What Is the Difference between a Security Token and a Utility Token in a DCF Context?
A security token represents an ownership stake in an underlying asset, like equity or a debt instrument, making its cash flows more directly comparable to traditional assets, often via dividends or profit share. A utility token's value is derived from its use in accessing a service, meaning its "cash flow" is indirect, linked to the demand for the service and the fees generated.
Security tokens are easier to value with DCF as their cash flows are more predictable and legally defined.
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
Network Access ⎊ Utility Token represents a digital asset designed primarily to grant holders access to a specific product or service within a decentralized network, rather than representing a claim on future profits or ownership equity.
Token Holder Governance
Framework ⎊ Token Holder Governance, within the convergence of cryptocurrency, options trading, and financial derivatives, represents a decentralized decision-making paradigm where token ownership grants participants voting rights and influence over project parameters, protocol modifications, and resource allocation.
Security Token
Token ⎊ A security token represents ownership or rights to an underlying asset, leveraging blockchain technology to facilitate fractionalization, enhanced liquidity, and programmable compliance.