Conversation

These are awesome! As always, they absolutely shouldn't include "supply side" revenue. If CEXes tried to claim that to investors, they'd get laughed out of the room, or sued. But when DEXes do that, everyone humors them because it's too sad to realize it's actually 0 for most.

Quote Tweet

Larry Cermak

@lawmaster

Feb 24, 2021

8/ A powerful feature of this chart is that you can only filter by the protocol revenue here. SushiSwap leads the way here with $92M, followed by Curve ($60M), Maker ($50M) and Compound ($45M). This revenue usually goes to the token holders.

Show this thread

166

Replying to

and

I think the argument against this is that some projects are purely in the customer acquisition pre-revenue mode. And as long as there is an expectation of the fee being turned on at some point in the future, investors seem to not be worried based on the price action

Replying to

and

Agree with

The revenue is earned by the protocol. They have a choice to pay fees to LPs, lenders, etc The revenue market makers extract from a CEX is not controlled by the CEX. Apples to oranges.

Quote Tweet

Jeff Dorman, CFA

@jdorman81

Feb 24, 2021

Replying to @SBF_FTX and @SBF_Alameda

Incorrect. It’s not about “claiming”, it’s about metrics. Revenue is revenue. How it is distributed is cash flow / profit. Equities are valued on price / sales too even though 90% of that revenue may never make it to shareholders. Separating is great, but it’s not irrelevant

Replying to

and

don't agree in a meaningful sense: a CEX could set maker rebates to 0; then volumes would drop as would liquidity a DEX could redirect maker rebates to the token holders; then liquidity and volume would dry up

Replying to

and

Sure, but that’s an assumption. The CEX owners and DEX governors make those choices. But the revenue today is real, and token and equity market prices reflect what could be done with that revenue, not what is being done.

Replying to

and

Agree with Sam here. Supply side LPs are contractors in the protocol. They receive compensation for providing their assets.

Replying to

and

Guess what? Employee / contractor salaries are expenses. Expenses are below the revenue line. Again, I’m all for price-to-EBITDA metrics too & plenty of other ways to evaluate DeFi tokens. But the total protocol revenue is still revenue. And that revenue should not be ignored.

Replying to

and

this would be like a quant firm booking exchange fees as expenses rather than out of the top line: it's easy to generate infinite revenue if you do it!

7:30 AM · Feb 25, 2021Twitter Web App

Replying to

A lot of people assume that when Uniswap turns on the fee switch, no LPs will leave and volumes will stay roughly the same. I personally believe that the effect will be larger than people think but it’s really hard to predict exactly what will happen.

Replying to

Before UNI drop, there were LPs that told me that if Uniswap turns on the fee, they immediately stop providing liquidity because of the thin margins. Now when I asked again several months later, they say they wouldn’t leave anymore. I assume mainly because they are deep in UNI.

Show replies