What Is the Difference between a Fee-Sharing Token and a Simple Utility Token in a DCF Context? ⎊ Path

What Is the Difference between a Fee-Sharing Token and a Simple Utility Token in a DCF Context?

A fee-sharing token is one that entitles the holder to a portion of the protocol's revenue, making it akin to an equity share in a traditional company. This direct link to protocol "cash flows" makes it more suitable for a standard DCF model.

A simple utility token, conversely, is primarily used to access a service or pay for network gas, and does not entitle the holder to a direct revenue share. Its value is derived indirectly from the demand for the underlying service, requiring network-based valuation models like MV=PQ rather than a direct DCF.

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Glossar

DCF

Valuation ⎊ Discounted cash flow, or DCF, within cryptocurrency and derivatives markets represents a projection of future free cash flows of an underlying asset or protocol, discounted to present value using a risk-adjusted rate.

Utility Token

Framework ⎊ A utility token, within the context of cryptocurrency, options trading, and financial derivatives, represents a digital asset designed to provide access to a specific product or service within a defined ecosystem, increasingly intertwined with sustainability initiatives.