⛏️ [Analysis] Valuing Productive Cryptoassets - Phil J. Bonello

Messari community analyst Phil J. Bonello released a framework for valuing "productive" cryptoassets. Similar to traditional securities, productive assets generate cash flows for holders and theoretically will grow in value along with the value generated atop the network. Bonello argues that while the equation of exchange (MV = PQ) can be a useful tool for evaluating "non-productive" assets, like medium of exchange or store of value tokens, productive assets should be valued using traditional methods like discounted cash flow analysis.

• Profit sharing tokens and work tokens are most similar to traditional securities in that holders can expect a "dividend" from their assets. Profit sharing tokens reward holders with an ongoing share of network fees. Work tokens require holders to stake assets in exchange for the right to perform services and receive corresponding compensation. Both can be valued using a net present value (NPV) calculation based on the expected fees or revenue earned on the underlying tokens. &nbsp
• Discount tokens offer reduced fees for services within a network and can be valued based on the total expected reduction in fees over a given interval. &nbsp
• Mint and burn models burn tokens when a service is provided, as a form of payment. A fixed amount of tokens are generated at given intervals and proportionally rewarded to service providers based on the number of tokens burned in exchange for their services. If the burn rate, which equates to demand, exceeds the fixed number of tokens created, the value of tokens should increase. &nbsp
• Governance tokens do not produce cash flows but protect the future value of a network by allowing users to vote for what they consider to be beneficial changes. In many cases, while a platform can be easily forked, the value of the old and new networks will diverge creating a "cost" for splitting.