- Greenfield identifies three key metrics—protocol fees, total value locked, and revenue—that more accurately explain DeFi project valuation changes.
- These fundamental indicators outperform models based on Bitcoin, Ethereum prices, or social media sentiment at three- and six-month horizons.
- Short-term valuations (one month) show less correlation to fundamentals and more to market prices of major cryptocurrencies.
- Additional metrics, such as decentralized exchange volume, active users, transactions, and treasury value, have some impact but less explanatory power.
- The findings suggest the DeFi sector is maturing and not purely driven by hype.
A Berlin-based venture firm, Greenfield, has presented research indicating that decentralized finance (DeFi) project valuations can be better understood through three main metrics: the fees generated by a protocol, its total value locked (TVL), and its revenue. This study, covering the period from 2021 to 2025, suggests that investors who focus on these indicators can more accurately predict which projects will succeed.
The analysis finds that models relying on these fundamental metrics outperform those tracking Bitcoin and Ethereum price movements or social sentiment factors, such as follower counts on platforms like X, especially at three- and six-month intervals. However, over shorter time frames like one month, the explanatory power of fundamentals declines, and prices tend to follow broader cryptocurrency trends instead.
“The longer you give the market to play out, the more you actually see that there is a divergent performance based on fundamentals versus just everything being correlated to broader market moves,” said Felix Machart, a partner at Greenfield and co-author of the research, as mentioned in the article.
The firm also emphasizes the need for investors to recognize temporary activity spikes caused by token incentives and to assess the defensibility of products amid increased competition. Additional metrics including token trading volume on decentralized exchanges, daily active users, transaction counts, and the protocol’s treasury values were noted to have some relevance but less influence on valuation changes.
Unlike traditional corporations, DeFi protocols operate in a decentralized manner, which affects how value is created for investors. For instance, buybacks and yield from staking tokens can be considered forms of revenue since they benefit token holders directly.
The research underscores the maturation of DeFi markets, indicating that valuations are becoming more aligned with fundamentals rather than being solely driven by hype or short-term sentiment. The report concludes with suggestions for expanding the data set and incorporating more on-chain analytics for future studies.
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