Cash Flow Valuation HyperLiquid: $HYPE real value could reach 385 USD?

With 93% of transaction fees returned directly to token holders, cash flow valuation shows that $HYPE is grossly undervalued. This article is derived from an article written by G3ronimo and is compiled, compiled and written by TechFlow. (Synopsis: Hyperliquid is going to be a prediction market? Interpreting the HIP-4 proposal: the DEX giant's new business experience (Background added: Circle announces that it has invested in $HYPE and is considering acting as a validator node, USDC has been deployed in Hyperliquid) HyperLiquid has grown into a full-fledged crypto-native exchange, with most of its net fees programmatically distributed directly to token holders through the Assistance Fund (AF). This design makes $HYPE one of the few tokens that can be valued based on cash flow. Until now, most valuations of HyperLiquid have relied on the traditional multiple method, comparing it to established financial platforms such as Coinbase and Robinhood, using EBITDA or revenue multiples as a reference. Unlike traditional corporate stocks, where corporate management typically retains and reinvests earnings at its own discretion, HyperLiquid systematically returns 93% of transaction fees directly to token holders through a bailout fund. This model creates predictable and quantifiable cash flows that are well suited for meticulous discounted cash flow (DCF) analysis rather than static multiple comparisons. Our method first determines the cost of capital of $HYPE, and then, we reverse the current market price to determine the future gains implied by the market. Finally, we apply growth forecasts to these revenue streams and compare the resulting intrinsic value to today's market prices, revealing the valuation gap between current pricing and underlying value. Why Discounted Cash Flow (DCF) instead of Multiple? While other valuation methods compare HyperLiquid to Coinbase and Robinhood through EBITDA multiples, these methods have the following limitations: Differences between enterprises and token structures: Coinbase and Robinhood are corporate shares whose capital allocation is directed by the board of directors, and the proceeds are retained and reinvested by management discretion; HyperLiquid systematically returns 93% of transaction fees directly to token holders through the Assistance Fund. Direct cash flow: HyperLiquid is designed to generate predictable cash flow and is well suited to the DCF model rather than the static multiple method. Growth and risk characterization: DCFs are able to explicitly model different growth scenarios and risk adjustments, while the multiple approach may not adequately reflect growth and risk dynamics. Determine the appropriate discount rate To determine our cost of equity, we proceed from public market reference data and adjust for cryptocurrency-specific risks: Cost of equity ® ≈ risk-free rate + β × market risk premium + crypto/illiquid premium Beta analysis based on regression analysis with the S&P 500: Robinhood (HOOD): Beta value of 2.5 and implied cost of equity of 15.6%; Coinbase (COIN): Beta value of 2.0 and implied cost of equity of 13.6%; HyperLiquid (HYPE):Beta value of 1.38 and implied cost of equity of 10.5%. At first glance, $HYPE has a lower beta value, so its cost of equity is lower than that of Robinhood and Coinbase. However, the R² value reveals an important limitation: HOOD: the S&P 500 explains 50% of its return; COIN: The S&P 500 explains its 34% return; HYPE: The S&P 500 only explains its 5% return. A low R² of $HYPE indicates that traditional stock market factors are insufficient to explain its price volatility and crypto-native risk factors need to be considered. Risk Assessment Despite the low beta value of the $HYPE, we adjusted its discount rate from 10.5% to 13% (compared to 13.6% for COIN and 15.6% for HOOD) for the following reasons: Lower governance risk: The direct programmatic allocation of 93% fees reduces corporate governance-related concerns. In contrast, COIN and HOOD do not return any earnings to shareholders and their capital allocation is determined by management. Higher market risk: $HYPE are crypto-native assets that face additional regulatory and technical uncertainty. Liquidity considerations: Token markets are generally less liquid than mature stock markets. Get the Market Implied Price (MIP) Using the 13% discount rate we set, we can reverse derive the market's implied earnings expectations at the current $HYPE token price of about $54: Current market expectations: 2025: Total revenue of $700 million 2026: Total revenue of $1.4 billion Terminal growth: Sustained growth of 3% per year thereafter These assumptions result in an intrinsic value of approximately $54, consistent with current market prices. This indicates that the market is pricing modest growth based on current fee levels. At this point, we need to ask the question: does the market implied price (MIP) reflect future cash flows? Alternative Growth Scenarios @Keisan_Crypto present an attractive 2- and 5-year bull market scenario. Two-year bull market forecast According to the analysis of @Keisan_Crypto, if HyperLiquid achieves the following goals: Annualized fees: $3.6 billion Aid fund income: $3.35 billion (93% of fees) Outcome: The intrinsic value of HYPE is $128 (140% undervalued at current prices) Five-year bull scenario In a five-year bull scenario, he predicts fees to reach $10 billion per year, of which $9.3 billion goes to $HYPE. He assumes that HyperLiquid's global market share will grow from 5% today to 50% by 2030. Even if it doesn't reach 50% market share, these numbers are still likely to be achieved through smaller market shares as global transaction volumes continue to grow. Five-year bull market forecast Annualized fees: $10 billion Aid fund income: $9.3 billion Outcome: HYPE has an intrinsic value of $385 (600% undervalued at current prices) Although this valuation is lower than Keisan's $1,000 target, the difference stems from our assumption that earnings growth normalizes to 3% annually thereafter, and Keisan's model uses cash flow multiples. We believe that using cash flow multiples to predict forward value is problematic because market multiples are volatile and can change significantly over time. In addition, the multiple itself contains the earnings growth assumption, while after 5 years using the same cash flow multiple as 1-2 years, implies that the level of growth from 2030 onwards is consistent with the level of growth in 2026/2027. Therefore, multiples are more suitable for short-term asset pricing…