This Smith + Crown cryptofinancial valuation series seeks to provide readers with the resources necessary to evaluate a number of prominent cryptofinancial valuation techniques. In this first installment, we outline historical valuation methodologies such as Discounted Cash Flow (DCF), Trading Comparables, Precedent Transaction Comparables, Dividend Discount Model (DDM) and Sum-of-the-parts (SOTP) Valuation, and explore their potential intersections with cryptocurrency valuation.
Later in this series we will look at what is easily the most widely referenced crypto valuation tool, the Equation of Exchange, a.k.a. the Quantity Theory of Money or MV=PQ, as well as discount token valuation techniques, the cost of production forecasting, generalized Metcalfe Analysis, and Network Value to Transaction Ratio Analysis (NVT). By understanding both existing valuation approaches as well as novel and newly emerging ones, readers are best prepared to contextualize this nascent stage of cryptofinancial valuation and evaluate techniques themselves.