How Does a Token’s Staking Yield Factor into a DCF Analysis?
Staking yield can be viewed as a form of dividend or cash flow distributed to token holders who secure the network or provide liquidity. In a DCF model, this yield can be included as part of the periodic cash flows projected for the token.
However, it is crucial to distinguish between real yield (from protocol revenue) and inflationary yield (from new token issuance), as only real yield represents sustainable intrinsic value.
Glossar
DCF
Valuation ⎊ Discounted cash flow, or DCF, within cryptocurrency and derivatives markets represents a projection of future free cash flows of an underlying asset or protocol, discounted to present value using a risk-adjusted rate.
Staking Yield
Reward ⎊ Staking yield, within cryptocurrency contexts, represents the remuneration received for participating in network consensus mechanisms, typically expressed as an annualized percentage of staked assets.
Real Yield
Attribution ⎊ Real Yield, within cryptocurrency and derivatives, represents the return an investor receives above the risk-free rate, adjusted for the inherent risks of the specific asset or strategy employed.