Bankless Token Ratings | September 2022
Dear Bankless Nation,
Our bad! We missed sending you this last week.
But our Token Ratings for September are here!
This month we’re initiating coverage on Synapse (SYN), Curve (CVX), Velodrome (VELO), while re-rating Uniswap (UNI), Maker (MKR), and Solana (SOL).
The first token is open for everyone, but the rest is exclusive for only Bankless Premium Subscribers.
Bankless Token Ratings are an ~ENTERTAINMENT ONLY~ analysis on whether you should buy, hold, or sell certain tokens based on our valuation models.
Let’s get into it.
- 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.🚨
Analyst notes, coverage, and six-month price targets on DeFi’s largest tokens.
This report initiates analyst coverage on three tokens: SYN, CVX, and VELO.
It also updates coverage on UNI, MKR, and SOL.
Below, we’ll discuss the rationale behind each rating by delving into the driving catalysts, as well as its potential impact on the token’s 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.
✅ Overweight
These are tokens we believe will outperform the market over the next six-months.
🧬 Synapse (SYN)
- Type: Coverage Initiation
- Sector: Infrastructure - Bridging
- 💲 Current FDV: $320.85M
We are initiating coverage of Synapse with a rating of overweight.
Key Catalysts
Synapse is being assigned this rating due to the upcoming resumption of Arbitrum Odyssey.
Arbitrum Odyssey is an upcoming event that is designed to encourage adoption of Arbitrum based projects on Arbitrium by users with custom NFTs. The eight-week long event, which was postponed, is likely to resume in the near future following the recently completed Nitro network upgrade.
It has also been speculated that Odyssey participants may be able to earn an airdrop of Arbitrum’s (still to be announced) governance token, meaning the event is likely to drive an increase in liquidity and activity on the network.
Potential Price Impact
The expected growth in usage and liquidity inflows into Arbitrum following the resumption of Odyssey should lead to an increase in bridging volumes on Synapse.
This in-turn should grow Synapse’s revenues, as a swap-fee is charged as a percentage of every transfer made via the network. Synapse should also benefit from the upcoming rollout of Synapse Chain, an EVM-compatible optimistic rollup that will settle to Ethereum and utilize Synapse’s messaging protocol to enable developers to create cross-chain applications.