Bitwise Chief Investment Officer Matt Hougan says the valuation framework for crypto assets is changing. For years, the sharpest question aimed at the industry was straightforward: blockchain technology may be novel, but does that mean the underlying token has real value?
Hougan writes that the criticism was fair. Many projects scaled quickly, attracted millions of users and generated billions of dollars in revenue, yet most of that economic value never reached the token or its holders. Even committed crypto bulls, he says, have sometimes struggled to explain why some tokens deserved multi-billion-dollar valuations.
That period is ending, in his view. Outside Bitcoin, crypto assets will increasingly be valued with tools more commonly used for stocks and bonds, with revenue taking a central role.
He argues that many projects have already moved in that direction by sending a large share of revenue back to tokenholders. Hyperliquid generated more than $800 million in revenue last year and used nearly 99% of fee income to buy back and burn HYPE in the secondary market, a structure he compares to share repurchases in public equities. Uniswap, Aave and Solana are among the projects he says are following the same path.
Yet investors broadly have not fully understood the shift, and Hougan says that is one reason crypto assets remain undervalued.
Why the market once believed crypto projects could not produce earnings
Hougan says the argument that crypto projects had no earnings power was once rooted in reality.
Bitcoin, the first and largest crypto asset, was not designed to generate cash flow for holders. It is a monetary asset, and those assets usually do not produce what he describes as productive yield. Few people ask how much income gold generates, and Bitcoin’s nature helped cement a broad assumption that the same logic applied across the rest of crypto.
He adds that regulation from 2017 to 2025 reinforced that belief. During the tenures of Jay Clayton and Gary Gensler at the U.S. Securities and Exchange Commission, the regulatory stance was strongly hostile to tokens distributing economic value to holders. In that period, the SEC commonly treated crypto projects that shared revenue with tokenholders as illegal securities offerings. Under that framework, founders could face unlimited joint liability or even criminal penalties.
As a result, nearly all new projects issued governance tokens instead. Those tokens gave holders voting rights but no direct claim on revenue. Hougan places major DeFi tokens such as Uniswap and Aave in that category.
The turn began with the Ripple case and a regulatory shift
Hougan dates the turn to July 2023, when the SEC lost its landmark case against Ripple. The agency argued that XRP was part of an illegal securities offering, but the U.S. District Court for the Southern District of New York ruled that XRP sales to retail investors did not constitute securities transactions.
He says the ruling sent shock waves through legal circles and challenged long-standing assumptions about securities law. Many expected the decision to be reversed on appeal. Instead, a series of later rulings largely favored Ripple. In August 2025, both sides dropped their appeals, formally ending the case.
By then, Paul Atkins had replaced Gensler as SEC chair and introduced a more crypto-friendly regulatory approach. Hougan says that made token-based revenue distribution viable again.
At nearly the same time, a major new project built around value capture was emerging.
Hyperliquid becomes the industry template
Hougan presents Hyperliquid as the clearest example. The decentralized exchange launched perpetual futures trading in February 2023 and later expanded into spot trading, real-world assets and prediction markets.
Since issuing its token in November 2024, it has been the best-performing major crypto asset, up about 800%, while Bitcoin fell by roughly one-third over the same period.
He says Hyperliquid succeeded for several reasons, but the main feature was its token model: around 99% of network fee revenue was used to buy HYPE on the open market. Since launch, the project has bought back and burned $1.3 billion worth of HYPE, permanently shrinking circulating supply and giving the token price direct support. For investors, that created a clearer connection between blockchain activity and token value.
Hougan says Hyperliquid has been the asset he has discussed more than any other with crypto investors over the past year.
Uniswap, Aave, shturl.c, Lighter and Layer 1 networks are adjusting too
Hougan argues that once regulation stopped treating revenue distribution as inherently toxic, and once Hyperliquid showed the model could work, other projects moved quickly.
At Uniswap, the “UNIfication” governance proposal passed in December 2025 with 99.9% support. The project then immediately burned 100 million UNI, equal to 10% of maximum supply and worth about $590 million at the time, and formally switched on protocol fees for the first time. It later burned another 7 million UNI. Hougan says annualized revenue now stands at about $100 million, all of it used to buy back and burn UNI.
Aave began using revenue in April 2025 to buy back its native token, AAVE, on a weekly basis. So far, Hougan says, the protocol is on pace to burn $30 million worth of AAVE per year, about 20% of annual revenue. In June 2026, it went a step further with “Aavenomics 3.0,” routing protocol fees and income from the GHO stablecoin into an automated buyback contract that cannot be manually overridden. Total buybacks have already exceeded 1.2% of token supply.
shturl.c moved even more aggressively. The meme-coin trading platform launched in July 2025 and began buying back PUMP within days. By April 2026, it had burned $370 million worth of tokens, equal to 36% of circulating supply. Hougan says the platform has more recently locked 50% of next year’s net income into an irreversible smart contract for buybacks and burns. Current annualized revenue stands at $328 million.
Some new projects are building value capture in from the beginning. Lighter, which Hougan describes as the fastest-growing perpetuals exchange on Ethereum, started buying back LIT with trading revenue as soon as it launched earlier this year. It has already repurchased around 6% of circulating supply and says all purchased tokens will be burned. Annualized revenue is $67 million.
The trend has also reached Layer 1 networks. The Solana community introduced proposal SGP-0003 to lower inflation and increase the scale of fee burning by as much as 14 times. Aptos raised gas fees by 10 times earlier this year to improve value capture for tokenholders. Hougan says users did not leave in large numbers. Instead, on-chain activity nearly tripled, and annual token burns rose from about 90,000 tokens to 1.9 million.
Hougan says the market still has not priced in the shift
With more than 25 years of investing experience in technology, Hougan says the pattern looks familiar. He compares it to the early years of internet platforms such as Facebook, before they had fully developed advertising models.
Back then, bears argued that platforms could not charge users or advertisers without driving people away. Bulls had to rely on softer frameworks such as traffic growth or Metcalfe’s law. Eventually, major platforms monetized successfully, users stayed, and investors recognized that profit mattered more than raw usage.
He thinks crypto may be following the same path. The change, he says, is already visible. Uniswap turned on fees in December of last year, and by July this year its DEX market share had reached a record high. Since July 1, the token has gained 35%.
Hougan argues that both DeFi applications and Layer 1 blockchains have more pricing power than the market expects. Strong brands are already established, and trust remains scarce in the industry. Over the next 12 to 24 months, he expects platforms to keep improving how much revenue they can capture.
He also says the opportunity exists because investors outside crypto still have not noticed the shift. Many continue to hold on to the old idea that crypto assets do not produce cash flow. At the same time, crypto-native investors have seen too many narratives fail in the past and remain skeptical that token value can stay linked to real revenue. In his view, that combination is what leaves valuations depressed.
Valuation comparisons and the main risk
Hougan offers several examples. Uniswap is a global brand with spot trading volume comparable to Coinbase, yet it has a market capitalization of only $2.4 billion. Aave and Morpho, another DeFi project with tokenomics optimized around value capture, lead the on-chain lending market and together are also valued at $2.4 billion. Hyperliquid, which he calls one of the fastest-scaling fintech businesses he has seen, trades at a price-to-earnings range of just 17x to 60x.
For fast-growing global platforms that are still expanding, he says those valuations look attractive.
Hougan still flags a critical distinction: crypto tokens are not the same as stocks. Tokenholders do not have legally protected claims on cash flow, and payout rules depend on community governance, which can change. Investors, he says, need to weigh crypto-specific strengths against crypto-specific risks.
If his thesis proves right, the link between revenue and token value will keep getting stronger. As the market reprices that connection, he says crypto valuations could double or rise even more. For a long time, the lack of cash flow was one of the strongest arguments against crypto. In Hougan’s view, it may soon become one of the strongest arguments in its favor.