Best P/E in DeFi - appliance Token terminal

General Chat
1

Dear Comm,

By my calculations YFI at current price has by far the best Price / Earnings or Price to Cashlow ratio within DeFi.

YFI staked entitles you to fees generated by the protocol. This is currently about 30% APR. Which givesd a P/E ratio of a little under 3.5. This is very high by traditional standard and within crypto it is absurdly high. Aka YFI is very cheap.

In comparison peers have:
Bancor: 42
Balancer: 49
Kyber: 74
Ethereum: 116
Ox: 207
Maker: 500

The measure is by no means perfect, nor is the same kind of cashflow measured per project. But it’s a nice way of comparing.

The platform Token Terminals is tracking these ratios. I think it would be nice for YFI to apply. It would look very good on that list and makes for nice exposure. I think most people are still sleeping on how cheap $YFI is and how good it compares to its peers.

https://www.tokenterminal.xyz/#

We need to apply the following information. I want to appeal to the community to populate the needed information. Once we agree on everything I can submit the form:

1.A) How do you calculate the protocol fee (constant, a weighted average, etc.)?

Example answer: (Constant: 0.3%.)

Our answer:

1.B) Please provide the URL to the best possible confirmation source (contract addresses/subgraph queries/proprietary APIs, etc.).

Example: https://github.com/Uniswap/uniswap-v2-core/blob/1136544ac842ff48ae0b1b939701436598d74075/contracts/UniswapV2Pair.sol#L180

Our answer:

2.A) What is the protocol fee charged on (total borrows, trade volume, loans issued, etc.)?

Example answer: Trade volume.

2.B) Please provide the URL to the best possible confirmation source (contract addresses/subgraph queries/proprietary APIs, etc.).

https://thegraph.com/explorer/subgraph/uniswap/uniswap-v2 (with the following query: https://gist.github.com/rbval/d4194a95be92c969b059279bb96612a4)

3.A) How much of the protocol fee goes to the supply-side?

Example answer: Currently: 100%. Planned: 83.3%.

Our answer:

3.B) Please provide the URL to the best possible confirmation source (contract addresses/subgraph queries/proprietary APIs, etc.).

Example answer:
https://github.com/Uniswap/uniswap-v2-core/blob/1136544ac842ff48ae0b1b939701436598d74075/contracts/UniswapV2Pair.sol#L180

4.A) How much of the protocol fee goes to the protocol?

Example: Currently: 0%. Planned: 16.7%.

Our answer:

4.B) Please provide the URL to the best possible confirmation source (contract addresses/subgraph queries/proprietary APIs, etc.).

Example answer:
https://uniswap.org/docs/v2

Our answer:

Let’s get YFI further out in the world, thanks!

2 Likes
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While I think tracking YFI there is a fine idea, anyone seriously looking at P/E ratios would want to estimate a normalized ratio, since the current numbers are massively skewed by the ongoing yield farming boom. Also, whoever computed P/E for Ethereum is confused, since transaction fees go to miners, not ETH holders, so E = 0.

1 Like
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Fully agree, Normalized ratios would be nice. But this is a start in a shift of valuing projects on fundamentals. Not just promises and ideas.

As per ETH, its still earnings generated on the ETH platform. It’s like a company that doesn’t pay any dividend to its shareholders, the earnings ratio is still real. Ideally in ETH 2.0 shareholders will get more of the fees. Imo this is more a issue of adding additional ratios. Such as % paid as dividend etc. Which would indeed favor platforms like YFI even more and platforms that distribute fees to miners even worse.

I think the guys of token terminal are working on a better version of their platform to improve the ratios and add new ratios.

4

The ETH situation is akin to a real estate company including its tenants’ earnings in its own P/E calculation, because they are in its “platform” (property). In reality, there is no claim to those earnings at all, because they belong to a different party (tenant/miner). Maybe in ETH 2.0 it will actually be as you describe, but right now, that method of calculation is nonsensical.

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Company earnings rarely go 100% to shareholders.

It’s spent over a variety of verticals including employees, management, research and development, capex.

I think the miners are more akin to capital investments into network security AKA all earnings are reinvested into network security.

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That is a fair comment, but normally one uses net earnings for a company. If miner rewards are a cost, they should be deducted from gross earnings. It’s hard to argue they are purely an investment, since the network would not work at all without them.

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Where are those fees stored? e.g the smartcontract adres.

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it’s limiting to look at normalized p/e

look at yearn v2. can it generate 30%? almost certainly. very probably higher.

OP’s notion is correct – this thing’s undervalued like crazy

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@Tommy – where did you get the 30% from? thanks

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Took it from the numbers provided by yieldfarming.info

Basically just divides the total fees generated by the amount of YFI staked.

I have staked YFI myself for the last week and the $'s i’ve earned match the annualized APR number presented there. So the math checks out.

The APR is currently lower due to the steep increase of the YFI price.

But still the highest within DeFi. And that is combined with having one of the highest revenue growth. Not to mention all the new verticles being build on that might start to generate fee revenue. Because I think this is only the Iearn part. So still looks very attractive imo. You would be hard-pressed finding a disruptive high growth stock with that valuation. Nevermind a DeFi peer.

I will start filling the numbers once I have more data. In the meantime all info and data is welcome.

11

thanks for explaining

my hunch is that yVaults will generate at least 30% apr