A Catalyst for These Protocols

Grayscale's thesis isn't simply that "these protocols are cheap," but that "they are cheap before a regulatory catalyst arrives."

Of the 15 protocols on the table, 12 are financial in nature: decentralized exchanges, lending platforms, liquid staking, and yield infrastructure. The CLARITY Act (Digital Asset Market Clarity Act) is precisely the regulatory framework targeting these financial use cases.

The core of the legislation is to delineate the jurisdictional boundaries between the SEC and the CFTC, establishing a framework to distinguish between "investment contracts" and "digital commodities." It has passed the Senate Banking Committee with a 15:9 vote (including 2 Democratic votes), and Polymarket assigns a 67% probability of passage within the year.

The logical chain is simple: Clearer regulatory rules → Lower compliance friction for institutions → Growth in on-chain activity and TVL → Increased revenue for these protocols → Repricing of current low valuation multiples.

[Compilation Supplement] Grayscale's DCF Valuation of AAVE: One-Year Price Target of $175

The following content is from Grayscale's related mid-June report, "Guide to Buying the Dip: Valuing Crypto with Cash Flows," and is supplementary material compiled by the translator, not part of the original article.

Grayscale places crypto assets on a valuation spectrum: at one end are pure commodity-type assets like Bitcoin, priced by supply and demand; at the other end are protocols like Hyperliquid and Aave that generate substantial revenue, suitable for traditional Discounted Cash Flow (DCF) models.

Analytical framework for Aave:

Aave Labs essentially operates like a permissionless on-chain bank, earning the spread between depositors and borrowers, plus fees and revenue from its stablecoin (GHO). Grayscale estimates Aave's 2026 protocol profit at approximately $60 million, with an operating margin of around 50%.

Applying comparable valuation multiples for fintech companies (20-25x P/E), AAVE's fair value is estimated at $80-$100, while it was trading at around $75 at the time of the report. AAVE's current forward P/E of about 18x is below comparable fintech companies.

In a base case scenario (accelerated tokenization adoption, clearer regulation), Grayscale provides a one-year price target of approximately $175, representing roughly 130% upside from current levels.

However, crypto protocol valuations have specific issues that traditional tools don't cover:

Token value accrual mechanisms vary — Buybacks (AAVE), token burns (HYPE), fee rebates (CoW), staking rewards (CRV). Each mechanism has a different efficiency in conveying value to holders.

Unique expenditure items — These include supply-side fees (to liquidity providers), token emissions (ongoing inflationary dilution), and DAO capital expenditures.

Uncertainty in legal structure — Holding governance tokens typically does not confer legally enforceable rights to protocol assets. DAOs use different legal structures to align protocol operations with applicable laws.

[Compilation Supplement] Macro Context: Market Divergence Since the Iran Conflict

The following content, sourced from a contemporaneous Grayscale weekly report, provides macro context.

Since the outbreak of the Iran conflict in late February, the U.S. stock market has risen by 9% (boosted by AI spending), Bitcoin has fallen by 1%, and gold has declined by 20%. The underperformance of BTC and gold is partially due to market expectations that the Fed might raise interest rates to combat inflation—the one-year federal funds rate expectation has risen by about 60 basis points, and roughly half of Fed officials believe a rate hike in 2026 could be appropriate. The European Central Bank has already raised rates.

Grayscale disagrees with this expectation, with its base case being that the Fed will hold steady. If this judgment is correct, Bitcoin's price might play catch-up with U.S. stocks.

Within this risk-off macro environment, the valuations of on-chain protocols have been further compressed, creating the current window for Grayscale's "bear market multiples + regulatory catalyst" thesis.

How to Objectively View This Report

The picture Grayscale paints is certainly worth noting: high-margin protocols trading at compressed valuation multiples, a potential regulatory tailwind on the horizon, and the overall market still in risk-off mode. This represents a rare, fundamentals-based crypto investment thesis in a market typically driven by sentiment.

However, two things must be made clear:

First, the catalyst is conditional. The timeline and final form of the CLARITY Act are not guaranteed. An investment thesis built on a legislative event inherently carries the risk of delay or disappointment. A 67% probability of passage also implies a 33% chance of failure.

Second, Grayscale is a stakeholder. It is a crypto asset management company whose business model relies on increasing investor exposure to these assets. It has already launched a staking ETF for Hyperliquid listed on Nasdaq. Its conclusion that "now is an attractive entry point" should be read within this context of interest, not as neutral analysis.

The valuation data is verifiable, and the anomalies are real. But whether this signals a bottom, or the market is correctly pricing the risks it sees, is a question every investor must answer for themselves.

For those tracking the CLARITY Act, the signal to watch isn't just whether the bill passes, but whether, in the weeks following its passage, institutional capital actually flows into these protocols—that will be the true validation of Grayscale's thesis.