Book contents
- Frontmatter
- Contents
- Editorial Board Members
- Acknowledgements
- Part I Institutionalisation of Digital Assets
- 1 Institutionalisation of Digital Assets
- 2 How and When Are Cryptocurrency Predictable? Backtesting Their Portfolio Economic Value
- 3 DeFi versus TradFi Valuation Using Multiples and Discounted Cash Flows
- Part II Digital Assets and Decentralised Finance
- Part III Regulations and Compliance of Digital Assets
- Part IV Cryptocurrency Economics and Monetary Policies
- Abbreviations
- Index
- References
3 - DeFi versus TradFi Valuation Using Multiples and Discounted Cash Flows
from Part I - Institutionalisation of Digital Assets
Published online by Cambridge University Press: 06 March 2025
Book contents
- Frontmatter
- Contents
- Editorial Board Members
- Acknowledgements
- Part I Institutionalisation of Digital Assets
- 1 Institutionalisation of Digital Assets
- 2 How and When Are Cryptocurrency Predictable? Backtesting Their Portfolio Economic Value
- 3 DeFi versus TradFi Valuation Using Multiples and Discounted Cash Flows
- Part II Digital Assets and Decentralised Finance
- Part III Regulations and Compliance of Digital Assets
- Part IV Cryptocurrency Economics and Monetary Policies
- Abbreviations
- Index
- References
Summary
As of August 2022, blockchain-based assets boast a combined market capitalisation exceeding one trillion USD, among which the most prominent are the decentralised autonomous organisation (DAO) tokens associated with decentralised finance (DeFi) protocols. In this work, we seek to value DeFi tokens using the canonical multiples and discount cash flow (DCF) approaches. We examine a subset of DeFi services including decentralised exchanges (DEXs), protocol for loanable funds (PLFs), and yield aggregators. We apply the same analysis to some publicly traded firms and compare them with DeFi tokens of the analogous category. Interestingly, despite the crypto bear market lasting for more than one year as of August 2022, both approaches evidence overvaluation in DeFi.
- Type
- Chapter
- Information
- Digital AssetsPricing, Allocation and Regulation, pp. 44 - 68Publisher: Cambridge University PressPrint publication year: 2025
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