There have been many approaches on estimating the value of cryptocurrency tokens.
I have thought about the apporach below for ADA and would like to ask for your help & contribution to make it a bit more accurate, correct and acceptable in terms of it´s economics & assumptions.
(1) ADA Token as Fuel / Utility Token for the Web 3.0 Infrastructure
Today the ISP providers are making approx. 600b USD per year for selling Internet Data, access & usage of the Web 2.0 Infrastructure. This should dramatically increase with the IoT & 5G adoption.
ADA Tokens are basically giving you access & usage of the Web 3.0 Infrastructure, being the secure Value Network.
Nevertheless we will have a few global providers and a few providers per country basis (for regulatory reasons on data storage), the same way we have for IaaS Cloud Providers (AWS, Goolge, Azure, etc.).
As on the Web 3.0 Infrastructure we might have all the various assets, financial instruments digitalized and the corresponding Value Streams operated, we may assume these Value Flows might easily pay off at least as much infrastructure cost as the Value Streams deployed on Web 2.0 are doing today. Considering the magnitude of value of the assets (exaggerating a bit, but maybe even Quadrillion USD) to be moved the costs of the infrastructure should be attractive & affordable, specially in the context of competitive blockchains.
So if Cardano may capture 20% of this global market, it should have at least 120b USD per year demand on the ADA Tokens.
(2) ADA Token as Value Token within DAPPs & DAOs, Store of Value and convenient Cryptocurrency
It´s estimated to have 200b USD mobile app revenue in 2020. There is no reason we should not expect the Web 3.0 create new (blue ocean) markets and also take some marketshare from the Web 2.0 apps.
Regarding DAOs it would necessarily mean Public Sector Organizations, who are willing to move their full or part of their operations (governance, decision making, fiinance, treasury, vendor management, etc.) into a transparent context for the sake of other benefits. For instance the UN, or the EU might be a candidate, partially offloading certain functions to a public blockchain DAO. The UN is operating with 5b USD buget per year. Obviously if such Organizations would bring a part of their Supplier Network on the Public Blockchain (maybe as part of regulatory enforcement doing business with them for transparency reasons and traceability of funds), that could create a whole economy of DAOs using ADA or in certain cases Stable Tokens (via the sidechains capability) within their value exchanges. I do however see this much more limited then other use cases of ADA, but for the record it´s listed.
Maybe for Store of Value, ADA will not be the most common cryptocurrency to be used, nevertheless it will still grab maybe a 1-5% of the BTC, Precious Metal market. While due to it´s deflationary characteristics it might attract low risk investors of the Government Bond market.
Also let´s not forget all the Institutional Money, which might be interested in “investing” into Cardano. We have soverign wealth funds managing trillions of USD assets (think about the Norwegian Pension Fund with 1 trillion USD, or ADIA with 900b USD, etc.). And we have not spoken about the Private Equity Funds yet.
Looking at ADA as a cryptocurrency to be used for instance in eCommerce and accepted by merchants might be limited, nevertheless the eCommerce market has a size of 3 trillion USD, so even a small share here could be interesting.
We may also consider here developing countries (Africa, Latin America, Asia) with highly inflating currencies (lately Turkey & Iran), and all the unbanked people in the World (~3 billion) who do want to have the alternative in the form of a cryptocurrency. Whether they would use the deflationary ADA or a Stable Token, that´s yet to be decided, but could have massive impact would an alternative cryptocurrency ecosystem develop in these countries gradually superseding and outgrowing the ecosystem based on the national fiat currency. Regulations to decide this battle.
Then there are Use Cases expanding the value network (for instance the supply chain) from Corporations to the public Blockchain and have them interact and transact in various B2B & B2G & B2DAO scenarios on the public Blockchain (for instance in various Open Marketplaces). This opportunity is the hardest to estimate and Cardano might in many cases “only” provide the infrastructure or be a Consortium / Private Blockchain (no use of ADA tokens in such setup), not other aspects of the ADA Token, in which case it belongs to the part (1).
Without having an accurate & explicit calculation here, just intuitively we may end up with 60b USD per year demand on ADA Tokens.
(3) Lifespan of Cardano
Charles has mentioned somewhere a min. 50 years of lifespan for Cardano, which is why it´s being built carefully, following the highest industry standards with Formal Verification, Academic Peer Review, Regular Audits, etc.
For the ease of calculation let´s assume we have already 30b ADA Tokens in circulation, which would mean we would have 6 USD per year for 50 years per each ADA Token. So based on this, considering risks, opportunity cost and other factors a 50 USD price future valuation per Token doesn’t seem to be out of this world. This is also verifies a recent statement from Charles where he does see the potential of Cardano to have a 1 trillion USD marketcap.
I believe this is not at all a pessimistic, but very far from an extremely optimistic scenario. It might make sense to separate various scenarios though based on the assumptions.
Proposal: please let´s work on this together, I am sure there are many missing use cases, flaws, wrong assumptions, typos, logical loops, broken links, but it would be nice to have a collaborative, agile approach, sharing the effort & time and using the collective intelligence & competence of the Community to refine the approach in multiple iterations. If you have a completely different approach in mind for the estimated valuation, that´s also very appreciated to share.
Any constructive criticism & suggestions for changes are highly wellcome. Thanks