According to TechFlow on December 3, as reported by DL News, Berlin-based venture capital firm Greenfield has released research showing that the decentralized finance (DeFi) market is beginning to be priced based on fundamentals, but this process will take several months to become apparent.
The research points out that three key indicators—protocol fees, total value locked (TVL), and revenue—explain changes in valuation better than other variables. Models based on these indicators generally outperform analysis models that track the performance of Bitcoin and Ethereum, as well as models that include social sentiment.
Greenfield partner Felix Machart stated, “The longer the market operates, the more we see differentiated performance based on fundamentals, rather than all projects being correlated with overall market trends.” The research shows that this theory holds true over three-month and six-month timeframes. However, within a one-month period, fundamental indicators are less explanatory than models that simply track Bitcoin and Ether prices. The research also highlights the importance of metrics such as token trading volume on decentralized exchanges and the number of active users.
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