What Is a Viable Alternative Valuation Model for a Purely Governance-Focused Token?
A viable alternative is to treat the governance token as a claim on the protocol's future revenue or treasury, valued using a sum-of-the-parts approach or a Discounted Cash Flow (DCF) model. The DCF should model the expected future revenue that the governance token holders can direct or capture.
Another approach is to value the token as a "real option" on the protocol's future success, using an options pricing model to capture the value of the control rights.
Glossar
Alternative Valuation
Calibration ⎊ Alternative valuation within cryptocurrency derivatives frequently necessitates calibration of models beyond Black-Scholes, acknowledging the inherent volatility skew and kurtosis present in digital asset markets.
Expected Future Revenue
Forecast ⎊ Expected Future Revenue in the context of decentralized protocols represents the probabilistic forecast of net fees, interest income, or transaction revenue that a protocol is projected to generate over a specified time horizon.
Governance Token
Authority ⎊ This specific class of digital asset represents a claim on decision-making power within a decentralized protocol, granting holders the right to propose and vote on changes to system parameters.