Bitwise Chief Investment Officer Matt Hougan says one of the longest-running questions in crypto has centered on valuation: blockchain networks may be growing quickly, but do their native tokens actually have a defensible source of value?
In his view, that question has been fair. Many projects have reached millions of users and generated billions of dollars in revenue, yet most of that economic value did not flow through to the token or to token holders. Hougan writes that even committed crypto bulls have sometimes struggled to explain why some tokens deserved multibillion-dollar market capitalizations.
He argues that this period is ending. Outside Bitcoin, he says, crypto assets will increasingly be judged using tools that look much closer to the way investors assess stocks and bonds, with revenue becoming a central metric.
Why the market long assumed tokens could not carry economic rights
Hougan says the criticism that crypto projects did not produce income was often correct in earlier years. Bitcoin, the first and largest crypto asset, was never designed to generate cash flow for holders. He describes it as a monetary asset, and monetary assets typically do not produce what he calls productive yield. Few people ask how much revenue gold generates, but Bitcoin’s design helped shape how investors thought about the rest of the asset class.
He says regulation reinforced that mindset between 2017 and 2025. During the tenures of Jay Clayton and Gary Gensler at the U.S. Securities and Exchange Commission, the agency took a hostile view toward tokens that distributed value to holders. According to Hougan, the SEC broadly treated projects that shared revenue with token holders as illegal securities offerings. Under that backdrop, most new projects chose governance tokens that granted voting rights but no direct claim on protocol income. He cites Uniswap and Aave as well-known DeFi examples.
The Ripple case marked the turn
Hougan places the turning point in July 2023, when the SEC lost a major case against Ripple. The regulator had argued that XRP was part of an illegal securities offering, but the U.S. District Court for the Southern District of New York held that XRP sales to retail investors did not constitute securities.
He says the ruling shook the legal community and challenged widely held assumptions about securities law. Many expected the decision to be reversed on appeal, but later related rulings largely favored Ripple. In August 2025, both sides dropped their appeals, bringing the case to a close.
By then, Paul Atkins had replaced Gensler as SEC chair and introduced a more crypto-friendly policy approach. Hougan says token-based revenue sharing became viable again.
Hyperliquid as the model case
Hougan says that at nearly the same time, a major new project built around value capture emerged. Hyperliquid, a decentralized exchange, launched perpetual futures trading in February 2023 and later expanded into spot trading, real-world assets, and prediction markets. Since its token launch in November 2024, he describes it as the best-performing major crypto asset, up about 800%, while Bitcoin fell by roughly one-third over the same stretch.
For Hougan, the key feature is the exchange’s fee policy. About 99% of network fee revenue is used to buy HYPE in the open market. Since launch, he says, Hyperliquid has bought back and burned $1.3 billion worth of HYPE, permanently reducing circulating supply and giving investors a direct way to connect network activity with token value.
He writes that Hyperliquid has been the asset people in crypto have mentioned to him most often over the past year.
Uniswap, Aave, and Lighter are moving in the same direction
Hougan says the combination of a less restrictive regulatory environment and Hyperliquid’s success has pushed other projects to revise their token economics over the past year.
- Uniswap: In December 2025, the "UNIfication" governance proposal passed with 99.9% support. Hougan says the protocol immediately burned 100 million UNI, equal to 10% of maximum supply and worth about $590 million at the time, while formally turning on a protocol fee mechanism for the first time. It later burned another 7 million UNI. He puts annualized revenue at about $100 million, all directed to UNI buybacks and burns.
- Aave: Beginning in April 2025, Aave started using revenue for weekly buybacks of AAVE. Hougan says the protocol is on pace to burn $30 million worth of AAVE per year, or about 20% of annual revenue. In June 2026, it went further with "Aavenomics 3.0," which moved protocol fees and GHO stablecoin revenue into an automated buyback contract that cannot be manually overridden. Cumulative buybacks have already exceeded 1.2% of total token supply.
- Lighter: Hougan describes Lighter as the fastest-growing perpetuals exchange on Ethereum. After launching earlier this year, it immediately began using trading revenue to buy back LIT. He says buybacks now equal about 6% of circulating supply, all purchased tokens are set to be burned, and annualized revenue stands at $67 million.
Value capture is spreading to layer-1 networks
Hougan argues the trend is no longer limited to DeFi applications. He says revenue-linked token mechanics are also spreading to layer-1 blockchains.
He points to Solana community proposal SGP-0003, which would cut inflation and increase the scale of fee burns by as much as 14 times. He also cites Aptos, which raised gas fees by 10 times earlier this year to improve tokenholder economics. According to Hougan, users did not leave in large numbers. Instead, on-chain trading activity nearly tripled, while annual token burns rose from about 90,000 tokens to 1.9 million.
Hougan says investors may still be underpricing the shift
Hougan writes that his more than 25 years of experience investing in technology makes the current moment feel familiar. He compares it to the early years of internet platforms such as Facebook, before advertising became an established business model. At that stage, skeptics argued platforms could not charge without losing users, while bullish investors leaned on traffic metrics and Metcalfe’s law to support valuations.
Eventually, he says, major platforms monetized successfully and users did not leave en masse. Investors then shifted their focus from traffic to profits. He believes crypto may be entering the same phase. As one example, he says Uniswap turned on fees in December of last year, reached a record share of the DEX market by July, and its token gained 35% from July 1.
Hougan’s view is that both DeFi applications and layer-1 networks have more pricing power than the market currently assumes. He says strong brands remain durable and trust is scarce across the sector. Over the next 12 to 24 months, he expects platforms to keep improving their ability to capture revenue.
His valuation argument comes with a clear caveat
Hougan says one reason the opportunity looks large is that investors outside crypto still have not recognized the change. Many continue to see digital assets through the old lens that tokens do not carry cash flow. Inside crypto, he says, confidence has also been damaged by years of narratives that failed to deliver, making investors slow to believe that tokens can be tied to real revenue in a durable way.
He gives several examples. Uniswap, he writes, is a globally recognized brand with spot volume comparable to Coinbase, yet its market capitalization is only $2.4 billion. Aave and Morpho, which he says together lead on-chain lending, also have a combined market capitalization of $2.4 billion. Hyperliquid, which he describes as one of the fastest-scaling fintech companies he has ever seen, trades at roughly 17x to 60x earnings.
He also stresses that crypto tokens are not the same as stocks. Token holders do not have a legally protected claim on cash flow, and revenue distribution rules depend on community governance, which can change. Investors, he says, still need to weigh crypto’s unique advantages against its distinct risks.
Still, Hougan’s core argument is that the link between protocol revenue and token value is getting stronger. If that continues and the market reprices accordingly, he says crypto asset valuations could double or rise even more. For years, the lack of cash flow was one of the strongest bearish arguments against the sector. In his telling, that same issue may soon become one of its strongest supports.
