From "Air" to "Cash Flow": The Rise of Practical Tokens After the VC Bubble Burst

In early 2025, as liquidity in the Secondary Market tightened, a large number of altcoins driven by "story + Airdrop" were ruthlessly burst.

Countless alts have been on a downward trend, constantly hitting new lows — while during the same period, Bitcoin's market cap share has risen to a five-year high of 62.1%, and the Altcoin Season Index even hit a record low of 4 points in May 2023.

However, "utility tokens" such as Uniswap (UNI), Aave (AAVE), Pendle (PENDLE), and Hyperliquid (HYPE) are attracting funds against the trend, with prices and on-chain revenues both rising. They share a common characteristic: real, auditable protocol cash flow, which returns value to token holders through buybacks, profit sharing, or staking.

This article attempts to sort out the logic of capital migration after the collapse of the VC bubble, and uses four representative projects as samples to explore how the "on-chain P/E era" is reshaping the crypto valuation system.

Market Background: As narratives fade, cash flow becomes a scarce commodity.

• VC Slowdown: In Q2 2025, global crypto financing dropped sharply to $4.99 billion, a 21% quarter-on-quarter decline, marking a new single-quarter low since 2020, with investors becoming cautious about "concept hype."
• Capital Flow Blue Chip DeFi: Bitcoin continues to strengthen and dominate, but there is significant differentiation within the DeFi sector; protocols with a "revenue-distribution" closed loop see their TVL and trading volume consistently rising. Pendle's TVL surpassed $5.59 billion in July, nearly tripling year-to-date.
• Valuation Anchor Migration: During traditional risk-off cycles, investors are more willing to pay for quantifiable cash flows rather than purely for narrative premiums.

What is a "utility token"?

Definition: Token holders can share protocol revenue (Fee Capture), or indirectly enhance the "on-chain EPS" (verifiable earnings per token) through buybacks/burns and staking distributions.

Typical Model

1. Fee Switch / Revenue Sharing: Proportionally refund or repurchase protocol fees (GMX).
2. Lending Interest Spread & Liquidation Fee: Include the interest spread and liquidation rewards in the treasury for repurchase (AAVE, Maker).
3. Tokenization of Yield: Splitting future earnings for trading, with protocol fees (Pendle).
4. Infrastructure Fuel: High-frequency matching engine transaction fees are repurchased and burned instantly (HYPE).

Overview of Four Major Cases

| Token | Yearly Low → July | Price Change | Value Reflow Mechanism | Key Catalysts | | --- | --- | --- | --- | --- | | UNI | $4.55 → $10.33 | +127% | Fee Conversion Restart Proposal, proposing to funnel 0.05% transaction fees back to the treasury (not implemented) | Foundation approved a massive investment plan of $165.5 million | | AAVE | $114.05 → $293.33 | +157% | DAO weekly repurchases $1 M AAVE and enters ecological reserve | Buyback plan passed in June | | PENDLE | $1.81 → $4.49 | +148% | Protocol fee 5% profit + 5 bps transaction fee | TVL broke $5.5 B, yield, PT-sUSDe token annual yield 11.11% | | HYPE | $9.3 → $44.3 | +376% | 30% transaction fee real-time buyback and burn | CoreWriter upgrade on July 5 |

Breakdown: How does cash flow drive valuation recovery?

Uniswap (UNI)

Previously, the market regarded UNI as a "pure governance coin." Subsequently, the Uniswap Foundation voted to approve a massive investment plan of $165.5 million. The Uniswap Foundation proposed to allocate $165.5 million in funds to the following areas.

· 95.4 million USD for funding (developer program, core contributors, validators);

· 25.1 million USD for operations (team expansion, governance tool development);

· 45 million USD for liquidity incentives.

Currently, the $UNI token does not have any actual token value capture or token repurchase plan!

Aave (AAVE)

Aave DAO approved to repurchase approximately $1 M AAVE weekly with protocol surplus and lock it into the DAO inventory:

• The first week of execution has driven a daily increase of 13%, with trading volume doubling.
• Lending Spread + Liquidation Fee for stable cash flow, coupled with a 32% year-on-year increase in V3 TVL, makes the buyback plan equipped with long-term ammunition.

Pendle (PENDLE)

Pendle brings the narrative of "future yield" derivatives to the trading market:

• Extract 5% profit + 5 bps trading fee, allowing the protocol to generate auditable revenue daily.
• High-yield strategies (such as stETH YT yield rate once exceeding 11%) are more attractive in a low-interest-rate environment, with continuous inflow of funds.

Hyperliquid (HYPE)

As a high-frequency matching DEX, Hyperliquid launched CoreWriter precompiled in July, allowing HyperEVM contracts to directly place orders, settle, and call CLOB, with an on-chain fee buyback and burn mechanism:

• During the upgrade week, both the on-chain active addresses and transaction volume reached historical highs.
• The immediacy of value flow + the scale of high-frequency trading fees makes HYPE a strong β in the "on-chain cash flow" narrative.

The Three Moats to Survive the Bear Market

1. Deterministic Cash Flow: On-chain income & expenditure can be audited, DAO decisions are publicly transparent, reducing information asymmetry.
2. Repurchase / Profit Sharing Closed Loop: Write the "Protocol Revenue → Token Value" path into the smart contract to create an effect equivalent to stock buybacks or dividends.
3. Institution-Friendly: Quantifiable return indicators (P/S, P/E) reduce valuation uncertainty, facilitating market making and structured product design.

Summary

After the tide of VC stories recedes, the market is re-evaluating the pricing of "verifiable cash flows."

Utility tokens integrate on-chain revenue, token value, and governance rights into one, making them a scarce asset that transcends cycles.

With mainstream DeFi protocols gradually introducing Fee Switch, buybacks, or surplus distribution, it marks a shift in the valuation logic of the crypto market from a "narrative market" to a "cash flow market."