Why Is Terminal Value Estimation Particularly Challenging in Crypto DCF?

Terminal value (TV) represents the value of all cash flows beyond the explicit forecast period, assuming a stable, perpetual growth rate. It is challenging in crypto because the long-term viability, competitive landscape, and regulatory environment for most protocols are highly uncertain.

The stable, perpetual growth rate assumption is often questionable. Analysts must use a very conservative growth rate or a lower exit multiple, often leading to a wide range of possible TV estimates, which can account for a large portion of the final valuation.