Measuring Token Value – A Case Study


Recap on previous articles

The previous posts in this series covered both the qualitative and quantitative components of token value. These two components may be weighted differently by investors but are both equally important to understand and use to your advantage as a founder when trying to raise funds or promote your product’s strengths.

This piece will be taking a look at how all these data points can be utilised to evaluate one of the most popular and well known DeFi protocols Sushi Swap, and its governance token $SUSHI. Although we will be looking at what gives the $SUSHI token value, none of the information in this article is financial or investment advice. It is purely educational and aims to demonstrate how the information in the previous articles can be utilized when evaluating a project or token by investors.

Sushi Swap Case Study

Sushi Swap is a popular cross-chain decentralized exchange that lets you swap a vast array of tokens in a permissionless manner. It has no centralized authority and relies on smart contracts written in code to automate the process of buying and selling tokens. Sushi Swap was originally a fork of Uniswap and has grown to be one of the biggest decentralized exchanges (DEX) in the DeFi space.

We have chosen to analyze Sushi Swap for this case study for a few reasons:

  1. Sushi Swap is an established, respected protocol with genuine users and real revenues.
  2. Sushi Swap’s governance token $SUSHI has revenue distribution via a buy-back and distribute mechanism.
  3. Sushi Swap has clear competitors to compare its metrics against.
  4. Sushi Swap and the $SUSHI token have one of the largest historical data sets in the DeFi space.

Note: Sushi Swap has been conducting a governance vote to alter the token design for the $SUSHI token. None of this has been taken into consideration for the below analysis as the final design has not been decided upon by the community. To read more about the proposed token design changes, please see this governance forum discussion.

Qualitative Components

Community size

A loyal and vocal community is a key aspect to driving value to a token, whether this is for speculative reasons or with the goal of having high governance participation. Sushi Swap has in excess of 340,000 community members across Discord and Twitter alone. This amount of community members is substantial in the current landscape of decentralized exchanges, however work can still be done to increase the Sushi Swap community size via marketing and educational materials.

Unique token holders

The SUSHI token is held by over 217,000 unique wallets across Ethereum Mainnet, Polygon, Avalanche, Arbitum, BNB Chain and Fantom. With over 110,000 unique wallets holding SUSHI on Ethereum Mainnet alone. 

One important factor to look at is that the amount of unique wallets is increasing on all blockchains. This is an important metric as it shows the SUSHI token is gradually dispersing into more hands, which will help to decentralize the protocol over the long term. 

Source: Nasen – Ethereum unique SUSHI holders


Narratives are something that are generally created organically within the market and its participants. As you can see in the chart below from Luna Crush depicting Sushi Swap, there is no clear relationship between the social media spikes (orange and blue lines) over a 3 month period and large price changes (green line). 

It is not surprising however that social media engagements are low when the price is at its lowest and they pick up when price increases. This is just human nature of market participants getting excited by seeing the price of the asset they are holding increase, it is important to use this momentum for any marketing and announcements in relation to the future of the protocol. 

Source: LunarCrush

Product and Token

Arguably the largest factor in token value derived from qualitative components is to do with the product, its future utility and how the token utility integrates with the product and captures value as success increases.

This area is the easiest to control by the team, building out a suite of products that solve a pain point for users, capturing value with the token and ensuring the user experience is as smooth as possible is imperative to your token value.

Looking at Sushi Swap through this lens we see a couple of things, some good, some not;

  • Sushi has a TVL of around $500M, this is substantially less than its competition and leads to only 3% of the AMM market and 0% of the DEX aggregator market being captured.
  • Sushi’s governance token, when staked as xSUSHI, captures value generated by the protocol which is distributed back to stakers in the form of more SUSHI tokens. This in turn captures more speculative value as this value capture mechanism will scale with the product as Sushi Swap grows and their product suite is innovated upon.
  • Sushi Swap offers a range of products that their competition doesn’t. This range of products all drive value to the SUSHI token through the xSUSHI staking mechanism.
  • Sushi Swap offers a standard UX with a familiar UI that DeFi users have come to expect from a decentralized exchange.
  • The SUSHI token has no major remaining lock-ups or a large amount of token emissions remaining, this allows those valuing the token to know that there will be no large circulating supply increases in the future.

Quantitative Components


TVL is one of the most important metrics for an AMM. Liquidity is everything when it comes to trading and attracting meaningful DEX aggregator volume in the highly competitive space. This is even more important now that concentrated liquidity market makers (CLMMs) have been developed, resulting in liquidity being much better utilised around the current price of a token.

Sushi Swap has a TVL of ~$440M across the 26 networks it is deployed on. In comparison to its competitors, such as Uniswap, Balancer and Curve which have $3.97b, $1.05b and $3,75b in TVL respectively. This lack of TVL and thus trading volumes impacts Sushi Swap as newer AMMs such as Balancer have surpassed Sushi Swap in both metrics.

Amount of users

Tracking the amount of users gives an indication of product market fit and adoption of the product. It would be expected that as the product matures, innovates and finds PMF the amount of users per week would increase also which would signify healthy adoption of the product and ideally drive an increase in revenues.

In the case of Sushi Swap this has not been the case. The amount of daily active users has been robust, even increasing since the ‘crypto winter’ of mid 2022. However, although Sushi Swap has seen an increase in the monthly average of daily active users since October 2022, revenues have not followed back to the previous highs seen in 2021. This could be due to multiple reasons, such as the average user of Sushi Swap is trading smaller position sizes and more users using DEX aggregators which may only route a small amount of the trade through Sushi.

Source: Token Terminal

*Purple represents the monthly average daily active users

*Green represents the monthly revenue captured


As shown in the Token Terminal image above, Sushi Swap revenues have reduced from a monthly high of $14.1M in May of 2021 to a miniscule figure of $156,600 with an overall trading volume of $317M in June of 2023. Some of this may be attributed to the decline in overall market trading volumes, however, compared to competitor Balancer which managed to generate June 2023 monthly revenues over $378k from over $3.56b in trading volume.

Source: Token Terminal

MC/TVL (fully diluted)

With a ratio of MC/TVL it is important to compare the metrics to competitive applications to get a gauge of how they compare in relation to one another. When comparing Sushi Swap, Curve, Balancer and Uniswap we get the following ratios:

Balancer: 0.19

Sushi Swap: 0.28

Curve: 0.19

Uniswap: 0.99

These figures can be interpreted in different ways. It could be interpreted that the lower the MC/TVL ratio, the more undervalued the token is compared to its competitors or it could be seen that the higher the MC/TVL ratio, the more the token captures the TVL value of that DEX.


A price to sales ratio is derived dividing the fully diluted market cap with the annualized revenues. This ratio shows how a project is valued in relation to its revenues generated, which can then be compared to companies in the same industry. These revenues are then ideally captured by the token and result in a positive perception of token value.

When comparing the same four dominant AMMs we get the following ratios:

Sushi Swap: 66x

Curve: 112x

Balancer: 58x

Uniswap: –

Note: All of Uniswaps fees go to liquidity providers, none are captured by the token.

As shown by the P/S ratio of the above DEXs, it is clear that Curves CRV token is priced much higher than its counterparts. This could be interpreted as Sushi Swap and Balancers tokens being undervalued, CRV being overvalued or even that Curve is valued as a more important piece of infrastructure and warrants the P/S ratio it has. This could also be the case for Uniswap, which gives 100% of its trading fees to liquidity providers, thus doesn’t have a P/S ratio.


Previous attempts at DCF analysis on cryptocurrency tokens have primarily focused on infrastructure and network tokens, such as Bitcoin, with a focus of cash flows being on the increased use of that network. With the emergence of DeFi and revenue producing protocols that distribute a portion of these revenues to token holders, we can now attempt to conduct DCF on these assets.

The artform with DCF analysis is accurately assuming the variables, such as the growth factor year-on-year and the discount rate. These assumptions are made even more difficult due to the lack of historical data in the cryptocurrency markets, infancy of DeFi and decentralised exchanges along with the high volatility experienced during the notorious ‘crypto cycles’.

For the purpose of this monetary experiment the following logic has been applied to assume the discount rate and the growth rate:

  •  Discount rate: Historically, when completing DCF on an immature and early stage company one must discount that future cash flow to be in line with the risks associated with investing in early stage start-ups. With this in mind, a discount rate of 30% has been applied to account for the risks associated with attempting to predict future cash flows of an early stage DeFi protocol.
  • Adoption rate: As one of the assumptions which has a large impact on the results of the DCF, the adoption rate was the most crucial yet difficult parameter to assume. With the lack of historical decentralised exchange volumes and revenues the comparison was made between historical centralised exchange volumes over a cycle and decentralized exchange volumes. Three different scenarios were assumed, one bearish, one neutral and one bullish in regards to adoption.
  • Assumptions were made in the following order:
  1. Historical CEX volumes were calculated from 2017 to 2022. The CEX volumes were then extrapolated out using ‘bull’, ‘neutral’ and ‘bear’ assumptions. These assumptions followed the historical 4-year crypto cycle.
  2. Historical DEX volumes were calculated from 2020 to 2022. The DEX volumes were also extrapolated out using the same ‘bull’, ‘neutral’ and ‘bear’ assumptions. Although the DEX Y/Y volume data is extremely limited, it is clear that decentralized exchanges were capturing an increasing amount of volume market share from their centralized counterparts, which saw a 0.76% capture of market share in 2020 and a 10.62% capture in 2022.
  3. The volumes of both CEX and DEX were aggregated and extrapolated out, with an assumption that decentralized exchanges continue to gain an increase in market share at the expense of centralized exchanges.
    1. This increase in market share can be seen in the % DEX Share of Aggregated Volume box, which shows DEX market share assumptions using the same ‘bull’, ‘neutral’ and ‘bear’ assumptions.
  4. In regards to Sushi Swap specifically, assumptions were made on how much of this volume and market share increase Sushi Swap captured. The historical data shows Sushi Swap rapidly losing market share of DEX volumes, from 10% in 2021 to 4% in 2022. This decline continued, with Sushi Swaps total share of DEX volumes falling to 0.5% in 2027.

Due to the unique nature of monetary policy involved with DeFi capital assets some adjustments to the traditional formula must be made,  the DCF formula is as follows:



  • Revenues = 365d trading volumes sourced from Dune query. These volumes are then multiplied by the 0.05% fee that directs revenue to xSUSHI stakers. Resulting in the revenue that accrues to the token.
  • Adoption rate = See above
  • Circulating Supply = Total circulating token supply for that year of the DCF.

n = Year of DCF, i.e. year 5 will be ^5.

This equation may open up some debate whether it is correct or not, however for crypto capital assets some adjustments must be made to the traditional way of conducting a DCF. For example in the following portion of the equation, Revenuei-1AdoptionRateiCirc.Supplyi it is important to capture the circulating supply of tokens being emitted into the market over each given year. These additional tokens will dilute the future cash flows of the current token, thus must be considered in the equation.

The following discounted cash flows were conducted on the Sushi Swap protocol with different rates of adoption.




SUSHI price chart for reference:

Source: Defi Llama


This token value case study has covered a variety of influential factors that must be considered when trying to understand what gives a token value. Not all of these metrics will be applicable to all super assets, as covered in the first part of this series. 

It is expected that the future of the super asset class we see in web3 will continue to be valued in an increasingly sophisticated manner. This is only natural as more money and investment flows into the space by larger and more sophisticated institutions. 

The above case study on Sushi Swap has shown that Web3 is extremely cyclical and the metrics that are seen at each stage of the cycle give an entirely different picture. As a founder, it is important to remember that the cyclical nature of the industry, along with rapid innovation will mean that surviving multiple cycles is the key to long term success. It is important to build a rainy day fund when times are good that will allow you to out innovate when times are tougher.

It is important to understand that none of these metrics can be used in isolation to value tokens and should not be construed as financial advice. This series was written to educate on what aspects can be considered as giving a token value rather than assigning a particular value to a token.

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