How Do Staking and Governance Rights Affect a Token’s Perceived Intrinsic Value?
Staking rights allow token holders to lock up their tokens to secure the network and, in return, earn staking rewards, which act as a form of yield. This yield provides an economic basis for valuation and reduces the circulating supply, creating scarcity.
Governance rights grant holders a say in the protocol's future development and fee structure. The ability to influence the protocol's economics and the expectation of future rewards significantly enhance the token's perceived intrinsic value, often quantified using a yield-based valuation approach.
Glossar
Economic Basis for Valuation
Principle ⎊ The Economic Basis for Valuation establishes the fundamental rationale and underlying economic theory used to assign a quantifiable worth to an asset or protocol.
Governance Rights
Voting ⎊ These rights, typically conferred by holding a protocol's native token, grant the holder the capacity to participate in on-chain decision-making processes.
Staking and Governance
Incentive ⎊ Staking and governance mechanisms are fundamentally linked by economic incentive, encouraging token holders to lock their assets to secure the network or provide liquidity in exchange for yield.