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| By Bruce Ng |
The crypto markets are still tepid. But, as my colleague Juan Villaverde stated on Friday, we are likely near a key cycle low.
Which means now is the time to find your next opportunity.
With sentiment stuck in “risk-off” mode and hype having quieted, we’ll need to focus back on fundamentals to do so.
Today, I’ll be looking at decentralized exchanges. These are DeFi platforms that allow you to swap crypto without the need for middlemen.
Find Potential in Undervalued Opportunities
Specifically, I’ll be narrowing in on the DEXes I consider to be undervalued from a fundamental perspective.
That’s because DEXes with strong fundamentals will catch the increased trading activity that comes with the next rally. And their native tokens will benefit.
But how can we tell whether a DEX is “undervalued?”
There are a few ways to answer this. But for this analysis, I decided to focus on the 30-day fee. That’s a measure of how much a DEX earns in swap fees over the past 30 days.
In English, it measures the “revenue” of a DEX.
Then, to determine how under- (or over) valued an exchange is, I compare the 30-day fee to the DEX’s circulating market cap, which is a measure of how much the DEX is worth.
By comparing them, I can calculate for the 30-day fee/Mcap ratio, which acts like a DeFi P/E ratio or E/P ratio to show me which DEXes are currently undervalued.
To find this hard data, I pulled the list of top DEXes from DeFiLlama. But to make it easier for you to see, I exported that info into the table below:
Now, scanning through that last column above, I highlighted the three DEXes with the best 30-day fee/Mcap ratio. That tells me they are undervalued … and more likely to rally with strength in the next leg up.
In descending order, they are:
- PancakeSwap (CAKE, Not Yet Rated)
- Orca (ORCA, Not Yet Rated)
- Cetus AMM (CETUS, Not Yet Rated)
That means these DEXes are undervalued right now. They are trading at a discount to their real value. And are poised to catch a substantial portion of the increased trading activity we can anticipate in the coming rally.
So, let’s dive a little deeper into these three.
PancakeSwap, Current price: $2.63.
You may recall my colleague Marija Matić highlighted CAKE in her update yesterday as one of the past week’s top performers.
PancakeSwap is a DEX built on the BNB Chain (BNB, “C+”). It utilizes an automated market maker model to facilitate token swaps without intermediaries so users can trade, provide liquidity and earn rewards through yield farming.
Its competitive advantages include low transaction fees due to BNB Chain’s efficiency, a user-friendly interface and innovative features. Its Position Manager, for example, auto-compounds rewards and concentrated liquidity in V3, which boosts capital efficiency up to 4,000x for stablecoin pools compared to earlier versions.
Orca, Current price: $1.52.
Orca is a user-friendly DEX on the Solana (SOL, “B”) blockchain, operating as an AMM that enables fast, low-cost token swaps, liquidity provision and yield earning through an intuitive interface designed to make decentralized finance (DeFi) accessible to all.
It stands out with Solana’s high-speed, low-fee infrastructure and offers near-instant trades. Its "money-lego" approach also allows projects to easily integrate swapping and farming into their dApps, enhancing its ecosystem utility.
Cetus, Current price: $0.09
Cetus is a pioneering DEX and concentrated liquidity protocol on the Sui (SUI, “B-”) and Aptos (APT, Not Yet Rated) blockchains. It focuses on efficient trading and liquidity provision through an AMM system that optimizes capital use with concentrated liquidity pools. This is particularly appealing to DeFi users seeking high yields and low fees.
Its competitive edge lies in leveraging the scalability and speed of Sui and Aptos, combined with a flexible liquidity network that supports interoperable modules, positioning it as a next-gen DeFi platform in emerging ecosystems.
Is now the time to load up on undervalued DEXes like these?
Well, that depends on the broad altcoin market condition, investor sentiment, trading volume on each DEX and fluctuations in their total values locked.
In particular, I’ll be watching how these factors change over the coming weeks. I expect to see market sentiment shift to “risk-on” in that time. How that impacts the metrics I listed will help reveal which DEXes will outperform.
Investors interested in these prospects may want to keep a close eye on CAKE, ORCA and CETUS as well.
Best,
Dr. Bruce Ng
