What Is Metcalfe’s Law and How Is It Applied to Network Valuation?

Metcalfe's Law states that the value of a telecommunications network is proportional to the square of the number of connected users (n^2). In crypto, this law is applied by hypothesizing that the value of a blockchain network is proportional to the square of its active user base or unique addresses.

While a direct n^2 relationship is debated, the principle suggests that network value grows exponentially with adoption. This provides a framework for comparing the relative valuation of networks with different user bases.