How Does the Discounted Cash Flow (DCF) Model Apply to Non-Dividend-Paying Tokens?

For non-dividend tokens, the DCF model is adapted by projecting the protocol's future cash flows, such as transaction fees or revenue generated by the network. The token's intrinsic value is then calculated as the present value of these projected cash flows, assuming the token holder has a claim on them, either directly or indirectly through staking.

A high discount rate is typically used to account for the extreme volatility and risk in the crypto market. This approach is more applicable to tokens that accrue value from protocol usage.