Text | Congee Overnight
Written in the front: Although the development prospects of decentralized finance (Defi) are expected to be high, the price of Defi tokens has fallen again and again recently, which inevitably makes people a little disappointed. As the leader of DeFi, Uniswap, its token UNI After experiencing the “half cut”, and then experienced the “toe cut”, does it have a future?
In this regard, Jeff Dorman, Chief Investment Officer of Arca, a New York investment management company, expressed his views.
The reason for holding ETH as an investment is that Ethereum is a clear market leader with strong growth and usage rates, even though ETH token holders have not yet obtained these values. This is actually the same for UNI.
Uniswap has a clear leading position in the DEX trading market, just like “Ethereum vs. other smart contract protocols”. In the DEX field, there is no agreement even close to Uniswap (analysis from @DuneAnalytics)
For ETH, EIP-1559 and Ethereum 2.0 have always been in the “future” state, but the “fee conversion” of UNI is almost certain, and the time point is February 26, 2021 (180 days after the start of governance).
Then, UNI will join a small list of tokens, such as HXRO, MKR, FTT, BNB, which obtain actual value from the proceeds.
Based on Uniswap’s daily average transaction volume of USD 360 million and a fee of 0.30%, the annual fee income generated by the Uniswap agreement is expected to be USD 380 million, and after the fee conversion (1/6 of the fee is allocated to UNI token holders) ), the UNI token holders will be allocated an annual income of $66 million, and its dividend rate -> 13%. For comparison, the S&P 500 forward price-earnings ratio is 25 times and the dividend rate is 1.7%.
I think that anything in DeFi (and digital assets in general) has a higher multiple than the over-expanded stock market during the recession.
Once market participants start to adopt the same value evaluation criteria for UNI and ETH, UNI will be regarded as the cheapest asset among all digital assets.
Here are 5 reasons why some people think they should not own UNI:
- The sales pressure of liquid mining exceeds the demand, but the actual amount of UNI released every day is 770,000. Once the fee conversion is completed and revenue is generated (liquid mining may end on November 18), value investors are very Easily absorb these releases;
- Do you think Uniswap will not continue to maintain its leading position in the market, and its trading volume will decline or lose competitiveness (just like “ETH killer”)
- You don’t believe that “fee conversion” will happen (or don’t even know about fee conversion);
- You believe that the cost conversion will happen, but since there are still 3 months, you are still waiting for the best time to buy;
- UNI is only part of DeFi, and DeFi is no longer popular;
Uniswap is one of the few companies/projects in the field of digital assets that has practical use and product market adaptability. The strange thing is that digital asset buyers are still chasing unproven future (L1 agreement) projects instead of projects that are actually attractive today.
Uniswap (UNI) investors will also benefit from the lessons of history.
Remember the failed Facebook IPO? It was priced at $40, and then fell below $20 after the listing. Everyone was afraid that it was overpriced.
Smart investors will not bet against leaders.
UNI is often mistakenly referred to as a “governance” token, while the market believes that “governance is worthless.”
But in fact, UNI is a pass-thru token, which means that its income will be passed on to token holders, and UNI token holders will receive a very generous income stream in February 2021.
And all governance tokens need to become value transfer tokens in the end. This is the main reason why voting is so important-to guide the flow of funds.
In an industry where it is difficult to achieve real growth, it seems crazy to be short on such growth projects.
