How Do Stablecoins Affect the Calculation of Network Transaction Value (PQ) for a Native Protocol Token?
Stablecoins, which are often used as the medium of exchange on a protocol, can complicate the calculation of the native token's PQ. If the native token is only used for governance or staking, its PQ may only represent the value of the governance rights or staked assets.
If the native token is required to pay fees, its PQ is the value of those fees. Investors must carefully delineate which transactions contribute to the native token's economic utility versus those facilitated by the stablecoin.
The total network economic activity is PQtotal, but only a fraction relates to the native token.
Glossar
Collateralized Debt Positions
Instrument ⎊ Collateralized Debt Positions, in the DeFi derivatives sphere, represent structured financial products where pools of crypto assets are locked to secure synthetic debt or leveraged trading positions.
Network Transaction Value
Measurement ⎊ Network transaction value represents the aggregate monetary value of all transactions processed on a blockchain network over a specific period.
Total Network Economic Activity
Measurement ⎊ Total Network Economic Activity is a comprehensive measurement of the aggregate value of all transactions, smart contract interactions, and value transfers occurring on a blockchain over a defined period.
Native Token
Collateral ⎊ Native Token refers to the primary, fungible cryptographic asset issued by a specific blockchain protocol, frequently used as the unit of account, for staking, or as collateral within that ecosystem's derivatives markets.