Grayscale: These 15 Profitable Crypto Protocols Are Severely Undervalued

Original Author: Zach Pandl (Head of Grayscale Research)

Original Translation & Compilation: TechFlow

TechFlow Editor's Note: Grayscale Research has published 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 in annual revenue are trading at single-digit, or even 1x, revenue multiples. The market caps of Pump.fun, PancakeSwap, and Meteora are almost equal to their annual 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 important to note: Grayscale is itself a crypto asset management firm, and the "undervalued" conclusion aligns with its commercial interests. Investors should make their own independent judgments.

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

For the top 15 on-chain protocols by revenue (including Hyperliquid), the vast majority now have a trailing twelve-month revenue multiple in the single digits, with many trading at just 1x. Since most protocols have relatively low operating expenses, they appear similarly cheap when measured by profit or cash flow.

Grayscale believes the potential passage of the CLARITY Act (possibly as early as next month) could help unlock this value. The rationale: if enacted, this law would bring traditional finance's regulatory framework to crypto assets, a significant positive catalyst for these applications.

Specifically, the CLARITY Act is expected to drive growth in tokenized assets and on-chain finance. Nearly all of the top 15 revenue protocols are linked to financial use cases or closely related infrastructure (e.g., oracles, staking). Grayscale argues these protocols will significantly benefit from the expected increase in on-chain trading activity following the Act's passage.

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

Figure Note: Top 15 on-chain protocols by revenue. Data as of June 24, 2026. Source: DefiLlama, Artemis, Grayscale Investments. Excludes projects with insufficient data coverage. Chainlink is excluded due to its combined on-chain and off-chain revenue.

This table is dense with information. Let's break it down layer by layer.

The "1x Club": Market Cap ≈ Annual Revenue

The most striking aspect of the table is the four protocols with a Revenue Multiple of just 1x:

Pump.fun (PUMP) — Trailing twelve-month protocol revenue of $459 million, with a circulating market cap of $456 million. A software business generating nearly $500 million annually with negligible operating costs, trading at a market cap equal to one year's revenue, would immediately catch a value investor's eye in traditional markets. However, Pump.fun's revenue is highly dependent on meme coin speculation, and trading volume could evaporate quickly if sentiment shifts. The 1x valuation could mean the market is ignoring real cash flow, or that it is correctly discounting unsustainable revenue.

PancakeSwap (CAKE) — $322 million in revenue, $425 million market cap, 1x. The largest DEX on BNB Chain, with operations spanning AMM trading, yield farming, 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. A liquidity infrastructure protocol on Solana, co-created by Jupiter founder Meow. It's worth noting the team risk following the resignation of co-founder Ben Chow over financial misconduct allegations.

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

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

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

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

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

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

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

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

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

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

The High Multiple Zone: Paying for Narrative and Optionality

Hyperliquid (HYPE) — Topping the list with $871 million in revenue, a $13.456 billion circulating market cap, and a 15x multiple. While its revenue scale far exceeds second place, its valuation multiple is also not low. Hyperliquid's story extends beyond a perpetual exchange: the HIP-3 proposal, launched in October 2025, allows third parties to permissionlessly deploy perpetual markets on Hyperliquid, with underlying assets expanding 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 a HIP-3 deployer, creating the first S&P 500 perpetual product. HIP-3 markets saw peak open interest of $3.2 billion and cumulative volume of approximately $200 billion. 99% of protocol fees are channeled back to the protocol via buybacks. Grayscale has launched a staking ETF (HYPG) for HYPE, listed on Nasdaq.

World Liberty Financial (WLFI) — $105 million in revenue, $1.82 billion market cap, 17x. The valuation appears significantly elevated, reflecting 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. Ranking second to last in revenue, yet holding the highest valuation multiple in the table. This reflects a long-standing structural issue: the premium paid by UNI holders primarily represents governance rights and the optional value of a "fee switch" (distributing protocol revenue to token holders), rather than current cash flow. The market is pricing what UNI "could become," not what it "is now."

The CLARITY Act: A Catalyst for These Protocols

Grayscale's argument is not just that "these protocols are cheap," but that "they are cheap ahead of a regulatory catalyst."

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

The core of this legislation is to clarify 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 vote of 15-9 (including two Democratic votes). Polymarket assigns a 67% probability of passage within the year.

The logical chain is straightforward: clear 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 for 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 not part of the original text. It is supplemented and integrated by the compiler.

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

Framework for analyzing Aave:

Aave Labs functions essentially like a permissionless on-chain bank, earning the spread between depositors and borrowers, plus fees and income from the GHO stablecoin. Grayscale estimates Aave's 2026 protocol profit to be around $60 million, with an operating margin of roughly 50%.

Using comparable valuation multiples for fintech companies (20-25x P/E), AAVE's fair value is estimated at $80-$100, compared to a trading price of around $75 at the time of the report's release. AAVE's current forward P/E of ~18x is lower than comparable fintech firms.

In a base-case scenario (accelerated tokenization adoption, progress on regulatory clarity), Grayscale gives a one-year price target of approximately $175, representing roughly 130% upside from current levels.

Valuing crypto protocols has several unique issues not covered by traditional tools:

Varying mechanisms for returning value to token holders — Buybacks (AAVE), token burns (HYPE), fee rebates (CoW), staking rewards (CRV). Each mechanism has different efficiency in transmitting value to holders.

Unique expense items — Including supply-side fees (payments to liquidity providers), token emissions (continuous inflationary dilution), and DAO capital expenditures.

Legal structure uncertainty — Holding governance tokens typically does not imply legally enforceable rights to protocol assets. Different DAOs use various legal structures to align protocol operations with applicable law.

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

The following content is from Grayscale's contemporaneous weekly report, providing macro context.

Since the outbreak of the Iran conflict in late February, U.S. stocks are up 9% (boosted by AI spending), Bitcoin is down 1%, and Gold is down 20%. Part of the underperformance for BTC and Gold stems from market expectations that the Fed might raise rates to combat inflation—the one-year Fed funds rate expectation has risen by about 60 basis points, and roughly half of Fed officials see a rate hike in 2026 as possible. The European Central Bank has already raised rates.

Grayscale disagrees with this expectation, with its base case being the Fed holds steady. If this assessment is correct, BTC's price could be poised for a catch-up rally to equities.

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

How to Objectively View This Report

The picture Grayscale paints is indeed worth attention: high-margin protocols trading at compressed valuation multiples, a potential regulatory tailwind seemingly imminent, while the broader market remains in risk-off mode. This represents a rare, fundamentally-based crypto investment argument 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 that event being delayed or falling short of expectations. A 67% probability of passage also implies a 33% chance of failure.

Second, Grayscale is a stakeholder. It is a crypto asset management firm whose business model relies on investors increasing their exposure to these very assets. It has already launched a Nasdaq-listed staking ETF for Hyperliquid. 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 whether the market is correctly pricing risks it perceives, is a question every investor must answer for themselves.

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