What Are the Primary Risks Associated with Valuing Tokens Using Traditional Financial Metrics?

Traditional metrics often fail to capture the unique network effects, technological risks, and regulatory uncertainty inherent in crypto. Metrics like Price-to-Earnings are difficult to apply as many protocols prioritize growth over profit distribution.

High volatility makes historical data less reliable for forecasting. Furthermore, the concept of "cash flow" is often abstract, derived from protocol fees rather than corporate profits, leading to subjective assumptions in valuation models.

The lack of standardized accounting practices is another significant risk.