Skip to main content

Crypto Valuation

Crypto | Games | Mind Map

The best product doesn't always win, the product that is sold the best does.

Create a framework for quantifying the value of narratives and the fundamentals the expand upon to understand the value of a token.

Schema​

Valuation Checklist​

Token valuation checklist

  • Fundamentals
  • Tokenomics
  • Flows
  • Memetics

Tokenomics​

  • Supply & Demand
  • Maximum & Circulating Supplies
  • Inflation
  • Deflation
  • Rule of Thumb for Inflation
  • Market Cap
  • Unit Bias
  • Fully Diluted Value
  • Trading Volume
  • Initial Distribution
  • Vesting Schedule
  • Current Distribution
  • Demand-side Tokenomics
  • Token Utility
  • Financial Incentives
  • Growth & Marketing Allocation

Fundamentals​

How does the protocol attract, capture and grow value?

The market tends to focus too much time and attention tokenomics rather than understanding the underlying business model.

Invest time evaluating a protocols business model. A business model is how the protocol plans to generate cash flows, while a token simply entitles owners to a claim on those cash flows. In a mature market, the value of a token will come from the quality and durability of a protocol's underlying business model. Without a sustainable business model, over the long-term, the underlying token will be worthless.

Engineering sustainable business models and tokenomics is difficult, in reality communities create tokens, tokens don't create communities.

Aim to establish a standardised framework for comparing blockchains to stop bullshit about which chain is better and get on with shipping valuable solutions.

Price vs Value​

Price is what you pay, value is what you get..

Is the current price driven by Fundamentals or Narratives?

Use JTBD Analysis to validate fundamentals, and psychology to validate narratives.

Primitives​

Crypto mechanisms to store, transfer and grow value.

Layer 1s​

Ethereum, Solana:

  • Product: censorship-resistant blockspace for decentralized applications
  • Supply side: validators that maintain the censor-resistant network
  • Demand side: developers and end-users of applications that use blockspace on the network

Liquid Staking​

Lido, Stride:

  • Product: access to staking yields while retaining liquidity
  • Supply side: validators that run nodes on behalf of depositors
  • Demand side: depositors that want to stake without running a node

DEXs and Money Markets​

Uniswap, Compound, Aave:

  • Product: ability to trade, borrow, or lend tokens permissionlessly
  • Supply side: liquidity providers
  • Demand side: users who want to trade, borrow, or lend

Tools​

Tools and sites to help value tokens.