If HYPE and PUMP were stocks, they would both be undervalued.

Author: Jeff Dorman, CFA

Compiled by: Deep Tide TechFlow

Revealing the disconnect between fundamentals and price

In the field of cryptocurrency, there are currently only three areas that consistently maintain growth: Stablecoins, Decentralized Finance (DeFi), and Real-World Assets (RWAs). Moreover, these areas are not only growing but are showing explosive growth trends.

Please see the following chart:

The growth of stablecoins (click to see more growth data):

The growth of DeFi (click here for more data: here, here, and here):

Growth of Real World Assets (RWA) (click to see more data):

These are the applications that should be widely recognized in the cryptocurrency industry. The charts showing these growth trends should have appeared on CNBC, in The Wall Street Journal, and in Wall Street research reports, and should be prominently displayed on every cryptocurrency exchange and crypto price page. Any objective growth-oriented investor seeing the growth in stablecoin assets under management (AUM) and trading volume, the expansion of RWAs, and the booming data of DeFi will inevitably ask, “How should I invest in these areas?”

The growth trends in these industries invariably show an “upward and to the right” trajectory. Apart from stablecoins, all these fields can be easily invested in via tokens (such as HYPE, UNI, AAVE, AERO, SYRUP, PUMP, etc.). These decentralized applications (dApps) now account for over 60% of the total revenue in the crypto industry, yet the underlying tokens of these applications only make up 7% of the total market capitalization of the crypto market. Read that sentence again; it's simply hard to believe.

Nevertheless, the media and exchanges continue to focus their attention on Bitcoin and memecoins. Most investors still associate cryptocurrencies with Bitcoin (BTC), Layer-1 protocols (such as ETH, SOL, and AVAX), and memecoins. However, the market has clearly shifted towards focusing on income and profits, yet many still fail to understand that tokens are actually excellent tools for capturing value and distributing profits.

Our industry has failed to attract fundamental investors who value high cash flow and sustained growth, despite this investor group being the largest and most important globally. Instead, for some unknown reason, the industry has catered to the smallest and most irrelevant investor groups (such as tech venture capital and fast money macro/CTA funds).

Worse still, many people still believe that investing in stocks gives you some legal claim to the company's cash flow, whereas investing through tokens provides no ownership at all. I have pointed out this double standard between equity investors and crypto investors for over six years. As a shareholder in a company, have you ever decided how the company spends its cash? Of course not. You cannot control how much the company pays its employees, its R&D expenditures, whether it makes acquisitions, whether it buys back stock, or pays dividends. All of these are completely decided by the management. As a shareholder, the only legal rights or protections you actually have are:

When the company is sold, you have the right to receive the corresponding profits (this is very important).

After the company goes bankrupt, you have the right to receive the remaining assets after debts are deducted (but this is almost always insignificant, as creditors usually receive all of the restructured equity, while shareholders get almost nothing).

You have the right to participate in the battle for proxy rights, by joining the board to overthrow the management (but this also applies in the crypto space – over the past 8 years, Arca has led three token activist movements, successfully forcing crypto companies such as Gnosis, Aragon, and Anchor to make changes).

Ultimately, whether as a shareholder or a token holder, you are subject to the management's decisions on the use of cash flow. Whether it's stock or tokens, you always rely on management to decide how to utilize the company's cash flow, such as whether to conduct buybacks, except in the case of acquisitions. There is no essential difference between the two in this regard.

Hyperliquid (HYPE) and Pump.Fun (PUMP) have demonstrated market appeal based on real yield and burn mechanisms to capture value. Many established projects, such as Aave, Raydium, and PancakeSwap, have also integrated similar mechanisms. Last week, Uniswap (UNI) became the focus of the news for finally launching the “revenue sharing” feature, which allows UNI holders to share a portion of the protocol's income.

Once again, it is proven that the market is undergoing changes. In just 2025, crypto protocols and companies carried out over $1.5 billion in token buybacks, with 10 tokens accounting for 92% of the total buybacks. (However, we believe that the ZRO data in this article is incorrect, and the buyback amounts for HYPE and PUMP are much higher than the levels shown in the data.)

To better understand this phenomenon, the total market capitalization of the entire liquidity crypto market (excluding Bitcoin and stablecoins) is currently only $1 trillion. The $1.5 billion token buyback amount accounts for only 0.15% of the total market value. However, if we look at those tokens with the largest buyback amounts individually, the buyback amount can account for as much as 10% of their market value. In contrast, the total stock buybacks in the U.S. stock market this year are approximately $1 trillion, which is 1.5% of the $67 trillion market capitalization.

The cognitive gap regarding crypto investment and value capture is very significant. On one hand, it can be said that most tokens have no investment value at all; on the other hand, the highest quality tokens are severely undervalued, likely due to the drag of inferior assets. The result is that, in many cases, the growth and revenue metrics of projects are on the rise, while token prices are declining. Among the three fastest-growing industries that contribute the most revenue and buybacks, many top tokens are performing exceptionally poorly.

The problem still exists: why haven't more leaders in the cryptocurrency industry focused on promoting those areas that truly drive growth? Shouldn't this industry showcase the tokens in these areas, highlight their outstanding tokenomics, and explain to investors how to invest in them? Investors need to understand that there is logic and fundamentals behind crypto investments, so they will be willing to take the time to study these investments. If we want quality tokens to outperform inferior ones, we must start educating people on how to identify quality tokens.

A few years ago, there were almost no cryptocurrency products that could generate significant income. Today, many projects not only create considerable revenue but also use a large portion of it (sometimes as high as 99%) for token buybacks. Moreover, the trading prices of these tokens are extremely low compared to traditional stocks. In fact, these tokens are essentially stocks, just lacking an educated and committed group of buyers.

So, if these assets are indeed stocks, at what price would they trade? If investors could understand the difference between these income-generating tokens and “cryptocurrencies” or “smart contract protocols,” at what price would they trade?

Let us illustrate with the two best cases in the market:

Hyperliquid (HYPE) and Pumpfun (PUMP)

Hyperliquid has already become a leader in decentralized perpetual contract exchanges, with almost all indicators showing that this company is growing rapidly and steadily.

Trading Volume Growth:

Source: Artemis

Cost:

Source: Artemis

Due to the increase in trading volume and fees, Hyperliquid has become one of the cheapest tokens under traditional valuation models. HYPE's annual revenue is $1.28 billion (based on the past 90 days' performance), with a price-to-earnings (P/E) ratio of only 16.40 times, and a year-on-year growth of 110%. Even more impressive is that the project uses 99% of its revenue to buy back tokens. So far, HYPE has repurchased over 10% of the circulating tokens (HYPE has repurchased tokens worth $1.36 billion). This is not only one of the most successful cases in crypto history but also in the history of the overall financial market.

In comparison, the price-to-earnings ratio (P/E) of the S&P 500 is about 24 times, while the Nasdaq is about 27 times. Coinbase has a P/E ratio of about 25 times, while Robinhood (HOOD) has a P/E ratio as high as 50 times, but its revenue is only 2 times higher than HYPE (around $2 billion, while HYPE is $1 billion).

HYPE's growth rate has been faster from the beginning of the year to now (110% compared to Robinhood's 65%).

In addition, Hyperliquid is also a Layer-1 protocol, a feature that has not yet been fully priced in by the market. Currently, the market still views HYPE simply as an exchange.

More importantly, every dollar of revenue from HYPE is distributed to token holders through buybacks, while Robinhood has neither a buyback plan nor a dividend policy.

This either means that the market expects Hyperliquid's growth to slow significantly and lose market share, or that the market is overlooking certain key factors. The valuation of HYPE being lower than Robinhood (HOOD) is somewhat reasonable: the HYPE token was only launched a year ago and faces fierce competition, while digital assets generally lack a clear moat. However, HOOD's price-to-earnings ratio is 5 times that of HYPE, while growing at a slower pace and with lower profit margins, making this gap seem overly exaggerated. This is more likely due to the maturity of stock investors being far higher than that of crypto investors, rather than an issue with the assets themselves.

In any other industry, if you see the situation shown in the image below—continuous growth in profits while prices are falling—you might not hesitate to invest all your funds into this investment.

Source: Skewga

Now let's take a look at Pumpfun (PUMP). Similar to Hyperliquid, the business model of Pumpfun is also very simple and clear. Pumpfun helps token issuers launch tokens and charges fees through the issuance of tokens and subsequent transactions.

This is also one of the most successful cases in the history of cryptocurrency, with past revenues exceeding 1 billion dollars.

Source: Blockworks

The PUMP token had its initial coin offering (ICO) earlier this year at a price of $0.004. Although the maximum supply is 1 trillion tokens, only 590 billion are currently in circulation. In less than four months, Pumpfun has repurchased 3.97 billion PUMP tokens, using 99% of its revenue for token buybacks. Based on adjusted market capitalization, PUMP's price-to-earnings ratio is only 6.18 times (with all profits used for buybacks).

Source: Blockworks

Frankly, we have never seen companies like Pumpfun and Hyperliquid grow so rapidly, let alone that they use almost all of their free cash flow to give back to investors. These are some of the most successful cases in investment history, and also the most outstanding tokens in crypto history.

If these were stocks, their trading prices would be at least ten times higher, if not more. But unfortunately, the investor base is not yet mature. Therefore, those who can recognize this value can only choose to wait. The problem lies not in these assets themselves, nor in the mechanism of value transfer.

Education is the main issue.