Ryan Watkins, co-founder of Syncracy Capital, argues that crypto is emerging from a years-long valuation reset in which expectations once priced into tokens are being replaced by scrutiny of revenue, product use and cash generation. In his view, the change is being reinforced by the arrival of Wall Street and Silicon Valley firms building production-grade blockchain products, often on public networks, as regulatory conditions become less restrictive.
Watkins frames the transition as a break from the 2021 market, when token prices frequently reflected anticipated adoption far more than established business fundamentals. He pointed to decentralized-finance “blue chip” projects that reached price-to-sales ratios of 500 times, alongside a period in which eight smart-contract platforms were each valued above $100 billion.
Bitcoin’s relative performance also illustrates the scale of the reset, according to Watkins. He said Bitcoin has not set a new high against gold since 2021 and has declined against the precious metal over that period, despite its position as the largest crypto asset.
A market still dealing with structural problems
Watkins attributed the weak performance of many tokens to structural problems that became clear near the beginning of the current cycle. Many protocols generate revenue that is closely tied to rising asset prices and trading activity, making their earnings highly cyclical and difficult to forecast through market downturns.
Regulatory uncertainty has added another obstacle, particularly for projects trying to determine whether a token can distribute value to holders without creating securities-law risks. The sector has also had to contend with ownership structures in which venture-backed companies retain equity while community members hold a separate token, creating potential conflicts over where revenue, governance rights and long-term value should sit.
Disclosure remains uneven across the market. Public companies operate under established reporting rules, while many token projects provide a patchwork of treasury dashboards, governance posts, blockchain data and informal updates. Watkins said better third-party data services are beginning to narrow those information gaps, though the quality and consistency of disclosure remains far from uniform.
A lack of common valuation tools has compounded the problem. Traditional equity analysis can use revenue, margins, earnings and discounted cash flow, while tokens may carry combinations of governance rights, fee claims, network utility and speculative demand. In many cases, the connection between a protocol’s activity and its token price has remained weak or undefined.
Product use has expanded beyond token trading
Watkins said the sector has nevertheless created several on-chain applications that continue to grow regardless of sharp swings in token prices. These include peer-to-peer internet-based systems that execute transactions and contracts without a central corporate or government intermediary.
Digital dollars, commonly known as stablecoins, are among the clearest examples. They can be held and transferred globally through blockchain networks, giving users a dollar-denominated settlement asset that operates outside conventional banking hours. Their use spans trading, payments, remittances and movement of collateral between blockchain-based applications.
Permissionless exchanges are another category Watkins highlighted. These platforms allow users to trade through smart contracts in a single transparent venue that can operate continuously. Their design differs from conventional market infrastructure by making liquidity, transaction rules and on-chain settlement visible to participants, although users remain exposed to smart-contract and market risks.
He also pointed to event contracts and perpetual swaps as newer derivatives products gaining traction on blockchain infrastructure. Perpetual swaps are futures-like contracts without a fixed expiry date, while event contracts let participants take positions on defined outcomes. Alongside them, blockchain-based collateral systems aim to reduce counterparty exposure by automating margin and settlement processes.
Other use cases cited by Watkins include low-cost systems for issuing digital assets, open fundraising mechanisms that reach capital beyond local markets, and decentralized physical infrastructure networks. In the latter model, distributed participants fund or operate real-world resources such as wireless networks, storage or computing capacity and receive token-based incentives.
Token models are being reconsidered
The reset has pushed founders to reconsider token economics, Watkins said. Some projects are trying to consolidate assets, revenue and governance around a single token rather than splitting value between corporate equity and a separately issued network asset.
Others are exploring a clearer division: on-chain revenue could accrue to token holders, while off-chain commercial revenue remains with the equity-owning company. Such structures may be easier to evaluate than models in which token holders fund network growth but lack a defined relationship to the economic activity they help create.
Watkins said an emerging valuation discipline is centered on cash flow. His rule of thumb is that 99.9% of crypto assets should generate cash flow, with Bitcoin and Ethereum treated as exceptions because markets may value them principally as stores of value or foundational network assets. He added that some analysts are limiting long-term growth assumptions to 20% annually or less, a more restrained approach than the projections common during the previous bull market.
Incumbents could intensify the shakeout
The entry of large financial and technology firms could increase pressure on smaller projects, Watkins said. Established companies bring distribution, capital, compliance teams and existing customer relationships, which can make it harder for lightly resourced token networks to compete on products that are becoming more standardized.
That competition could leave a smaller group of native crypto projects able to dominate specialized markets where decentralization, open access or on-chain composability offers a genuine advantage. It could also expose projects whose activity depends mainly on token incentives rather than durable demand.
Watkins expects more failures as the sector matures, citing the high failure rate associated with technology startups. His assessment rejects the idea that every token requires a direct payout mechanism, but it places growing pressure on projects to explain who uses their product, how it earns revenue and whether token holders have a credible economic claim on the network they support.
For a deeper look at utility-focused projects and token value, explore our top 5 utility altcoins guide.
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