Uniswap has become the first decentralized app running on the ethereum blockchain to cross $1 billion in yearly revenue.
The defi dapp is currently handling $1.28 billion in volumes a day, giving it an income of $2.5 million.
For the past year from October 2020 to October 2021, it earned in total $1.1 billion in fees as pictured above.
That makes it a Price to Earnings (P/E) ratio of about 20 based on the current fully diluted market cap of $20 billion.
Unlike in the wider tech space thus where P/Es of 100 and even 1000 can be seen, Uniswap is being valued more as a traditional old company running a slow growth but stable business.
That may be in part because the ethereum blockchain can’t quite handle more traffic without L2s, and thus it isn’t too easy to see 10x growth in usage before L2s like Starknet, zkSync or Optimism and Arbitrum take off.
It did however handle $4.1 billion in trading volumes on December 4th. That gives it a daily revenue of about $10 million, and thus we have a peak earning of $4 billion a year, or a fully diluted market cap of $80 billion, giving a top range price of $80 for Uniswap from the current $20.
One does have to consider competition, but with 60,000 trading pairs Uniswap may have significant network effects due to the first mover’s advantage.
More widely one also has to consider the industry and whether that has much room for growth, not least because a lot of these metrics are affected by the price of the token that is being exchanged.
Making valuation a very tricky business but their volumes have ranged between $500 million and $4 billion, giving it a fair price between $10 and $80.
Meaning one can halve their money or 4x it depending how the market goes, which presumably would give this an analyst rating of hodl unless they make significant progress with L2s, in which case it would be a buy.