Methodology and Analysis Tools for Digital Asset Investment Indicator xRev

The digital asset investment indicator 'Market Cap to Revenue (xRev Revenue Multiple)' is the value obtained by dividing the market cap of a coin by the project's revenue. This document outlines the practical methodology for calculating xRev and the methodology for selecting investment coins. The success of xRev analysis lies in the precise separation and comparison of 'trailing multiples' and 'run-rate multiples'. Trailing xRev is calculated by dividing the circulating market cap by the cumulative revenue over the past 12 months, while run-rate xRev is calculated by multiplying the recent 30-day revenue by 12 and dividing it by the circulating market cap. Comparing these two figures allows for the assessment of the protocol's real-time status. During the calculation process, it is essential to distinguish between fees and protocol revenue, as well as to consider token circulation and unlocking risks. Precise on-chain revenue data can be extracted using professional analysis sites like DefiLlama and Token Terminal. In Series 3, the xRev rankings were analyzed for the top 100 coins by market cap.

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