What Is the Role of the Risk-Free Rate in a Crypto Valuation Model?

The risk-free rate, typically the yield on a short-term US Treasury bond, serves as the baseline return for an investment with zero risk in the DCF model's discount rate calculation. While crypto is inherently risky, the risk-free rate still provides the fundamental time value of money component.

In practice, due to the extremely high-risk premium of crypto, the exact value of the risk-free rate has a relatively minor impact on the final high discount rate.