What Is the Gordon Growth Model and Its Limitations in Crypto TV Estimation?

The Gordon Growth Model (GGM) is used to calculate Terminal Value (TV) by assuming perpetual, stable cash flow growth: $TV = CF_{n+1} / (r – g)$, where $CF$ is the final cash flow, $r$ is the discount rate, and $g$ is the perpetual growth rate. Its major limitation in crypto is the assumption of a stable, perpetual growth rate ($g$) and the protocol's indefinite survival.

Due to rapid innovation, competitive disruption, and regulatory uncertainty, a low, conservative $g$ is necessary, making the TV highly sensitive to small changes in $g$ and $r$.