What Kind of Tokens Can Survive Bull and Bear Markets?

Faith-based assets and cash flow assets: two answers to long-termism in crypto.

Written by: donn

Compiled by: Saoirse, Foresight News

The token issuance tactics in cryptocurrency have long been understood.

Automated processes like Pump.fun for pump and dump schemes have been established. Each token issuance is packaged for hype, with KOLs adeptly using wallet splits to offload and harvest retail investors. The average holding period for traders is often just a few seconds.

The efficiency of coin creation in the industry is unprecedented, but creating a token that can withstand bull and bear markets and is worth holding for over a year is much more challenging.

I tend to evaluate whether a token can create long-term demand from two dimensions: the strength of the belief underpinning the asset and the credibility of token holders in realizing economic returns.

Faith-based Assets

These assets do not generate cash flow; their value relies entirely on collective consensus—if enough people believe it is valuable, it has value. I personally do not believe in Bitcoin, so I only choose to buy when I judge that a large number of people will continue to be optimistic about BTC.

So, what is the core difference between fleeting meme coins like WIF and BONK and meme assets like BTC that can endure?

Faith-based assets that can stand the test of time often share several common characteristics:

• Iconic core figures, akin to spiritual leaders. BTC has Satoshi Nakamoto, ETH has Vitalik, SOL has Anatoly (who often debated with extreme Ethereum supporters on Twitter), and HYPE has Jeff. The core figures of faith-based assets are continually mythologized; when the token is mentioned, people immediately think of them.
• Survived near-death crises and then reborn. BTC endured the Mt. Gox incident, ETH survived the DAO hack, and SOL escaped the fallout from FTX's collapse. HYPE faced the JellyJelly attack, where its price plummeted to single digits, and the market widely questioned whether the project could survive. Surviving such life-and-death challenges clears out speculators, leaving the most loyal believers as the foundation of the community. (Note: The JellyJelly attack refers to Hyperliquid (HYPE) suffering massive losses in its HLP liquidity pool due to liquidation arbitrage involving the JELLY token, marking a near-death rebirth in HYPE's narrative.)
• Made early believers wealthy, and with substantial wealth. The rise in token prices is the best promotional tool; early users who became wealthy through the project become its most fervent evangelists. From 2013 to 2018, BTC provided early participants with a 200-fold return; from 2020 to 2022, ETH saw a 40-fold increase; SOL also achieved a hundredfold increase; HYPE increased 30 times while providing generous airdrops to early users.
• Possesses a passionate community, meme culture, and exclusive identifiers. Even with financial incentives, meme culture accelerates dissemination. Exclusive jargon and internal memes create a sense of belonging among members, making them willing to unconditionally support this grand narrative. BTC has the laser eyes culture, ETH has .eth domains, SOL has the ◎ symbol and .sol identifiers, while HYPE has the .hl user group that floods the chat. (Note: Laser eyes is a signature meme culture of the Bitcoin community that emerged on Twitter in 2021, where users added laser eyes to their avatars to signify strong bullish sentiment towards BTC, serving as an identity marker for Bitcoin believers.)
• A short and powerful battle slogan. A simple slogan facilitates rapid narrative dissemination. BTC: digital gold; ETH: world computer; SOL: Ethereum killer / decentralized Nasdaq; HYPE: the hall of all finance.

Recently, ZEC also closely aligns with this set of standards: it experienced a shielded pool vulnerability crisis, rising from $40 to $1200 within a year, with the narrative slogan being "privacy Bitcoin" or "soon to possess quantum resistance capabilities like Bitcoin".

However, these traits cannot be artificially manufactured. Forcing a community to be packaged as a religion will come off as very awkward.

To create a long-term token that can cross cycles, there is a clearer path...

Cash Flow Assets

Cash flow assets are quite scarce in the crypto market for two main reasons:

• Attracting follow-up funds through narrative marketing is far simpler than building a business that can generate positive free cash flow.
• If you successfully run a stable, profitable cash cow business and do not need to expand, the simplest choice is not to issue tokens and keep all profits.

Many profitable project teams operate this way, such as DexScreener, Axiom, and Trojan, where all earnings belong to the team. It was not until Hyperliquid emerged that the market saw a new paradigm: you can build a high cash flow business and aggregate value to the token, with long-term returns exceeding the short-term profits retained by the team.

When evaluating cash flow assets, focus on five key dimensions:

• Profit fundamentals: Can it continuously generate surplus (profit)? HYPE and PUMP are benchmark cases, with average daily profits reaching $1-2 million. The revenue stability of perpetual DEXs is stronger and less cyclical, especially after launching perpetual contracts. The market has always questioned the sustainability of revenue from Launchpads (token issuance platforms). Previously, the market judged that the revenues of PONS, STONK, and GP (BonkFun) were not sustainable, and subsequent trends confirmed this judgment, but PUMP broke this inherent consensus.
• Transparency: Can profits be verified on-chain? The cleanest earnings are fully on-chain, as seen with HYPE and PUMP, requiring minimal trust costs. In contrast, projects like GRASS derive their earnings off-chain and from private contracts with Frontier Labs, leading the market to question the authenticity of its revenue (though the author believes the income is genuine).
• Token vs. equity: How do profits flow to token holders? Is there a value retention by an equity entity? This has been a hot topic in the industry recently: Venice is conducting equity financing while distributing tokens for free; GRASS has also clarified that all value belongs to token holders. A negative example is SHFL: the business revenue is considerable, but profits flow to an equity entity registered in Curacao, which received $18 million in dividends; token holders can only obtain lottery qualifications.
• Value capture mechanism: Is there a direct return to token holders through buybacks or dividends? The reasoning is straightforward: automated buybacks and dividends (HYPE, LIT, SKY) are far superior to discretionary buybacks by the team (PUMP).
• Team trustworthiness: If profits are not distributed as dividends but reinvested into business expansion, is this team trustworthy? This is similar to investing in startups. GRASS, ENA, CHIP, and CARDS fall into this category. They explicitly promise that value only belongs to token holders but choose to retain profits for expansion. This heavily relies on team credibility—token holders lack corresponding legal protections, and most do not have boards or regulated financial reports. Analysis frameworks like Blockworks' TTF can assist in judgment.

Requiring early projects to distribute all profits as dividends can harm their growth potential; however, holders are understandably reluctant to be fed empty promises. If it cannot clearly explain how retained profits will ultimately benefit token holders, then "investing in expansion" essentially means holders are betting on two things: the development of the business itself and whether the team will be willing to share profits in the future. Buybacks can reduce some uncertainty; CHIP has recently improved transparency in value aggregation for tokens, which is commendable.

High-quality targets that meet the above five standards include: HYPE, LIT, PUMP, SKY. New projects that hit all five criteria are extremely rare. PAPER was once one of the most promising candidates, theoretically capable of generating considerable revenue. Unfortunately, the project team ultimately abandoned the token because the token mechanism would foster motives to attack exchanges.

I believe there is still vast innovation space in the cash flow asset sector. HYPE has pioneered the paradigm of high-value capture tokens, and PAPER has shown the market the upper limits of this model. Imagine if a business like Polymarket, which generates about $20 million in monthly revenue, aggregated all its value to the token.

Additionally, the Shuffle team is discussing building a fully on-chain casino. If this casino is realized and uses 90% of net game revenue daily for token buybacks, SHFL would directly enter the top tier. Buying tokens that rank lower and have not yet met all conditions essentially means betting on whether the team will optimize mechanisms and move closer to the top tier.

In the future, I will focus on perpetual DEX tokens like VAR (Variational) and XTEN (Extended). Other noteworthy targets include exchanges like ARCUS and ENTROPY, as well as Polymarket (if it initiates token issuance TGE).

Conclusion

To create cross-cycle, long-lasting assets, there are only two paths. BTC, ZEC, and HYPE follow the faith-based asset route; HYPE, LIT, and PUMP follow the cash flow asset route. Among all targets, HYPE offers the best holding experience: it is both a strong cash flow asset and has the potential to grow into a faith-based asset with lasting vitality.

Many tokens attempt to pursue these two paths but ultimately fail: including new layer public chains (the sector has become overly saturated) and established DeFi tokens (which have almost no revenue and no value capture capability). AI narrative themes repeatedly attempt to create faith-based assets but mostly fall victim to the fate of decline.

Note 1: I wrote "Using Religion as an Analytical Framework for Blockchain" as early as January 2024, ten months before the issuance of the HYPE token. Later, I found that HYPE meets all the standards of faith-based assets, even though it is also a cash flow asset. Note 2: Only when players use SHFL to bet will 30% of the net game revenue be burned, and this type of transaction accounts for a very low proportion of total revenue. The $18 million dividend information comes from relevant financial documents and sources from team insiders. Note 3: Rollbit's perpetual products generate about $18 million in revenue annually. I originally estimated that Papertrade's scale could reach five times that of Rollbit, which would mean annual revenue exceeding $100 million. Note 4: Refer to the Hyperliquid HIP-4 proposal.

This content is provided for general informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online promotions, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets. Crypto assets are highly volatile and may result in loss. The availability of WEEX services, products, and related events may vary by region. You are responsible for ensuring that your participation is in accordance with applicable local laws and regulations.