📣 The REV debate

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Bitcoin launched 16 years ago, but investors still cannot agree on how to value blockchains. Today’s 0xResearch breaks down the latest way to do so: “real economic value” (REV).

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MKR-to-SKY conversion rate doubles overnight:

As of today, 27.17% of all MKR has been converted to SKY, up from just 13% the day prior — marking the single largest daily jump in adoption since the migration path was introduced. The data shows that conversions had been slow and steady through late 2024 and early 2025, with brief spikes but little sustained momentum.

The surge coincides with the finalization of the SKY token’s status as the sole governance asset, as well as the activation of SKY staking, with the promise of USDS rewards and a looming penalty for stragglers set to kick in later this year. MKR holders appear to be getting the memo.

This sharp increase may mark a tipping point for governance alignment under the Sky Protocol’s “Endgame” restructuring. (See Governance below for more.)

— Macauley

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The REV debate

How should blockchains be valued?

In crypto’s very short history, there have been many attempts to definitively answer that question.

One early approach drew from monetarist economic theory, applying the MV = PQ equation. That idea has largely fallen out of fashion as hundreds of chains have come onto the market with their own “money.”

Then there was the Bitcoiner’s stock-to-flow ratio, based on the assumption that scarcity — measured by the ratio of existing supply to annual issuance — directly drives value. This framework too has lost credibility due to Bitcoin’s volatility and the model’s repeated breakdowns post-2021. 

When smart contract platforms blew up in 2020, some investors turned to total value locked (TVL) to market cap ratios, a rough analog to price-to-book in traditional finance. But TVL was too easily gamed, offering little in the way of reliable fundamentals.

Staking yields on proof-of-stake chains introduced a new narrative: L1 tokens could be valued like yield-bearing assets using discounted cash flow (DCF) analysis. While attractive in theory, this framework, too, cannot account for the sky-high valuations of L1 tokens.

As far as I can tell, most of these valuation theories have pretty much fallen out of favor with professional crypto investors today.

REV (real economic value)

Today, a growing class of investors are grappling onto REV (real economic value) to explain the value of blockchains.

What is REV?

REV is the total economic demand to transact on a given L1. 

• REV = Transaction fees + maximal-extractable-value (MEV) tips

Or Blockworks Research’s technical definition: 

• “Network REV (Real Economic Value) is a standardized metric that tracks blockchain value accrual generated by user activity. REV consists of both in-protocol transaction fees and out-of-protocol tips that users pay for transaction execution, so it measures the monetary demand to transact onchain.”

REV notably does not include “issuance,” the inflationary emissions with which every blockchain pays its validators.

(That metric is TEV i.e. “total economic value.”)

As such, REV rejects the thinking that blockchains should be treated as traditional businesses with formal “revenue and cost” income statements.

REV today

The below chart is what REV looks like today for the major chains. Ethereum dominated REV in 2020-2021 (remember $100 gas fees?), but Solana is in the lead today.

The core idea behind REV is that investors can apply a price ratio to it, enabling a comparable apples-to-apples price multiple across blockchains for forward-looking earnings.

Here’s what it looks like in practice when applied to the all-time-highs fully diluted valuations of the major L1 tokens: 

Based on the above chart, REV partially explains the valuations of chains like Ethereum and Solana, whose REV-to-ATH multiples of ~26 remain within a plausible range relative to fees paid by users onchain.

However, newer chains like Aptos with a 6,368.8x multiple, likely driven by speculative momentum, still seemingly defies fundamental valuation.

I asked Blockworks Research’s Dan Smith about this. 

“Aptos is a two year old startup with a similar TAM to every other chain, so even if investors attribute a 1% of winning its vertical, its valuation on a probability-adjusted basis remains high. This is similar to suggesting a  pre revenue startup cannot have a valuation since there is no revenue. It’s all about your future REV,” he said.

REV criticisms

REV is not without its critics. 

Criticisms have tended to fixate on the “MEV” component of REV, questioning the assumption that blockchains have an equal ability to capture MEV.

As DefiLlama’s 0xngmi points out, blockchains differ in their protocol architectures and transaction ordering policies, which means MEV is not captured similarly.

For example, Arbitrum ordered its transactions on a first-come-first-serve (FCFS) basis up until a month ago when a market-ordering mechanism was introduced with Timeboost. Under the old FCFS policy, Arbitrum’s REV would be lower than in a post-Timeboost era. From a REV perspective, Arbitrum was “leaving money on the table.”

Secondly, REV fails to explain bitcoin’s $2.1 trillion valuation, as Block Analitica’s monetsupply points out.

The all-time high price to REV multiple for bitcoin would be a staggeringly high 10,096 (annualizing bitcoin's Q1 2025 REV of $208M), far above the same for SOL or ETH at ~26.

Paradigm’s Matt Huang, however, sees this as an exception for BTC, mainly because bitcoin never wanted to be a smart contract platform and is largely seen as a monetary store-of-value asset today.

What I think REV critics have largely pushed back against is not the usefulness of REV as a metric per se, but a perceived overemphasis on REV as a way to value blockchains.

Blockworks Research’s Dan Smith acknowledges that while chains should maximize for REV, that is not the same as optimizing for MEV extraction.

“The intent of REV is to track the amount of dollars paid for transaction execution as that is not currently being done properly. For instance, Token Terminal or DefiLlama counts only the burn, which is objectively incorrect,” Smith said.

“It’s all about future REV, not today’s REV.”

— Donovan

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