Investment analysis tools for L1 and L2 tokens

The important distinction is fees vs. revenue. Fees are what users pay; revenue is the portion economically attributable to the protocol/network. Token Terminal explicitly separates fees, supply-side fees, revenue, expenses and earnings, which makes it particularly useful for this analysis.tokenterminal.com+1

2. TVL is useful—but easy to misuse

TVL answers roughly: "How much capital is sitting in this ecosystem?"

That's valuable, but TVL can be inflated by:

• incentive farming
• double-counting assets
• native-token price appreciation
• mercenary capital
• bridged assets that aren't actually being used
• recursive lending

Token Terminal defines TVL as assets deposited into protocols, while L2BEAT uses Value Secured for L2s—a somewhat different concept that tracks assets secured by the L2 infrastructure.tokenterminal.com+1

So I would look at:

TVL growth + stablecoin growth + volume growth + users growth

rather than TVL in isolation.

A chain whose TVL goes from $1B → $2B while users, stablecoins and transaction volume all rise is much more interesting than one going $1B → $2B purely because its native token doubled.

3. Revenue is probably the most important fundamental metric

For an L1/L2, ask:

Are people paying to use the network?

Look at:

• daily/weekly/monthly fees
• revenue
• revenue growth
• revenue/user
• fees/user
• earnings after expenses
• fee/revenue per unit of market cap

Token Terminal provides standardized fees, revenue, expenses, earnings, active users and valuation metrics across chains, which makes cross-chain comparisons substantially easier.tokenterminal.com+1

The particularly interesting metric is:

Market cap / annualized revenue

For example:

• Chain A: $10B market cap / $500M annual revenue = 20×
• Chain B: $5B / $50M = 100×

Even if B has faster user growth, A may offer the more attractive fundamental valuation.

For crypto I wouldn't treat this like a traditional P/E ratio—token economics are radically different—but it is a useful relative valuation anchor.

4. Active users: look for real users, not just addresses

"Active addresses" can be misleading.

One user can control 20 addresses, bots can generate thousands of transactions, and incentive programs can manufacture activity.

I'd examine:

DAU → WAU → MAU

and, ideally:

retention/cohorts

The really bullish signal is:

MAU ↑ + transactions/user ↑ + fees/user ↑ + revenue ↑

rather than simply:

transactions ↑

Token Terminal, for example, provides daily/weekly/monthly active users and addresses as well as ARPU/AFPU.tokenterminal.com

That allows you to ask a much more interesting question:

"Is each additional user becoming economically valuable?"

5. For L2s, add a completely different metric: value capture

This is where many investors make mistakes.

A successful L2 doesn't necessarily mean a successful L2 token.

An L2 can have:

• enormous TVL
• millions of users
• huge transaction volume
• growing revenue

…and still have a poor token investment if the token has no meaningful claim on those economics.

So for every L2 ask:

Where does the money go?

Map:

Users → L2 → sequencer → Ethereum/data availability → treasury/token holders

Then determine:

1. What are users paying?
2. What does the L2 retain?
3. What are its operating costs?
4. How much is distributed to token holders?
5. Is there a buyback/burn?
6. Does staking capture revenue?
7. How much new token supply is being emitted?

This is arguably more important than TVL.

6. L2BEAT is essential for L2 research

For Ethereum L2s, I would use L2BEAT alongside financial analytics.

It tracks things that generic DeFi dashboards don't capture well:

• value secured
• activity
• rollup type
• proof systems
• data availability
• finality
• costs
• risk assumptions

For example, L2BEAT currently separates rollups from validiums/optimiums and explicitly shows the different bridge/value categories and additional trust assumptions.tokenterminal.com+1

Its activity dashboard also lets you compare L2 throughput using UOPS/TPS and 30-day transaction counts.l2beat.com

For L2 investing, I would never rely on DeFiLlama TVL alone.

7. My preferred tool stack

🥇 DefiLlama — ecosystem health

Best for:

• TVL
• stablecoins
• fees
• revenue
• DEX volume
• lending
• bridges
• yields
• protocol rankings
• chain comparisons

Its metrics dashboard currently covers hundreds of chains and explicitly provides TVL, fees, revenue, volume, stablecoins, bridges and token metrics.defillama.com

Use it to find candidates.

🥈 Token Terminal — fundamental valuation

This is probably my favorite tool for the investment part.

Use it for:

• fees
• revenue
• earnings
• active users
• TVL
• market cap
• FDV
• developers
• ARPU
• valuation comparisons
• financial statements

It also has SQL access to standardized on-chain data, which is useful if you're building your own screening model.tokenterminal.com

Use it to decide whether a good network is actually cheap enough.

🥉 L2BEAT — L2-specific research

Especially useful for:

• Ethereum L2 risk
• value secured
• activity
• rollup architecture
• proof systems
• data availability
• decentralization/security stages

Use it to distinguish a genuinely strong L2 from a high-TVL but risky/immature one.

8. Don't ignore developers

For a 5–10 year thesis, developer activity can be an important leading indicator.

I care about:

• active core developers
• developer growth
• contract deployments
• commits
• ecosystem applications
• quality of applications

The key is persistent development, not one month of GitHub activity.

Token Terminal currently exposes core developers and code commits alongside financial and user metrics, making it convenient to put development beside economic activity.tokenterminal.com

9. The metric most investors forget: token dilution

I'd put this near the top of the checklist.

Suppose:

Network revenue grows 50%

but

token supply grows 80%

You don't necessarily have a better investment.

Look at:

• circulating supply
• FDV
• annual inflation
• staking emissions
• investor unlocks
• team unlocks
• foundation allocations
• treasury
• token burns
• buybacks
• percentage of supply already circulating

Then calculate:

Fundamental growth vs. supply growth

A network growing revenue 30% while token supply grows 5% is substantially different from revenue growing 30% while supply grows 40%.

10. My "accumulation scorecard"

For each L1/L2 I'd create something like this:

Then score each 1–5.

I'd give token capture + valuation + revenue more importance than raw TVL.

11. The "green flag" I want to see

My ideal long-term candidate looks something like:

Users ↑
→ Transactions ↑
→ Stablecoins ↑
→ TVL ↑
→ Fees ↑
→ Revenue ↑
→ Revenue/user ↑
→ Developers ↑
→ Token capture ↑
→ Token supply growth modest
→ Valuation reasonable

That's a compounding network-effect thesis.

Conversely, I'd be cautious about:

TVL ↑
→ users flat
→ revenue flat
→ token emissions high
→ FDV enormous
→ token captures little/no economics

That's potentially just capital temporarily parked on a chain, rather than a fundamentally valuable network.

My practical workflow

If I were building a long-term L1/L2 portfolio today, I'd do it in four passes:

1. DefiLlama: screen 50–100 chains → narrow to ~15 based on TVL, stablecoins, fees, users and volume.

2. Token Terminal: compare those 15 on revenue growth, active users, developers, earnings and valuation.

3. L2BEAT: for Ethereum L2s, investigate security architecture, value secured, activity and trust assumptions.

4. Tokenomics: manually inspect each token's supply schedule, unlocks, emissions and—most importantly—whether network growth actually accrues to the token.

The final question isn't "Which blockchain has the most activity?"

It's:

"Which blockchain has durable and growing economic activity, while its token is priced below the value of the future cash flows/network economics it can plausibly capture?"

That's the distinction I'd use between investing in a network and investing in its token.tokenterminal.com+1

Not financial advice; crypto fundamentals and token value capture can change very quickly.