How Does a Token’s Utility or Governance Role Affect Its DCF Valuation?

For utility tokens, the "cash flow" is often modeled as the discounted value of future fee savings or services the token grants access to. Governance tokens' value is derived from the power to influence network parameters, which can be modeled as the discounted value of future protocol revenue streams or a claim on the treasury.

A protocol's ability to generate sustainable fees or revenue is crucial for a positive DCF outcome. High discount rates are typically used due to the inherent volatility and risk in the crypto space.