- Even though there has been a significant decline in the prices of L1 tokens, their earnings have risen.
- Ethereum’s P/S ratio has been the lowest amongst the L1 tokens.
In recent weeks, prices for Layer-1 (L1) tokens have taken quite a beating due to the bearish sentiment prevalent in the market. Over the past 30 days, popular L1 tokens like ETH (Ethereum) and SOL (Solana) have corrected by more than 30%.
Even though there has been a significant decline in the prices of these L1 tokens, their earnings have risen. This is because of the surge in transaction volumes during the ongoing downtrend. Each time a transaction occurs on the network, these L1 tokens earn a portion of the transaction fees. Therefore, with the rise in transactions, the earnings of these blockchain tokens increased.
According to data from Token Terminal, the monthly revenues of Ethereum stood at $690 million at the time of writing, up by more than 30% from the month before. Similarly, the revenues of L1 tokens like Tezos and Stellar are up by 220% and 80% respectively on a month-on-month basis.
ETH Revenue
Data from Delphi Digital showed that Ethereum has been leading the L1 tokens in terms of price to sales ratio (P/S). This metric is the ratio of a token’s fully diluted market capitalization by its total annualized revenue. A low P/S ratio means that the project is trading a low multiple with respect to its earnings, which is positive. This is why P/S becomes a helpful barometer of real demand in the market.
As we see in the chart above, Ethereum’s P/S ratio has been the lowest among the lot, except for a brief period when Fantom overtook the biggest blockchain. That was probably due to FTM’s sudden drop following its founder Andre Cronje’s exit from Fantom. Another interesting trend that we can observe is the decline in Avalanche’s P/S ratio. This indicates that the blockchain token has been clocking in more and more revenues lately.
While Ethereum continues to be the pick of the lot, Avalanche is quickly rising up the ranks.
