After sharing my attempt to evaluate crypto projects using future free cash flow, many readers left comments sharing their views.
A common view was:
Using this method to evaluate projects in the crypto ecosystem, almost no projects have value.
Broadly speaking, I also somewhat agree with this perspective.
However, I still want to specifically point out: The crypto ecosystem does indeed have some quite good projects that are currently generating free cash flow, and I also believe will continue to generate free cash flow in the future.
Uniswap, Aave, MakerDAO, Compound and others are projects that I consider quite good.
Although their revenues cannot yet compare with traditional good enterprises, they started generating profits and net income very early. In the emerging crypto ecosystem, achieving this is already remarkable, and in my view, they can be considered rare valuable projects.
Of course, I'm not saying these are the only projects in the ecosystem, but among the projects I follow, I am more appreciative of these.
For example, in the DEX track where Uniswap operates, I believe that as we move forward, it will become an essential need in the crypto ecosystem, and this track is large enough to accommodate a certain number of competitors, so I believe Uniswap's future can still generate good free cash flow.
Specifically for the Uniswap project, I actually think the biggest factor affecting its future free cash flow is whether it has a sufficiently deep moat.
Regarding this point, I have also shared my view in previous articles: I believe that although Uniswap currently has certain advantages, how long these advantages can be maintained is hard to say. For instance, in the BASE ecosystem, its advantage is not as strong as Aerodrome's, and its moat may not be that deep.
Not just Uniswap, but Aave, MakerDAO, Compound and others I believe have similar issues, because the core competitiveness they currently possess is having sufficiently deep liquidity on certain tokens. However, for new tokens that may emerge in other ecosystems (such as Ethereum Layer 2 expansions), I am skeptical whether they can quickly establish such deep liquidity.
Besides the moat-related issues, I believe there is another more universal and deeper problem. It plagues the entire crypto ecosystem: their token attributes remain undefined.
I'll continue to use Uniswap as an example.
I previously wrote in an article that if the UNI token Uniswap currently issues were not just a governance token, but had clear equity attributes like a stock, I would likely buy some. I even considered finding ways to buy 51% of the circulating UNI tokens from major holders.
This way, I would forcibly require Uniswap to distribute a portion of the nearly $5 billion in net profits they've received over the years as dividends, obtaining real, tangible returns.
Unfortunately, this idea is purely a fantasy in the current scenario.
Even if I bought all these tokens, using governance voting to forcibly demand that the project team pay dividends, they could simply choose not to comply, and I would have no recourse.
The ideal implementation would be for these rights to be written into the smart contract, strongly bound to the project token at the code level. This way, once the contract is executed, the rights would take effect, completely unaffected by human factors. This would achieve "code is law" in the realm of rights exchange.
Back to reality, in the current crypto ecosystem, only COINBASE can perform this operation. Investors can acquire these rights by purchasing COINBASE stocks in the secondary market. However, buying and selling COINBASE stocks is too complex, requiring oversight from too many centralized institutions, making operations inefficient. Additionally, in my view, COINBASE's current price is far above its intrinsic value. So I would not buy its stocks at this time.
Only when truly equity-attributed tokens emerge in the crypto ecosystem will tokens from projects like Uniswap that have already realized value truly reflect their intrinsic value.
At that time, if these tokens can be traded freely and without permission on decentralized exchanges, the game will become very exciting.
