How do you value crypto?

First, we need to differentiate between crypto assets and traditional investments. Since most traditional investments, like equities and debt instruments, have relatively predictable cash flows, they are typically valued based on the present value of future cash flows using a discount rate that coincides with their level of risk. By using a combination of a company’s income statement, cash flow statement, balance sheet, and projections on financing costs and revenue, financial analysts can typically arrive at a valuation. This 20 page document proposes a framework for tokenomics and valuation.

Smart contract platforms (SCPs) like Ethereum (ETH) are often referred to as distributed computers, whereas payment cryptocurrencies like Bitcoin – discussed in part one of our series – are simpler distributed ledgers. In this piece, we’ll break down the unique characteristics of smart contract platforms, discuss how their native tokens vary from traditional payment cryptocurrencies like Bitcoin. This 20 page document propose a valuation framework by examining supply and demand factors.