Meteora TGE is approaching: What is the reasonable value of MET?

Original Title: Meteora's TGE: What is fair value for MET?
Original Authors: Luke Leasure, Carlos, Blockworks
Original Translator: AididiaoJP, Foresight News

This week, Meteora is set to launch its token MET: Where might its fair value lie?

Index

The week started strong, with BTC rising 7% from last Friday's low. During Monday's trading session, the Launchpad sector was the best performer, while the AI sector saw the largest decline, reversing the relative strength each had shown over the past week.

From the weekly chart, the recent strength of Launchpad has made it a relative winner, only surpassed by gold, which again approached historical highs at Monday's close. Overall, following a historic liquidation event, most indices remain in negative territory on a weekly basis. In the Launchpad index, the BSC-based Launchpad project AUCTION is the only asset showing positive returns on the week, up 46%.

While there are some short-term gains, the monthly chart shows that almost all cryptocurrency indices have declined over the past 30 days. The liquidation event on October 10 led to widespread weakness, with only gold, cryptocurrency miners, AI, and stock indices performing strongly.

The VIX index has significantly retreated, dropping from a spike to 29 on Friday morning down to 18. The S&P 500 and Nasdaq indices both rose during Monday's trading session, with closing prices just a step away from historical highs.

Market Update

ETF fund flows remain subdued and negative. Data from Monday showed that BTC ETFs saw outflows of $40 million, ETH ETFs saw outflows of $145 million, while SOL ETFs saw inflows of $27 million. On a weekly basis, total net outflows from ETFs reached $1.5 billion, reversing some of the funds accumulated during a very strong start to October. The SOL ETF is the only product showing net inflows, increasing by $14 million.

Among DATCOs, BMNR is far ahead. This entity currently holds 3,236,014 ETH, exceeding the total held by all other ETH DATCOs combined, accounting for 2.67% of the total ETH supply. Notably, since the end of August, BMNR has consistently increased its ETH holdings by nearly 70%, while most other ETH DATCOs have remained flat. During this process, BMNR's market share of ETH held in DATCOs has grown from 50% to nearly 65% now.

This situation is also reflected in the trading volume of ETH DATCOs. BMNR accounts for 60-85% of the trading volume in ETH DATCOs, making its stock the most liquid. This liquidity characteristic has garnered the preference of larger allocators and reduced the marginal impact of ATM issuance on prices. BMNR appears to be the clear winner in the ETH treasury company space.

In SOL DATCOs, the situation is less clear. FORD remains the largest holding entity, with nearly all of its scale obtained through PIPE issuance. Despite a $4 billion ATM issuance plan being authorized, this entity has not significantly increased its holdings through ATM issuance.

The growth in holdings remains weak, with HSDT recently rising to second place.

The trading volume of SOL DATCOs tells a similar story. While DFDV once dominated the trading volume in this space, the situation has now shifted to a more even distribution among top names. Although FORD holds about 43% of the SOL held by DATCOs, it accounts for only about 10% of the trading volume in this space, indicating a relatively low turnover rate for its stock. These data may well explain why the accumulation of SOL through FORD's ATM issuance has been very limited.

While BMNR is becoming the clear winner in the ETH space, the leader in the SOL space may still be undecided. In the coming month, trading volume is expected to increasingly concentrate on the top companies.

Meteora's TGE: What is fair value for MET?

The highly anticipated Meteora TGE will take place on Thursday, October 23. Unlike the recent trend of projects conducting ICOs before launch, Meteora will not raise funds prior to the TGE. Instead, it will airdrop to eligible recipients, including Mercurial stakeholders, Meteora liquidity providers, JUP stakers, and Launchpad partners. Airdrop recipients will automatically receive unlocked MET or can choose to provide liquidity at launch to earn trading fees.

Meteora was launched in February 2023 by the team behind Solana's largest DEX aggregator and perpetual contract trading platform, Jupiter. When Meteora launched, the previous iteration of the protocol, Mercurial Finance, was terminated. The closure of Mercurial and its governance token was due to a large amount of MER being involved with FTX/Alameda, leading the team to decide that the best course of action was to rebuild the platform with a new token.

As early as 2023, the team announced that 20% of MET tokens would be distributed to Mercurial stakeholders at TGE. As shown, the team has honored its initial commitment, with 15% allocated to Mercurial stakeholders and 5% to Mercurial reserves. Additionally, the DEX has been running a points program since January 31, 2024, which will allocate a total of 15% of MET to this program. At launch, 48% of the MET supply will be in circulation, which is a high circulation ratio compared to other notable token launches in the Solana ecosystem.

As mentioned, 10% of the total supply will be used to guide initial liquidity through a dynamic AMM pool, with a starting price of $0.50, and liquidity distribution extending up to a $7.5 billion valuation. The early liquidity pool is one-sided, with early buyers exchanging their USDC for MET. Note that the pool fees start high and sharply decline over time through a fee scheduler.

Valuation Calculation

DEXs, especially on Solana, lack significant moats as they do not have front ends. A prime example of this dynamic is Raydium, which lost millions in trading volume and revenue after Pump decided to guide its graduation token to its own AMM PumpSwap. Meteora attempts to mitigate this issue through vertical integration, expanding its distribution capabilities through Jupiter and selected Launchpad partners.

As mentioned, this DEX works closely with the Jupiter team, which has become a common portal for retail users to conduct on-chain transactions. Additionally, Meteora is launching a Launchpad in August 2024 in partnership with Moonshot and is introducing new partners over time, including Believe, BAGS, and Jup Studio. The chart below shows that recent Launchpad activities have contributed between $200,000 and $800,000 in weekly revenue to Meteora, with most of the traffic coming from Believe and BAGS.

From an overall financial perspective, Meteora has generated $8.8 million in revenue from all its funding pools over the past 30 days, with weekly revenue consistently approaching $1.5 million even during periods of relatively low on-chain activity. Notably, over 90% of Meteora's revenue comes from Memecoin funding pools, which typically have higher fee tiers than SOL-stablecoin, project tokens, LSTs, and stablecoin-stablecoin pools.

Regarding valuation, we can use Raydium and Orca as comparable companies. The chart below shows the price-to-sales ratio of RAY and ORCA year-to-date based on 30-day annualized data. We observe that until September, the pricing ratios of these two assets were relatively similar, after which RAY began trading at a premium. From a broader perspective, the median price-to-sales ratio for these two assets in 2025 is 9 times.

The table below compares the price-to-sales ratios of RAY and ORCA over different review periods. We observe that ORCA trades very similarly across all annualized time frames, with a price-to-sales ratio of about 6 times. In contrast, as revenues declined, RAY has become more expensive in recent months. For Meteora, we see its annualized revenue ranging from about $75 million to about $115 million, depending on the review period.

Finally, the chart below illustrates the potential valuation of MET across different revenue and price-to-sales ratio ranges. Based on the historical pricing of RAY and ORCA, a price-to-sales ratio between 6 and 10 is most likely. Therefore, it is reasonable to expect MET's trading valuation post-launch to be between $450 million and $1.1 billion. Note that based on the following figures, a valuation exceeding $1 billion begins to appear somewhat expensive relative to comparable companies, while exceeding $2 billion would almost certainly indicate that MET is overvalued unless it can improve its revenue run rate.

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