Bankless Token Ratings | December 2022

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Dear Bankless Nation,

We publish our token ratings on the first Friday of the month. Today’s that day.

Bankless Token Ratings are an ~ENTERTAINMENT ONLY~ analysis on whether someone should buy, hold, or sell certain tokens based on our valuation models.

This month we’re covering:

• 🆕 BNB, APT, AXS

• 🔄 ENS, SNX, PERP

The first token is open for everyone, the rest are exclusive for ✨Bankless Premium subscribers✨.

– Bankless Team

🚨 None of the information in this article is financial advice. All of it is for educational purposes only. Please, do your own research.🚨

Author: Ben Giove, Bankless Analyst

This report initiates analyst coverage on three tokens: BNB, APT, and AXS.

It also updates coverage on ENS, SNX, and PERP.

Below, we’ll discuss the rationale behind each rating by delving into the driving catalysts, as well as its potential impact on the token’s price.

We are also providing a comprehensive overview of many of the tokens we cover via the Bankless Token Bible!

📓 Token Bible access at the bottom of this report. Bankless Premium only!

Intended to complement our ratings and valuation models, the Token Bible is a one-stop-shop where investors can get all the relevant information they need about each token covered, whether it be fundamentals, financials, tokenomics, and more. 

Before we dive into the coverage and ratings, let’s take a moment to explain our rating scale and fair value estimates. 

The ratings reflect how we expect each token will perform over a six-month time horizon relative to the performance of the overall crypto-market based on market capitalization. It is not indicative of our opinion on the long-run potential of each token.

The rating scale is as follows:

To help inform our ratings, we also provide valuation estimates for any of the applicable tokens using a discounted cash flow (DCF) model.

These models aim to value each protocol’s core business offerings based on the revenues it generates and its future growth prospects, which are influenced by the catalysts discussed in this report. It is not applicable to all protocols covered in the report as not all of them are generating revenue. 

While these models are certainly not the only factor that goes into determining a token’s rating, especially given the short-time horizon on which they are made, we view these fair value estimates as the price ceiling under which we would consider the token to be undervalued and if above, overvalued.

Now that’s out of the way, let’s dive into the report.

These are tokens that we believe will outperform the broader market over the next six-months.

We are initiating coverage of BNB with a rating of overweight.

BNB is being assigned this rating due to strong network fundamentals as well as due to the collapse of FTX.

The fundamentals of Binance Smart Chain have remained strong throughout the bear market, with the blockchain growing its share of DeFi TVL from 7.5% to 12.5% over the past year. In addition, BSC has generated the second most fees of any network during this time at $528.8M. Furthermore, the network has also managed to grow its user base in recent months, with the monthly average of daily active users (DAUs) up 46.4% since August 2022 from 764K to 1.1M. This is the highest total of any L1 or L2 network. 

BNB’s strong fundamentals and sticky user base should help contribute to outperformance of the token, as the network burns a portion of its total transaction fees (which are paid in BNB). In addition, BNB should likely benefit from FTX’s implosion, as many investors view the token as a proxy for getting exposure to Binance. With one of its biggest competitors out of the picture, Binance seems likely to grow market share, particularly in perps trading, over the coming months.