How Do You Account for Differences in Tokenomics When Using Comps? ⎊ Path

How Do You Account for Differences in Tokenomics When Using Comps?

Differences in tokenomics, such as inflation rates, vesting schedules, and token utility, must be normalized when using Comps. Analysts often adjust the valuation multiple by using the Fully Diluted Valuation (FDV) to account for future dilution.

They also factor in the token's utility (e.g. whether it captures fees or is only for governance) to ensure the comparison is apples-to-apples. A token with high utility and low inflation should command a premium multiple.

How Does the Concept of “Network Effects” Influence Comps Analysis?

Can High Inflation Indirectly Lead to a Higher Token Velocity?

What Is the Rationale for Using Fully Diluted Valuation (FDV) over Market Cap in Comps?

What Is the Relationship between Token Utility and Its Ability to Counteract Inflation?

How Can a Protocol Use Deflationary Mechanisms (Like Token Burns) to Counteract Inflation?

What Is the Relationship between Circulating Supply and Fully Diluted Valuation (FDV)?

How Does the Network’s Inflation Rate Affect the Profitability of a Validator?

What Is the Difference between Fully Diluted Valuation (FDV) and Market Capitalization?

Glossar

Fully Diluted Valuation

Calculation ⎊ Fully Diluted Valuation in cryptocurrency, options, and derivatives represents the theoretical price of an asset assuming all potential convertible securities are exercised.