![]() It appears to be a signal of how much people are using the blockchain and its ecosystem.īut this could be misleading. One of these metrics is called Total Value Locked (TVL) - how much money is deposited in a smart contract, then summed across all smart contracts. (This is the equivalent of venture capitalists using things like "number of waitlist signups" as a proxy for how much a startup should be valued at.) ![]() In blockchains like Ethereum or Solana or Avalanche, we don't have that same methodology yet, so we try to find other metrics that we can use as a basis of valuation, even if it's directional (X should be worth more than Y). Not everyone comes to the same conclusion, but conceptually everyone agrees that this is a reasonable methodology. ![]() Something stocks have that cryptocurrencies don't is some sense of commonly accepted valuation frameworks.įor example, discounted cash flow: take the cash flow a company is projected to produce, then discount it back to today, and that's how much the stock should be worth. ![]() For today, a story pouring some cold water on web3.
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