This article systematically explores the definition, calculation, pros/cons of REV (Real Economic Value), its relationship with models like FDV/REV and MEV, and combines on-chain data with market trends to help readers build a nuanced, (dialectical) valuation framework—avoiding misjudgments from over-relying on (single metrics).

Preface

This piece aims to foster learning and critical thinking about REV, enabling a more holistic evaluation of public blockchains. We advocate (inclusive) learning, (dialectical analysis) of ongoing debates, and avoiding isolated reliance on any metric to prevent potential pitfalls.

Key References:

1. Articles:

   • Poopman (💩✨) on Twitter/X

   • mteam.eth 🗼 on Twitter/X

   • Valuing Blockchains: The Great REV Debate

2. Dashboards:

   • Chain Comparison: Blockworks Analytics

3. Understanding REV

3.1 What is REV?

REV (Real Economic Value) measures the total fees users pay to interact with a blockchain, akin to revenue for traditional businesses.

"REV includes in-protocol transaction fees + out-of-protocol tips (e.g., MEV), reflecting aggregate monetary demand for on-chain transactions." —@blockworksres

Formula (clarified):

REV = ∑(In-protocol fees) + ∑(Out-of-protocol tips) + ∑(MEV)  

Note: The "/" in some formulas denotes addition, not division.

The REV Debate:

• REV Maxis: Argue maximizing REV reduces marginal costs, expands user bases, and ensures sustainable revenue (e.g., Dan Smith).

• REV Minimalists: Claim REV is a poor long-term metric—it spikes during speculative bubbles and fails for chains like Bitcoin (near-zero REV). Advocates propose minimal viable REV to limit economic risks (e.g., Ryan Berckmans).

This article focuses on REV’s application, not ideological debates.

3.2 Recent Trends

• 2019–2023: Ethereum dominated REV share.

• 2024: Solana (SOL) took the lead, with Tron (TRX) also gaining ground.

• Key Insight: REV heavily weights non-user income (e.g., MEV). Solana’s MEV boosts its REV, enhancing valuation potential.

DeepSeek’s Analysis:

3.3 Pros & Cons of REV (@mteamisloading)

Pros:
Harder to manipulate (vs. active addresses/trading volume), especially when fees are burned.
Tracks retail activity across chains historically.

Cons:
Lagging indicator.
Doesn’t reflect a chain’s full picture—never use in isolation.
Possible manipulation (though difficult).
MEV-heavy chains may distort REV (e.g., immature MEV infra → unfairly low REV).

3.4 Valuation: The F/R Multiplier

By dividing FDV (Fully Diluted Valuation) by annualized REV, we get an F/R Multiplier—similar to a P/E ratio for blockchains:

• High F/R: Market optimism/speculation (e.g., Bitcoin’s narrative/liquidity premium).

• Low F/R: Strong revenue alignment (e.g., SOL, TRX).

Alternative: M/R Multiplier (Market Cap ÷ REV) avoids FDV’s dilution bias, better for short-term pricing efficiency.

DeepSeek’s Comparison of Valuation Models:

3.5 REV vs. MEV

MEV (Maximal Extractable Value): Profits from链上套利 (on-chain arbitrage),清算 (liquidations),抢跑 (front-running).

Key Differences:

• MEV: Micro-level health indicator (e.g., validator income, user experience).

• REV: Macro-level revenue premium (total).

Health Metric: MEV/REV Ratio → Lower = healthier (high ratios signal risks like centralization).

4. Conclusions

1. REV ≠ Value Capture: REV is often burned or redistributed (e.g., via deflationary mechanisms).

2. F/R Varies by Chain: Like P/E ratios, differences reflect yield expectations/REV quality.

3. Blockchains ≠ Companies: Native tokens aren’t equity—valuation requires unique frameworks.

4. REV Minimalism? Unlikely optimal; maximizing REV warrants debate (Dan Smith).

5. Holistic Metrics: Combine REV with fees, F/R, MEV, etc., for balanced analysis.

Final Note:
Blockchain valuation demands (dialectical thinking)—no single metric suffices. REV, MEV, and multipliers are tools, not gospel.