REV and Related Multipliers: A New Perspective on Public Chain Valuation

This article aims to explore the real economic value of REV(, a valuation metric for this public chain, as well as concepts such as the F/R multiple that stem from it. We will provide a comprehensive interpretation of REV and dialectically consider its advantages and disadvantages, avoiding the isolated use of any single metric.

1. Interpretation of REV

) Definition of 1.1 REV

REV represents the real economic value, measuring the total fees paid by users to the public chain. It includes transaction fees within the protocol, tips outside the protocol, and MEV, comparable to the "revenue" of the public chain. The calculation formula is:

REV = Σ### fees within the protocol ( + Σ) tips outside the protocol ( + Σ) MEV (

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) Controversy of 1.2 REV

There is currently a debate on whether REV should be maximized:

• The REV maximization faction believes that it can reduce the marginal costs of the network, expand the user base, and achieve sustainable growth.
• The REV minimization principle suggests that REV will soar during speculative bubble periods and is not applicable to blockchains where REV is close to zero.

This article does not discuss this, but focuses solely on the application value of REV.

Recent features of 1.3 REV

Recent REV data shows:

• ETH dominated from 2020 to 2023
• SOL will start to lead in 2024
• The REV of TRON is quite considerable and continues to grow.

Based on data from the past three months, SOL, TRON, and ETH are the leaders of REV.

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A significant feature of REV is the substantial increase in the impact weight of non-user-side income factors, such as Solana's MEV, which has significantly enhanced its REV.

) Pros and Cons of 1.4 REV

Advantages:

• More difficult to manipulate than the number of active addresses and transaction volume.
• Can reflect the historical activity level of retail investors across various chains.

Disadvantages:

• Has lagging characteristics
• Cannot fully reflect the complete picture of the public chain.
• Possibility of being manipulated
• In some cases, MEV and REV can be significantly higher than the average.
• REV may lead to unfair valuations on public chains where MEV infrastructure is not mature.

Overall, REV should be viewed dialectically and not used in isolation.

2. F/R Multiplier: Combining FDV Valuation Method

F/R multiplier = FDV / REV

Similar to the price-to-earnings ratio (P/E), it measures the premium level of market valuation for a project. The larger the F/R multiple, the greater the potential valuation bubble and the more optimistic the market expectations; conversely, it may represent relative undervaluation.

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It can be seen from the data:

• BTC has the highest F/R multiplier, reflecting long-term narratives and liquidity premiums.
• The low F/R multiples of SOL and Tron may indicate stronger income potential or more reasonable valuations.

Market capitalization can also be used instead of FDV to construct MC/R or M/R multiples, which are more suitable for assessing short-term market pricing efficiency.

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3. The Difference Between REV and MEV

Although MEV is a component of REV, the two play different roles in valuation:

• MEV is more often used as a micro indicator to measure network health and value distribution.
• REV is more macro-oriented, focusing on the premium situation of the overall revenue of public chains.
• Can monitor ecological health with MEV/REV ratio ) lower ratio is healthier (

4. Conclusion

1. REV does not equal the value capture of the on-chain native token.

2. The F/R ratio varies between different chains.

3. Blockchain is not a company, and native tokens are not equity.

4. Maximizing the long-term impact of REV is worth discussing.

5. REV can be combined with other indicators to build a comprehensive public chain evaluation system.

Reasonably and flexibly using these combined indicators helps us to comprehensively evaluate public chains.

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