The investment value of UNI

Yesterday's article was published, and a careful reader noticed a mistake in the article: the circulating supply of UNI is not 6.29 billion, but rather 629 million.

Here, I used "circulating supply" instead of "maximum supply" (1 billion) mainly to make the calculations more aligned with the current situation.

Additionally, this reader provided a set of UNI fee revenue from another perspective:

The trading volume over the past 30 days was $148.5 billion, and if we roughly calculate a fee of 0.05%, the fees for 30 days would be $74.25 million, which amounts to about $890 million a year. If we conservatively estimate the lower limit of annual revenue to be $500 million, then UNI's annual fee revenue is approximately $500 million to $890 million.

Converted to fee revenue per token, it would be $0.79 to $1.41, and the cost for repurchasing tokens would be $0.13 to $0.235.

Using the above data along with the corrected circulating supply of 629 million tokens for recalculation, the PE and "dividend yield" are as follows:

Calculating based on the price of $5 before the significant rise, its PE is 3.55 to 6.32, and its dividend yield is 2.64% to 4.72%.

Calculating based on the price of $9.22 after the rise, its PE is 6.54 to 11.67, and its dividend yield is 1.44% to 2.56%.

There is an element of uncertainty here, which is what its costs actually are.

Since Uniswap does not need to disclose financial data like traditional public companies, we cannot see its various costs, and therefore cannot calculate its net profit and free cash flow; we can only consider its trading fee revenue as its net profit.

If costs are taken into account, its actual PE would be higher than the calculated values above, and the actual "dividend yield" would be lower than the calculated values above.

However, even so, examining UNI with this data, from its PE perspective, whether before or after the price surge, its premium risk is not considered high. Even when viewed with the post-surge standard, its premium risk remains relatively low.

With low premium risk, the next thing to consider is its revenue.

In terms of revenue, aside from the inability to clearly determine the costs mentioned above, another factor I believe has a more far-reaching impact is whether its business model has a very strong moat.

Regarding this, I shared some concerns in previous articles: that is, at least in certain ecosystems, such as BASE, Uniswap's leading effect is not very obvious, and with Uniswap now having its own layer two expansion, it is certainly hoping to direct TVL and traffic into its own layer two as much as possible.

Will this inadvertently cede the trading market of other ecosystems to competitors?

Finally, when I consider whether UNI is worth investing in, I will directly compare it with Ethereum, mainly in two aspects: risk and "dividend yield."

The so-called risk refers to my assessment of the survival and continued development risk of the UNI project compared to Ethereum.

Clearly, I believe Ethereum's risk is lower than UNI's.

The so-called "dividend yield" is the project revenue that token holders can directly enjoy. Based on the calculated UNI dividend yield (without considering costs), I estimate it to be about 2.6% to 4.7%. Currently, Ethereum's staking income is around 2.6% to 3.2%.

UNI might be slightly higher.

If we consider both risk and return, at this stage, I would tend to choose Ethereum. However, I am not buying Ethereum right now, so I certainly won't be buying UNI.

Some readers mentioned wanting to dollar-cost average, and I personally do not dollar-cost average into UNI, but I can provide a rough method I have used before:

In the past, I would refer to the highest value UNI had reached, and then calculate a discount price based on the highest value that I could bear as my dollar-cost average price.

However, this method has a prerequisite assumption: that is, it assumes UNI will definitely exceed its previous high in the future.

This method is for readers' reference only. And readers should be sure to pay attention to this prerequisite assumption when using this method.