Skip to main content

Data suggests Uniswap is 36% overvalued and SushiSwap trades at a discount

An exchange token valuation methodology suggests that SUSHI trades at a 33% discount and that UNI price is 36% overvalued.

Just looking at Binance Coin's (BNB) reported market capitalization, one might conclude that the token is the dominant asset when compared to other exchange tokens.

Although there is no direct relationship between Binance's exchange volume (or revenue) and token economics, traders seem to use it as a proxy. The controversial burn mechanism has been losing impact since April 2019, when the exchange changed the BNB whitepaper. 

Initially, the whitepaper proposed a plan where BNB tokens equivalent to 20% of the exchange's profit would be bought under a "repurchasing plan", but the new version scrapped that plan.

Exchange tokens market cap and volume. Source: Messari Screener and CoinGecko

However, excluding the 60 million BNB that have never been in circulation drastically changes the outcome because these excess tokens are meant to be burned over time.

The remaining exchange tokens are inflationary, meaning the issuing rate is very steep. For example, Uniswap (UNI) has 611 million tokens in circulation, but that number is expected to reach 1.14 billion in 10 years.

BNB price (above) and Binance exchange daily volume (below). Source: TradingView and Nomics

How BNB differs from the other exchange tokens

BNB has an actual use case apart from trading fee rebates, and it is the primary asset pair on the Binance Smart chain. BNB captures a portion of the $17 billion total value locked in the BSC smart contracts, and it has decent market share and representation on decentralized exchanges. As a result, the network creates perpetual demand for BNB.

Based on these simple figures, should analysts discount BNB's value by 50% compared to other exchange tokens? As mentioned earlier, the market appears to be pricing BNB based on Binance exchange's volume, and thus it makes sense to use that as a valuation proxy.

Uniswap has been averaging $1.63 billion daily volume, although it offers exclusively spot markets. Hence, the figure is comparable with Binance's $24.3 billion average, not factoring derivatives markets.

Using Uniswap's 93.3% lower volume, the gross estimate accrues a $10.3 billion market capitalization based on 50% of BNB's reported $76.7 billion. Thus, the prediction comes out 36% below UNI's actual data.

PancakeSwap, the leading Binance Smart Chain's DEX, has been handling a $750 million in daily volume. Using the same 50% of BNB's market capitalization methodology, CAKE's estimated valuation should be $4.73 billion, which is surprisingly in line with the current figure.

FTX and SUSHI are trading at a discount

Moving to a centralized exchange, FTX has amassed $1.7 billion in daily volume, including derivatives markets. Consequently, the indicator can be compared to Binance's $54 billion average. Despite its 96.8% lower volume, FTX's gross estimate valuation is $4.83 billion — 11% below the actual number.

Using Huobi's adjusted $5.4 billion volume and Binance's entire $54 billion daily average volume, including its derivatives products, results in a $15.34 billion estimated valuation. When considering Huobi Token's unprecedented inflationary model, applying a heavy discount for the reported market capitalization makes sense.

Lastly, Sushiswap aggregates a daily $305 million transaction volume. Considering Binance's $24.3 billion spot-only data, the same estimate yields a $1.92 billion valuation roughly 33% above the actual figure.

It is worth noting that this estimate does not imply an investment recommendation. This unrefined and primitive methodology simply aims to show that traders are effectively using exchange volume as a proxy for native token valuation.

While this may have worked in the past, the current regulatory, KYC, and removal of leverage trading options at centralized exchanges could impact the efficacy of this analysis method in the future.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.



from https://ift.tt/2WHwNAP
https://ift.tt/3zFaHxO
Labels:

Comments

Post a Comment

Any questions, Please.

Popular posts from this blog

Five Bitcoin Price Charts Analyzing The Dramatic Q1 2022 Conclusion

There are only hours remaining until the Q1 2022 close in Bitcoin price action. With the important quarterly candle set to close tonight, let’s look at what technicals might say about the direction of the next quarter. Q1 2022 Comes To A Close For Bitcoin The first quarter of a year, often sets the tone for the year to come. In investments, a poor Q1 performance is indicative of a bad year ahead. Considering the fact that Bitcoin price is now above $45,000 after touching $32,000 this quarter, it is tough to say the performance has been “poor” by anything other than crypto standards. Related Reading | Bitcoin Weekly Momentum Flips Bullish For First Time In 2022 The cryptocurrency has recovered nearly 40% from the low, leaving a long wick behind. Such a long wick suggests that before the quarter came to a close, buyers stepped up in a major way. Buyers were able to step up in a larger capacity in Q1 2022 than bears were able to in the final quarter of last year. The bearish wick to cl...
Post a Comment
Read more

FTX hacker reportedly transfers a portion of stolen funds to OKX after using Bitcoin mixer

On-chain activity suggests that the hacker has sent at least 225 BTC (4.5 million) to OKX so far. Hackers who drained FTX and FTX USA of over $450 million worth of assets just moments after the doomed crypto exchange filed for bankruptcy on Nov. 11, continue to move assets around in an attempt to launder the money.  A crypto analyst who goes by ZachXBT on Twitter alleged that the FTX hackers have transferred a portion of the stolen funds to the OKX exchange, after using the Bitcoin mixer ChipMixer. The analyst reported that at least 225 BTC — worth $4.1 million USD — has been sent to OKX so far.  1/ Myself and @bax1337 spent this past weekend looking into the FTX attacker’s deposits to ChipMixer. It appears they’ve likely been transferring a portion of the stolen FTX funds to OKX after withdrawing from CM So far we’ve accounted for at least $4.1m (255 BTC) sent to OKX pic.twitter.com/C46JZWtktn — ZachXBT (@zachxbt) November 29, 2022 According to ZachXBT, the FTX h...
Post a Comment
Read more

2 metrics signal the $1T crypto market cap support likely won’t hold

Despite the 8.5% weekly rally in cryptocurrencies, the lack of stablecoin premiums in Asia and futures markets activity shows buyers’ lack of confidence. Cryptocurrencies broke the $1 trillion market capitalization resistance on Oct. 26, which had been holding strong for the previous 41 days. Despite Bitcoin’s ( BTC ) modest 5.5% weekly gains, the aggregate value of 20,000 listed tokens increased by 8.5% between Oct. 24 and 31. Total crypto market cap, USD (in billions). Source: TradingView The cryptocurrency market was positively impacted by a 6.3% weekly rally in the Russell 2000 mid-capitalization stock market index. Some encouraging news accompanied the positive tailwinds from traditional markets. For instance,  55,000 BTC was withdrawn from Binance on Oct. 26, a record high. Typically, analysts consider the reduced number of coins deposited on exchanges a bullish indicator, as the immediate selling pressure eases. Moreover, exchange and wallet provider Blockchain.com ...
Post a Comment
Read more