Bankless Token Ratings | August 2022 📊
Token Ratings for OP, RPL, SNX, GMX, AAVE and LDO.
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Dear Bankless Nation,
It’s the first Friday of the month! Time for the Bankless Token Ratings for August 2022.
Bankless Token Ratings are an ~ENTERTAINMENT ONLY~ analysis on whether you should buy, hold, or sell certain tokens based on our valuation models.
This month we’re initiating coverage on OP, RPL, SNX, GMX, and revisiting AAVE and LDO. 👀
The first token is open for everyone, the rest is exclusive for Bankless Premium Subscribers.
Here we go 🚀
- Bankless Team
🚨 None of the information in this article is financial advice. All of it is for educational purposes only. Please do your own research.🚨
Token Ratings | August 2022 📊
Author: Ben Giove, Bankless Analyst
Analyst notes, coverage, and six-month price targets on DeFi’s largest tokens
This report initiates analyst coverage on four tokens: OP, RPL, SNX, and GMX.
It also updates coverage on AAVE and LDO.
Below, we’ll discuss the rationale behind each rating by delving into the driving catalysts, as well as its potential impact on the token price.
We are also providing a comprehensive overview of each token we cover via the Bankless Token Bible! (Member access at the bottom of the report)
Intended to complement our ratings and valuation models, the Token Bible is a one-stop-shop where investors can get all the relevant information they need about each token covered, whether it be fundamentals, financials, tokenomics, and more.
Rating Scale and Fair Value Estimates
Before we dive into the coverage and ratings, let’s take a moment to explain our rating scale and fair value estimates.
The ratings reflect how we expect each token will perform over a six-month time horizon relative to the performance of the overall crypto-market based on market capitalization. It is not indicative of our opinion on the long-run potential of each token.
The rating scale is as follows:
✅ Overweight: We expect this token to outperform the broader market over the next six months.
➖ Neutral: We expect this token to perform in line with the market over the next six months.
❌ Underweight: We expect this token to underperform the market over the next six months.
To help inform our ratings, we also provide valuation estimates for any of the applicable tokens using a discounted cash flow (DCF) model. These models aim to value each protocol's core business offerings based on the revenues it generates and its future growth prospects, which are influenced by the catalysts discussed in this report. It is not applicable to all protocols covered in the report as not all of them are generating revenue.
While these models are certainly not the only factor that goes into determining a token’s rating, especially given the short-time horizon on which they are made, we view these fair value estimates as the price ceiling under which we would consider the token to be undervalued and if above, overvalued.
Now that’s out of the way, let’s dive into the report.
📊 TOKEN RATINGS | AUGUST 2022
✅ Optimism (OP)
🏅 Rating: Overweight
💲 Current FDV: $8.2B
🎯 Fair Value Estimate (FDV): n/a
We are initiating coverage of OP with a rating of overweight.
OP is being assigned this rating due to the recent growth of the Optimism ecosystem.
The DeFi TVL in Optimism has soared 221.1% from $293.9M to $943.7M in the past month, generating $664K in network revenue during this time.
This growth in activity and liquidity on the network has been fueled by the launch of decentralized exchange Velodrome, which has accumulated $132.5M in TVL, as well as the rollout of OP incentives via Optimism’s governance grants program.
OP is poised to benefit from Optimism’s growth as well as from the broader adoption of and liquidity migration to Ethereum L2s.
While the use of OP for incentives may place some downward pressure on the token with users selling it to try and capture yields, this should be offset by its continued use as an instrument to get broad, index-like exposure to the broader Optimism ecosystem.
Furthermore, although there is no timeline for which this will be announced, OP may be utilized to decentralize the sequencer and capture MEV revenue, which should help drive further value and utility for the token.