Grayscale: AAVE's current price is undervalued, and its fair value may rise to around $175 within a year

Grayscale Research released a report stating that it believes the fair value of the AAVE token could rise to around $175 within a year, with the current price of $75 being undervalued.

The report pointed out that DeFi protocols have generated nearly $25 billion in fees since 2023, becoming an asset class that produces real income. Grayscale categorizes crypto assets on a spectrum from pure commodities to cash flow-driven assets, with AAVE, UNI, and SKY being closer to cash flow assets. The report noted that Aave's protocol revenue has grown over 6.6 times in the past three years, with an operating profit margin of about 50%. The report expects Aave to earn about $60 million in revenue by 2026, and based on a fintech company price-to-earnings ratio of 20-25 times, the current fair value market cap is estimated at $1.2-1.5 billion, corresponding to a token price of $80-100. If regulatory clarity accelerates the adoption of tokenized assets, the fair value of AAVE could rise to $175 within a year.

Grayscale also pointed out that the accumulation of DeFi value is usually achieved through burning, buybacks, rebates, and staking, and that protocol revenue alone is insufficient to determine token value.