Author: Frank, PANews

The cryptocurrency market has once again ushered in a frenzy. On December 5, Bitcoin broke through the $100,000 mark. Other competing coins have also begun a surge against this backdrop. Previously, PANews conducted a market analysis of mainstream tokens, and more than 60% of tokens increased by over 100% in the past month. (Related reading: The season for competing coins has arrived! Analysis of the performance of 289 tokens: 60% increased by over 100%, high enthusiasm for public chains and meme coins)

While the market is looking good, investors are searching for potentially undervalued targets. Among various tracks, DeFi projects can be more easily quantified through data such as TVL and fee status. In this regard, PANews conducted data analysis on DeFi-related tokens from Defillama and Coingecko to see which projects may be undervalued by the market.

Data description: The data for this analysis is taken from December 5, 2024, and involves analyzing the data of 86 DeFi-related projects or public chains, followed by comparative analysis using API programs. Among them, market capitalization and trading volume data come from Coingecko, and trading volume refers to the 24-hour trading volume of the token. TVL and fee data come from Defillama.

From the perspective of TVL: 42 DeFi projects are relatively undervalued

For DeFi projects, TVL (Total Value Locked) is almost the most important metric. Generally speaking, the larger the TVL, the more funds are deposited in the protocol, which also indicates that this protocol has a thicker liquidity pool and better user acceptance. For projects that have already issued tokens, the P/TVL data also has a certain reference value. If P/TVL is less than 1, it indicates that the TVL of this project has exceeded the total market capitalization of the token, possibly indicating that it is undervalued in the market. If P/TVL is greater than 3, it indicates that the market believes that the token of the protocol has higher growth potential, or the locked value provided by the protocol is considered insufficient.

After data analysis, it can be seen that among the samples, there are 42 tokens with P/TVL less than 1. Among them, Marinade, Lido, Ether.fi, Scallop, JUST, Venus, Kamino, Morpho, BENQI, and Rocket Pool have the lowest values, ranking in the top ten.

Among these projects, Lido, Aave, Ether.fi, JUST, Maker, Ethena, Amp, Pendle, Jito, and Compound have the top ten TVL data. These are also long-standing DeFi projects, characterized by high TVL and low market cap. According to the latest disclosed data from Grayscale, as of December 5, 2024, the Grayscale DeFi fund's portfolio consists of 5 tokens: $UNI, $AAVE, $MKR, $LDO, and $SNX. Among Grayscale's holdings, $AAVE, $MKR, and $LDO are also at the forefront of the P/TVL values less than 1.

Among the tokens with P/TVL less than 1, the one with the lowest market capitalization is KTX.Finance, with a token KTC market cap of only $568,000, but the TVL has reached $8.5 million. However, this token has only a few trading markets, and the total transfer count of the token on Arbitrum is only about 35,000, indicating poor on-chain activity. In addition, some lower market cap projects include Ramses, HMX, Lynex, Scallop, Spookyswap, Extra Finance, and Inverse.

It is worth mentioning that in the ratio of TVL to market capitalization, it can be seen that several popular DEX protocols on Solana have a ratio less than 1, such as Raydium, Jupiter, and Orca. These projects account for more than 80% of the trading volume on the Solana chain, yet their token market capitalization is lower than TVL.

What are the most profitable DeFi projects?

In addition to TVL, fees are also an important metric for measuring the activity and profitability of DeFi projects. However, the reference method for fees is slightly different from TVL. In the calculation of fees, PANews mainly uses the total revenue of fees over the past 30 days to calculate the average daily fee value, then multiplies this fee value by 365 to simulate the expected annual fee at the current fee level. By comparing this predicted annual fee with market capitalization and the current total fees.

First, the ratio of annual expenses to market capitalization is quite similar to the PE ratio used for valuing a company in traditional financial markets, which we will refer to as "PF" here. If PF is less than 10, it indicates that the project is in a state of undervaluation. A value between 10 and 20 is generally considered reasonable. A value between 20 and 50 belongs to projects with high growth expectations, while a value greater than 50 is likely to be overvalued.

In this analysis, there are 38 projects with PF values less than 10, among which Lifinity, Orca, Lynex, Raydium, WigoSwap, HMX, Marinade, Thena, Jito, and KTX have the smallest values in the top ten.

However, it should be noted that a high PF value for some projects does not necessarily indicate overvaluation. Rather, some projects inherently have low fee generation mechanisms, especially when considering the PF value of public chains. This data is generally more significant as a reference in some tooling and decentralized exchanges or lending protocols.

Moreover, among the 86 data analyzed, there are 28 projects whose predicted annual fees exceed the total fees, which means that if these projects continue at the current fee level, the fees generated in the next year will exceed the total past fees. This also indicates that the activity and profitability of these projects are gradually increasing. The top ten projects in this data include Raydium, Jito, Solana, Thena, Ethena, Ether.fi, Orca, Aerodrome, Kamino, and KTX. Of course, when reviewing this data, the launch time of the projects should also be considered; for example, a project like Ether.fi, which has been launched for less than a year, will predictably have annual fees exceeding total past fees.

In addition, there is another metric dimension to consider, which is the ratio between token trading volume and market capitalization. Generally, when this ratio is greater than 0.1, it indicates that the market activity and liquidity of the token are relatively good. Among these tokens, there are a total of 51 projects with a V/P greater than 0.1.

8 projects with several undervaluation indicators

After filtering through multiple data dimensions (P/TVL less than 1, V/P greater than 0.1, P/F(YEAR) less than 10, predicted annual fees greater than total fees), there are a total of 8 projects that meet this condition: Raydium, KTX, Inverse, Aerodrome, Jito, Ethena, Morpho, and Ether.fi. However, when examining these projects, further judgment must also consider the issuance time of the token, the market it was launched in, and community activity.

Furthermore, when determining whether a DeFi project is undervalued, it is often possible to estimate by comparing indicators of leading projects such as Uniswap and Sushi.

Finally, there are still some supplementary explanations needed regarding the judgment of the undervaluation level of DeFi projects. The above data filtering method is not absolute; the market performance of a token often depends on factors outside the data. Only if the market is sufficiently rational can it completely follow the trend influenced by the data model. Besides the above data, factors such as user activity, marketing, and project type also need to be considered. (The above analysis is somewhat of a futile pursuit; it should not be taken as investment advice. The market is risky, and caution is needed when entering!)

All specific data is here for readers' reference.

(The above content is an excerpt and reprint authorized by partner PANews, original link)

Disclaimer: The article represents the author's personal views and opinions, does not represent the views and positions of Block客, and all content and opinions are for reference only and do not constitute investment advice. Investors should independently decide on transactions and the author and Block客 will not bear any responsibility for any direct or indirect losses resulting from investor transactions.

"Which DeFi tokens are undervalued? Open up the data of '86 projects' to find the answer!" This article was first published on (Block客).