Valuation Multiples Analysis

The measures: FDV-to-TVL, FDV-to-annualised-fees, and market-cap-to-annualised-revenue. Two denominators of value must be distinguished first, because conflating them is the most common error here. MARKET CAP counts circulating supply only; FULLY DILUTED VALUATION counts a fuller supply figure - in practice providers use MAXIMUM supply where a cap exists and total supply otherwise. This analysis takes the market snapshot's own FDV figure, and where there is none computes it as price times maximum supply, or total supply when no maximum is listed. For a token with a long emission schedule the two differ enormously, and using the wrong one flatters or penalises the asset by a large factor.

The analogy to a price-to-earnings or EV/EBITDA multiple is deliberate and imperfect. A multiple compares what you pay to some measure of what the asset is or generates, and much of its informational content comes from COMPARISON - to peers, to the asset's own history, or to a growth rate. Note that the three ratios here are not alike in kind: fees and revenue are FLOWS over a period, while TVL is a STOCK of assets deposited by other people. TVL is not something the token produces and it is not owned by holders, so FDV/TVL is closer to a size ratio than to an earnings multiple.

So the central caveat is this one. FDV/TVL under 1.5 labelled cheap, to 4 fair, above expensive, are FIXED bands rather than a peer comparison. A protocol whose entire sector trades at 8 is labelled expensive by this rule while being unremarkable in context, and a declining protocol can screen cheap precisely because the numerator is falling. Fixed bands answer 'where does this sit against a constant', which is a useful screen and a weaker claim than 'is this cheap'.

Annualising fees or revenue from a recent window assumes the recent window is representative. In a market with incentive programmes and short-lived activity that assumption is frequently wrong.