How Can Investors Estimate the Intrinsic Value of a Token?

Investors can estimate a token's intrinsic value by using valuation models adapted from traditional finance, such as Discounted Cash Flow (DCF) for tokens that generate cash flows or fees. For utility tokens, the value is often tied to the network's utility, adoption, and transaction volume, using metrics like the Quantity Theory of Money (MV=PQ) or Metcalfe's Law.

Analyzing the token's governance rights, staking rewards, and burn mechanisms also helps to gauge its long-term economic viability. Comparing it to similar tokens or protocols is another common method.

Ultimately, it is a complex process blending quantitative and qualitative analysis.