Crypto traders are placing greater weight on revenue, profitability and token-holder value capture after a bruising market cycle exposed the limits of narrative-driven valuations, according to research notes by DeFiLlama researcher Kyle.
The screening approach favors projects whose tokens have a defined claim on economic activity, manageable supply dynamics and products that generate sustained demand. It marks a departure from the model that dominated much of the previous cycle, when low circulating supply, high fully diluted valuations and lengthy token-unlock schedules often supported prices before protocols had established viable businesses.
Kyle’s notes frame the change against the backdrop of the record liquidation event on Oct. 10, 2025, following a period that included heavy speculation around a Trump-themed token and growing attention on digital-asset treasury companies. The account describes crypto prices remaining weak even as U.S. equities advanced, while project closures, DeFi exploits and withdrawals by professional capital managers added pressure across the sector.
The result, Kyle argues, is a sharper divide between tokens linked to operating platforms and assets traded primarily on stories, communities or short-lived market themes.
Revenue alone does not settle the token question
A protocol can produce meaningful revenue without creating value for its token holders. That distinction sits at the center of the framework.
Kyle identifies three questions for evaluating a token: whether holders can participate in a project’s business value, whether its product has market demand and can operate profitably, and whether circulating supply and future selling pressure are under control.
The model addresses a recurring problem in crypto markets: a protocol’s economic upside may accrue to a separate company, shareholders, insiders or service providers rather than the token used for governance or utility. In those structures, rising fees or user activity do not automatically translate into a reason to own the asset.
The notes describe crypto as a “lemons market,” borrowing the economic term for markets where buyers struggle to distinguish quality assets from poor ones because reliable information is scarce. High fully diluted valuations, thin initial token floats and multi-year unlocks can worsen that problem by masking potential sell pressure until it reaches the market.
Disclosure is another dividing line. Kyle favors projects that offer regular, formal communication comparable to public-company investor-relations practices, although the focus is less on polished presentations than on information allowing holders to assess revenue, spending, supply changes and governance decisions.
Buybacks also feature in the framework, though the notes treat them mainly as a signal of alignment unless they are large enough to materially affect supply. A buyback program funded by protocol revenue can demonstrate that a team recognizes token-holder value capture as a design goal, but small purchases alone do not resolve weak demand or excessive emissions.
Ethena’s changes put token economics under scrutiny
Ethena’s ENA token is presented as a case study in how changes to token economics can reshape market perceptions. According to the notes, ENA gained 95% over the preceding 14 days after a series of measures aimed at tightening the connection between the protocol’s growth and the token.
Those measures included repurchasing ENA from early holders who had sold, proposing automated token buybacks tied to revenue, and ending a monthly venture-capital unlock schedule by releasing unvested allocations. Ethena also moved protocol intellectual property under a foundation governed by token holders, a structure intended to align token-holder and shareholder claims.
The changes address several concerns common to token markets. Ending future unlocks could remove a predictable source of selling pressure, while revenue-funded buybacks would give holders a more direct connection to the protocol’s economic performance. Placing intellectual property under token-holder governance would also reduce the risk that the protocol’s core assets sit outside the reach of the token community.
Kyle similarly identifies Hyperliquid’s HYPE as an earlier example of a token with a clearer route toward value capture and an investment case suited to gradual accumulation rather than short-term narrative trading.
Perpetual exchanges and stablecoin-linked exposure lead the framework
Perpetual futures decentralized exchanges rank as crypto’s closest product-market fit segment in the notes, based on their user activity, volumes and fee generation. The next growth phase may depend less on building new trading venues and more on distribution through retail-broker-style applications similar to Robinhood and Interactive Brokers.
Kyle lists LIT and HYPE as preferred exposure within that category. The argument relies on the view that trading products with repeat use and established fee models can be assessed more directly than early-stage protocols whose revenue remains hypothetical.
Stablecoins remain crypto’s most successful product category, according to the notes, but their largest issuers offer limited direct token exposure. Tether and Circle do not have on-chain tokens designed to pass business upside to holders, leaving traders unable to use USDT or USDC as a straightforward claim on issuer growth.
USDE is listed as a preferred alternative because the notes see a closer relationship between Ethena’s growth and token-holder economics. Kyle also cites an increase of more than $1 billion in USDe circulating supply after the launch of a new digital-bank product, although the notes do not establish whether that expansion will be sustained.
AI inference and tokenized assets offer different growth cases
Among crypto-native sectors, Kyle ranks AI inference as the only theme with demand outside the digital-asset industry. Inference refers to serving requests to trained AI models and returning outputs, such as generated text, images or software code.
The notes link this demand to the Jevons paradox: lower costs can increase total consumption by making a service accessible for more uses. As inference becomes cheaper, applications may call models more frequently or use them in products where costs were previously prohibitive.
VVV and ORBIO are named as top AI-inference picks, with NEAR and CHIP also included as options. The framework does not suggest that an AI label alone is enough; the test remains whether a network serves paying demand and routes economic value to the token.
Tokenized equities and real-world assets represent the largest addressable market in the notes. Kyle compares roughly $300 billion in stablecoins and about $2.5 billion in tokenized stocks with a U.S. equity market valued at $69 trillion. BP is listed as the preferred exposure in this category.
Smaller tokens face a tougher credibility test
The notes argue that AI-assisted development has made rapid launches and polished interfaces easier to produce, reducing their value as signals of project quality. That raises the risk of adverse selection in smaller-cap tokens, where a large number of projects can appear quickly with limited operating history.
Kyle argues that screening 100 tokens above $1 billion in market capitalization is more practical than evaluating 10,000 tokens below $10 million, where launches can arrive hourly. The point is not that large-cap assets are inherently sound, but that the available information, liquidity and operating record are often easier to assess.
The notes list ZEC as the preferred privacy-focused asset, while stating that Kyle holds no ZEC position.
On-chain applications generated a record $467.66 million in combined user fees during September 2026, according to the supplied notes. That figure supports the underlying premise of the framework: users will pay for applications that solve practical problems, but fees become durable token value only when governance, supply and ownership structures allow holders to benefit from the business they help fund.
Explore how regulation and macro trends shape crypto beyond narratives in Crypto and DeFi in 2025.
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