Tokens vs. Stocks: Valuation Gap

Author: DWF

Translation by: Jae, PANews

Key points

• Tokens: High valuations and declining liquidity have damaged investor confidence, and funds are flowing into stocks.

• Tokens and stocks have similar upside potential, but their risk characteristics are quite different: tokens peak faster (<30 days) and face greater volatility; while stocks maintain more robust returns over a longer time span.

• Stocks enjoy a higher valuation premium relative to tokens: This premium can be attributed to institutional access requirements, index inclusion potential, and the wider range of trading strategies supported by stocks.

• The price-to-sales ratio (P/S) provides a useful benchmark for evaluating companies, but valuation divergence reflects the importance of other factors, including regulatory moats, revenue diversification, shareholder value, and industry sentiment.

• Mergers and acquisitions (M&A) activity hit a five-year high as consolidation accelerates: acquisition capabilities have proven to be faster than building them on the spot, while regulatory compliance is driving strategic acquisitions.

The current state of token issuance

The crypto industry has reached a tipping point. Billions of dollars are flowing in, institutional interest is peaking, and the regulatory environment is becoming increasingly favorable. However, for builders and users, the situation is more bleak than ever before. The widening gap between institutional funding and the native spirit of crypto is part of a larger problem. The original decentralized spirit and cyberpunk experimentation seem to be fading, replaced by the entry of centralized entities and their enormous impact.

Cryptocurrencies have long thrived in a high-risk, casino-like environment, which is gradually being stripped away as token performance declines sharply. This is also driven by predatory events that significantly impact retail investors, leading to a liquidity exodus from the market.

According to a report by Memento Research, over 80% of tokens issued in 2025 are currently priced below their TGE price. Projects are particularly hard hit due to the difficulty in justifying and sustaining their high valuations, manifesting as high volatility and a general lack of demand for the tokens. Upside potential has also become scarce, as most tokens have faced significant selling pressure since TGE, due to reasons including early profit-taking, lack of confidence in the product, or poor tokenomics (airdrops, CEXs, etc.). This has dampened investor and retail interest, and events like the "10/10" phenomenon have further exacerbated the outflow of funds from the crypto market, raising questions about the industry's core infrastructure.

The Rise of IPOs

Meanwhile, in the traditional financial sector, IPOs have proven highly attractive to crypto companies, with several notable listings in 2025 and many more companies currently filing for IPOs. Data shows that crypto IPOs raised over $14.6 billion in 2025, a 48-fold increase compared to 2024. Mergers and acquisitions also showed a similar growth rate, with leading companies seeking to diversify their product portfolios, which we will discuss further below. Overall, the outstanding performance of these companies demonstrates strong market demand for exposure to digital assets. This trend is likely to accelerate in 2026.

Where is liquidity flowing?

Over the past year, numerous high-profile IPOs and ICOs have raised substantial funds. The table below shows the amount of funds raised and the initial valuation for each company.

This shows that IPOs and ICOs have relatively similar valuations. Some ICOs (such as Plasma) intentionally price themselves below institutional investor valuations to provide retail investors with greater upside potential and access to the market. On average, IPOs offer 12-20% of their shares to the public, while ICOs offer 7-12%. World Liberty Finance is a notable exception, with its offering exceeding 35% of the total supply.

Analysis of ICOs and IPOs reveals that tokens typically exhibit greater short-term volatility and shorter peak times (<30 days). Conversely, stocks tend to achieve steady growth over a longer period. It's worth noting that, despite this, both are similar in terms of potential upside.

CRCL and XPL are exceptions, experiencing significant gains from the outset, offering investors returns of 10-25 times. Nevertheless, their performance still follows the aforementioned trend. XPL retraced 65% from its high within two weeks, while CRCL steadily climbed during the same period.

Revenue: Evaluating Stock Premium

Further analysis of revenue data reveals that stocks tend to command a higher premium than tokens, ranging from 7-40 times and 2-16 times respectively. This can be attributed to enhanced liquidity resulting from a variety of factors:

• Institutional Access: While positive sentiment continues to grow regarding the inclusion of digital assets on balance sheets, it remains largely limited to authorized funds (especially pension or endowment funds). An IPO provides companies with access to this vast pool of institutional capital.

• Index Inclusion: Growth momentum in public markets is far stronger than in on-chain markets. Coinbase will join the S&P 500 index in May 2025, becoming the first crypto company to be included. This could lead to an accumulation of index-tracking funds/ETFs and buying pressure.

• Alternative strategies: The stock market allows for a wider range of institutional strategies, including options and leverage, while on-chain tokens are often limited by insufficient liquidity and counterparties.

Overall, the price-to-sales ratio (P/S) shows a company's valuation based on its revenue over the past 12 months and helps determine whether it is undervalued or overvalued relative to its competitors. However, investor sentiment factors beyond the numbers are not factored in. Factors to consider when evaluating stocks/tokens include:

• Moats and diversification : These are crucial in the rapidly evolving digital asset industry. Premiums are being paid for licensing and regulatory compliance, while a diversified business portfolio enhances the core business's value proposition beyond mere revenue figures.

For example, Figure launched its own RWA lending pool, accessible to retail and institutional investors, and was the first company to receive SEC approval to issue an interest-bearing stablecoin ($YLDS). Bullish is a regulated exchange, but also owns other businesses such as CoinDesk, which adds value beyond its trading services. All of these factors could potentially contribute to extremely high premiums.

In contrast, eToro appears to be "undervalued" due to its extremely low P/S ratio, but a deeper analysis reveals that its revenue and costs are increasing in tandem, which is not ideal. Furthermore, the company focuses solely on providing trading services, resulting in limited differentiation and low profit margins. Therefore, building a defensive moat and diversifying its business should be the key focus for investors.

• Shareholder value: Returning capital to investors through buybacks is common in both the stock and token markets, especially for companies with strong revenue-generating capabilities.

For example, Hyperliquid has one of the most aggressive buyback programs, with 97% of its revenue used for buybacks. Since its inception, the aid fund has bought back over 40.5 million HYPE tokens, representing more than 4% of the total supply. This aggressive buyback program undoubtedly impacts the price, boosting investor confidence as long as revenue remains stable and the industry still has room for growth. This helps improve the P/S ratio, but given the strong backing of the team itself, this doesn't necessarily mean the token is "overvalued."

• Sector sentiment: High-growth sectors driven by institutional or regulatory events naturally enjoy a premium as investors seek exposure.

For example, shortly after Circle's IPO in June 2025, its stock price experienced a parabolic surge, with its price-to-sales ratio reaching a peak of approximately 27. This can be attributed to the GENIUS Act, passed shortly after Circle's IPO, a framework designed to legalize the adoption and issuance of stablecoins. As one of the leading players in stablecoin infrastructure, Circle will be a major beneficiary.

Mergers and acquisitions: major consolidation

Reports indicate that crypto M&A activity is projected to reach a five-year high in 2025, driven by both increased activity from traditional financial (TradFi) firms and a more favorable regulatory climate. Following the Trump administration's series of crypto-friendly policies, digital asset treasuries (DATs) have seen a surge in activity, as holding digital asset exposure on balance sheets has become less controversial. Companies have also shifted their focus to acquisitions, as this is a more efficient way to obtain specific licenses and achieve compliance. Overall, the establishment of a regulatory framework has paved the way for accelerated M&A activity.

Looking back over the past year, the number of transactions across all sectors has increased significantly. The top three categories that institutions prioritize are:

• Investment & Trading: Including trading and settlement infrastructure, tokenization, derivatives, lending, and DATs

• Brokerages & Exchanges: Regulated Platforms Focused on Digital Assets

• Stablecoins & Payments : Including deposit and withdrawal channels, infrastructure and applications

These three categories will account for over 96% of the transaction value in 2025, totaling over $42.5 billion.

Top acquirers include Coinbase, Kraken, and Ripple, all of whom have ventured into multiple categories. Notably, by acquiring both traditional and innovative decentralized applications (dApps), Coinbase has solidified its ambition to become the "everything app" and bring on-chain applications to the masses. This likely stems from increased competition among exchanges and the pursuit of capturing their own user base and traffic to become the "everything app."

Other companies, such as FalconX and Moonpay, are ramping up their efforts in their respective fields, offering a full range of services through complementary acquisitions.

What's next for "token" issuance?

Despite current market conditions and sentiment, we believe 2026 will continue to bring many positives to the digital asset sector. We anticipate more companies preparing for IPOs, which is a net positive for the industry. It provides greater accessibility and exposure to capital and investor pools, thus expanding the overall pie.

Companies waiting in line for IPOs include:

• Kraken : Filed its S-1 registration statement with the SEC in November 2025, and is highly likely to IPO in early 2026.

• Consensys : Reportedly working with Goldman Sachs and JPMorgan Chase, with plans for a mid-2026 IPO.

• Ledger : Targeting a $4 billion IPO, currently working with Goldman Sachs, Jefferies, and Barclays.

• Animoca : Plans to acquire Currenc Group Inc. in a reverse merger and list on Nasdaq in 2026.

• Bithumb : Aiming for a KOSDAQ listing in 2026 with a valuation of $1 billion, underwritten by Samsung Securities.

The path forward is not an either-or choice between traditional finance and crypto-native innovation, but rather a convergence. For builders and investors, this means prioritizing fundamentals and creating useful products that generate real, sustainable income. This shift towards a long-term mindset may cause some turbulence, but those who adapt will seize the next wave of value creation.

Cryptocurrency is dead. Long live cryptocurrency.