We’ve previously highlighted how grossly undervalued WaultSwap’s $WEX token continues to be, despite having a TVL (total value locked) of over $400MM, yet it’s market cap remains under $40MM. The majority of others coins hold about a 0.5 – 1.0 ratio for Market cap to TVL:

Of course, in the pageant for most undervalued asset, we have another contender with an even more massive TVL and transaction volumes. In fact, on August 12th, transaction volumes were the highest of any DeFi solution running on the Binance Smart Chain (BSC) at just under $900MM. Our winner for the next moonshot is Alpaca Finance ($ALPACA).

Per dAppRadar, Alpaca Finance ranks #19 across all chains and #3 on BSC, with at TVL of $1.12B. So who is number 2 on the BSC?

Venus Protocol – as of August 14th:

  • $2.74B – TVL
  • $1.15B – Market Cap
  • MC / TVL ration = 0.42, compared to Alpaca Finance’s 0.14

Evaluating fundamentals alone aren’t enough to forecast pricing, but understanding the story and benchmarking against peers are a key starting point. Coupling TVL with the high level of transaction volumes gives a clear indication of rapid adoption. Recognizing the value of their product, the Alpaca team has expanded to include a head of institutional growth. In a world that has seen negative interest rates, farming stable coin pairs for high yields is an extremely attractive proposition. This is especially true as there seems to be no end in sight to the global easy money policy. Leaving fiat currency in the hands of a bank, at 1-2% interest, won’t even keep up with inflation… actually, sorry, seems like it’s closer to a half of a percent:

And CIT Bank is bragging about their near zero rate being 5x the national average. Of course if you read the fine print, that high rate is only available on a small portion of any savings deposited with the bank. Good luck retiring or accumulating life changing wealth on that.

Back to Alpaca, let’s have a look at their leveraged farming rates on their stable coin pairs:

It should be noted that these rates assume leverage of 2-2.5x, but that’s the beauty of the protocol, it takes care of all of the borrowing and behind the scenes transactions for you.

These are three of about 50 different pairings available.

So considering pricing on the token itself, if the Market cap / TVL ratio inched closer to 0.4, we could easily see an $ALPACA price over $2.00.

Header Image: Twitter – @AlpacaFinance