How To Value a Token
Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.
In valuing equity one looks at the revenue for high-growth companies and cash flow for low-growth startups.
From this one can determine the valuation.
Tokens bring additional features that impact the valuation.
In addition to ownership, tokens can bring the following benefits:
Voting rights — gives the holder the right to vote to determine the policies of the community.
Yield — gives the holder the right to lend out the token in order to generate income through interest rates.
Utility — gives the holder additional capabilities such as access rights to resources.
To value a token one must consider not only the revenue and profit streams but also the voting rights, potential gain through yield farming, and utility.
To find a final valuation one must assign a value to each of these components and then sum them up.
This gives the token several more levers with which to pull to increase the value.
If the interest rates go up on yield farming, then the value of the token should rise commensurate with it.
If the token holder has the right to vote to increase the value of the community, then the value of the token should increase with it.
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