What Are the Primary Challenges in Forecasting “Cash Flows” for a DeFi Protocol?

Forecasting DeFi cash flows is challenging due to the nascent and rapidly evolving nature of the protocols. Revenues, typically transaction fees or interest income, are highly dependent on unpredictable factors like market sentiment, regulatory changes, and competition.

The lack of historical data and standardized accounting practices complicates the projection of future user adoption and protocol usage. Furthermore, the potential for sudden shifts in tokenomics or governance decisions introduces significant uncertainty into long-term cash flow estimates.