I am working on developing a valuation model for ADA. I wanted to start a discussion, where the community can freely contribute ideas on the topic. I expect this discussion to develop over time, eventually leading to a more in-depth exploration of value as it applies to cryptoassets and ADA in particular. By understanding the “intrinsic” value of ADA we may perhaps get a better idea of its future potential.
There are currently several valuation methodologies in their early stages of development, but I will not be focusing on that just yet. At this point I would like to begin by offering a simple basis for valuation and opening the discussion to the community to share thoughts and ideas.
The value of a network relies on its various use cases. For example, one use case for ADA is to facilitate transactions. If for example the network’s sole purpose was to facilitate transactions and the value of those transactions equaled $1 billion, then the value of the network would be $1 billion. If the network had 1 million tokens outstanding then each token would be worth $1,000. That’s fairly simple.
A valuation such as this, may be appropriate for a first generation blockchain like Bitcoin, which is primarily used for transactional purposes. However, in the case of ADA and the Cardano network, more use cases may be available that offer value to users. I’m interested in hearing from people what they believe these uses cases are, and whether they can be monetized, or at the very least quantified. By identifying the various use cases for ADA, one can start building a model to value the different components that this third generation blockchain offers.
I would like to open the discussion now to comments from the community. Feel free to share your ideas.