Why Is a Protocol’s Fee Structure Crucial When Using the MC/TVL Ratio?

The protocol's fee structure is crucial because it determines the rate at which the protocol generates revenue from its locked assets (TVL). A protocol with a high TVL but a low fee capture rate will have a lower intrinsic value, even if its MC/TVL ratio looks attractive.

Conversely, a protocol with a moderate TVL but a high fee rate that accrues to token holders will have a stronger fundamental valuation. The fee structure dictates the protocol's ability to monetize its TVL.