AltcoinsOpinion
|11 min ReadAltcoins Hit Their Reckoning As Tokens Split Into Equity Or Noise
Jax Morales
Senior Analyst
Published
Jan 16, 2026
Alpha Briefing: Altcoins are hitting a brutal reset as speculative demand dries up and capital chases real income and tech equities instead. Launchpads now spray out tens of thousands of memecoins, while a small group of DeFi protocols and trading apps quietly pull in tens of millions in monthly revenue. In this new regime, tokens that do not act like pseudo-equity with clear claims on protocol income are being left to die.
The easy era is over. For five years, you could throw a dart at almost any token when sentiment was depressed and walk away with tremendous returns a cycle later. That game is finished. Capital has grown up, the menu of assets has exploded, and the market is finally forcing a simple question: does this token give me a real stake in a real business, or is it just noise?
Patrick Scott of Dynamo DeFi argues that we are watching a full repricing of the entire altcoin complex. Most tokens were not just a little rich. They sat on top of what he calls "speculative demand in excess of fundamentals." In plain English, there were not enough high quality, liquid assets in crypto, so money piled into whatever existed. Now the world looks different.
Speculation Era Ends For Altcoins
For years, there were only a few big liquid names in crypto, mostly Bitcoin and a handful of larger altcoins. Institutions that wanted exposure bought what they could. Retail piled into the same trade after hearing the legends of early Bitcoin millionaires, then chased the next wave of smaller coins, hoping to repeat the miracle.
Demand for altcoins with any kind of story far outstripped the supply of projects with real business models. The first order effect was beautiful if you were early. You could buy almost anything at the bottom of the last cycle and look like a genius a few years later. The second order effect was ugly. Projects realized the fastest way to make money was not to build products, but to sell their own tokens. For many teams, the "business model" was the token itself.
Then three big shocks smashed that setup.
First, launchpads like Pump.fun turned token creation into a commodity. It became trivial to launch a new coin, and on some days this year more than 50,000 tokens hit the market on Pump alone. Attention and liquidity that used to concentrate in the top few thousand coins got scattered across millions of tiny assets. The classic wealth effect around Bitcoin halvings got diluted.
Second, a small group of crypto projects started to show real fundamentals. Tokens like HYPE and new public offerings like CRCL trade more like traditional businesses, with revenue and data that investors can actually model. It is much harder to sell people on a whitepaper dream when they can buy live, cash-generating assets instead.
Hyperliquid is one of the clearest examples. The derivatives venue has months where holders’ revenue regularly tops $100 million. That is not a meme. That is a business.
Third, tech equities stole the show. Stocks tied to AI, robotics, biotech, and quantum computing have outperformed much of the crypto market. Even the Nasdaq has beaten both Bitcoin and altcoins year to date. Retail investors look at that and ask a simple question: why gamble on obscure tokens when "real" companies, with boards and filings, offer better returns for what feels like less risk.
The result is a graveyard of underperforming altcoins. Teams now fight over a shrinking pool of capital, while veteran crypto investors scramble to adjust their playbooks for a new regime.
At the end of the day, protocol tokens fall into two buckets. Either they give you an economic stake in a business, or they are effectively valueless. They are not magical instruments that gain value just by existing or by waving the word "community" around. Network coins like Bitcoin sit in a different category, more like commodities, but the argument for DeFi tokens is now brutally clear.
In the coming phase, only DeFi tokens that behave like pseudo-equity, with explicit or clearly switchable claims on protocol income, stand a real chance of holding value.
Retail Walks Away From The Casino
Retail has noticed the game is rigged. Many smaller investors are done with most tokens for now, and you cannot blame them.
First, tokens ran ahead of reality. They were bid up on big promises that never turned into products, revenue, or adoption. Second, memecoin launchpads created a tidal wave of supply. When everyone can launch a coin in minutes, almost nothing is scarce. Third, extractive tokenomics and an industry that tolerates "absolute trash" have taught retail a hard lesson: if you do not understand where the yield comes from, you are probably the product.
Instead of pouring money into altcoins, these players scratch the gambling itch somewhere else. Sports betting, prediction markets, stock options. None of those are necessarily smart bets, but they are not obviously worse than buying a random small cap token.
Leading KOLs talk about "crime is legal" in this market and still act shocked when people do not want to be the victim of that crime. The public is not stupid. Apathy is rational.
This apathy shows up in interest data. The enthusiasm of this cycle never matched the previous mania, even though protocols today have stronger fundamentals and lower regulatory risk. Search interest in crypto has lagged badly.
AI has not helped. ChatGPT and the broader AI boom showed a new generation what a real killer product looks like. For years, crypto people said "this is our Dot-Com moment." That pitch is harder to sell when AI is visibly reshaping daily life and crypto is not.
Search data makes the contrast obvious. Interest in AI has surged past crypto on Google, and the last time crypto beat AI was during the FTX collapse, when people searched the space out of fear, not greed.
Can retail come back to altcoins in size? Yes. They are clearly coming back to betting in general through prediction markets, even if they are buying binary options on political events instead of dog coins. To get them to buy tokens again, they have to believe they have a fair shot. That means less scammy token design and more real economics.
Only Protocol Income Can Support Token Prices
With the speculative buyer of last resort stepping away, tokens have to stand on their own. After years of experiments, most of the serious value accrual mechanisms collapse to one core idea: claims on protocol income and assets, whether past, present, or future.
Different models package this in different ways. Some tokens pay dividends. Some run buybacks. Some burn fees. Some give holders direct control of a well stocked treasury. But all of these are just routes back to the same destination: tokenholders having an economic claim on what the protocol earns or owns.
That does not mean every serious protocol must turn this on today. There are good reasons for teams to reinvest revenue instead of immediately showering holders with cash. The key is optionality. There needs to be a clear switch grounded in governance or hard criteria that can be flipped in the future. Vague "we might reward the community someday" lines no longer cut it.
For investors, the good news is that this information is right in front of everyone. Platforms like DefiLlama publish revenue and fee data for thousands of protocols. You do not have to guess.
Look at the top protocols by 30-day revenue and a pattern jumps out. Stablecoin issuers and derivatives platforms dominate. Launchpads, trading apps, collateralized debt positions, wallets, DEXs, and lending protocols also show up, but the big money is clearly in stablecoins and perpetual futures.
Trading more generally is a very profitable business to support. That said, there is real revenue risk if we move into a long, grinding bear market, unless these platforms can pivot to trading real world assets. Hyperliquid is already trying to go that route.
Distribution also matters as much as the underlying primitive. There was a time when hardcore DeFi users insisted that trading apps or wallets could never be top earners, because "smart" users would always interact with base protocols directly to save fees. The scoreboard says otherwise. Frontends like Axiom and Phantom are hugely profitable because they own the customer relationship.
The big takeaway is simple. Some crypto apps now generate tens of millions in revenue per month. If your favorite protocol is not there yet, that is fine. Building something the market will pay for takes time. But there must be a credible path to profitability. Playtime is over.
How Value Investors Will Pick Winners Now
If you want to find tokens that can survive and thrive in this value-based world, Scott lays out three simple filters.
First, the token should already give holders claims on protocol income, or have a clear, transparent road to those claims. Second, the protocol should show consistent and ideally growing revenue and earnings. Third, the market cap should trade at a reasonable multiple of past revenue. In other words, do not pay a trillion-dollar valuation for a lemonade stand.
Curve Finance is one example. The DEX has delivered steady revenue growth over the last three years, even as its fully diluted valuation has dropped. Today, Curve’s FDV sits at less than eight times its annualized revenue from the past month. Once you factor in bribes for locked CRV stakers and the long vesting period for new tokens, the effective yield for some holders is much higher. The key question going forward is whether Curve can hold or increase this revenue base.
Jupiter is another. It has become one of the biggest winners of the Solana ecosystem boom, acting as the main DEX aggregator and a leading perp DEX on that chain. The team has made a series of strategic acquisitions and now uses its distribution to launch and support new onchain markets. Annualized revenue flowing to tokenholders is high, at nearly 25 percent of circulating market cap and more than 10 percent of FDV.
Scott notes that he does not currently hold positions in either Curve or Jupiter, and that any serious investment decision also needs to weigh team quality and the competitive landscape. But the point is clear. These are the kinds of numbers that let a token trade like pseudo-equity instead of a lottery ticket.
Other protocols that fit this broad framework include Hyperliquid, Sky, Aerodrome, and Pendle. They combine revenue, distribution, and token designs that connect holders to the cash.
Everybody knows you cannot go back to the old game forever. In this new environment, tokens that pretend to be something special without offering claims on income will keep drifting toward zero. Tokens that admit what they really are, pieces of a business, finally have a chance to be priced that way.
Disclaimer: This document is intended for informational and entertainment purposes only. The views expressed in this document are not, and should not be taken as, investment advice or recommendations. Recipients should do their own due diligence, taking into account their specific financial circumstances, investment objectives and risk tolerance, which are not considered here, before investing. This document is not an offer, or the solicitation of an offer, to buy or sell any of the assets mentioned.