Most Web3 projects fail to raise because they can’t justify the numbers.

Without clear revenue, traction, or a live token, founders default to inflated FDVs and hopeful decks but investors want fundamentals. If you can’t explain where the value comes from, how it’s captured, and why the token matters, you’re not pitching a project, you’re selling a liability.

Why Traditional Valuation Models Don’t Work

Unlike traditional equity, where shares represent a stake in a company with established cash flows and financial statements, tokens in decentralized networks do not directly reflect a company's intrinsic value. Instead, a token's value depends on future network adoption, usage, and tokenomics rather than on current earnings.

So when you’re raising a round before the token even exists, you need a new playbook.

We’ve reviewed over 750 token models and benchmarked more than 2,500 projects. Here’s the 3-layer framework to triangulate valuation:

1. Scenario-Based Financial Modeling

(Discounted Cash Flow Model)

This is where most serious investors start: future value, adjusted for present-day risk.

We forecast your protocol’s revenue based on projected usage — then discount that revenue back to today using an aggressive Web3-appropriate rate (typically 35%–45% to reflect market risk, volatility, and pre-product stage).

Formula:

NPV = ∑ (Rt / (1 + d)^t)

Where:

• Rt = projected revenue in time period t

• d = discount rate

• t = time (months or years)

We build three paths:

• Best case (high user growth, strong token sinks, max fee capture)

• Base case (realistic adoption curve, moderate velocity)

• Worst case (low retention, minimal value accrual)

Why it works:

• Forces teams to ground the valuation in real protocol mechanics

• Shows investors you understand the levers that drive value

• Helps avoid inflated FDVs that break during price discovery

This model tells you:

“If the protocol performs like this, and risk stays here, this is what the token is worth today.”

It’s not exact — no DCF is. But it gives you a defensible floor.

2. Tokenomics and Value Capture Models

(MV = PQ, adjusted for velocity)

This is where we bridge protocol activity to token value — using the equation of exchange, a foundational formula in monetary economics:

Formula:

MV = PQ

Where:

• M = token supply

• V = velocity (how frequently tokens change hands)

• P = price per unit of good/service

• Q = quantity of goods/services transacted

We rework the formula to isolate M, helping us estimate the token’s theoretical market cap based on protocol usage:

Token Market Cap (M) = PQ / V

Then, we adjust based on design elements like:

• Staking mechanisms (which lower V by reducing liquidity)

• Burning or supply sinks (which tighten M over time)

• Utility loops (which increase Q or justify higher P)

This model tells you:

“If this much value flows through the system, and this is how fast tokens move, here’s what they’re likely worth.”

→ To understand how this feeds into sustainable value, read our breakdown of Token Value Capture

Multicoin Capital, in my opinion, the most thoughtful Web3 venture firm, especially Kyle Samani, managing partner, emphasizes that MEV (Maximal Extractable Value) is now the most structurally important component of value capture for L1s and L2s. Unlike base fees, MEV arises naturally from market entropy — arbitrage, reordering, backrunning, and liquidations — and is often returned to validators and stakers.

That means if a protocol shares MEV back to token stakers (as Solana and Ethereum do), holding and staking the token is a claim on that value stream, even in the absence of “revenue” in the traditional sense.

So when modeling value capture:

• Factor in the percentage of fees and MEV returned to token holders.

• Adjust for staking participation and validator commission rates.

• Map how mechanisms like burns, lockups, or escrow change token velocity.

If your model ignores MEV or assumes 100% fee-based capture, it’s likely underestimating real accrual potential.

3. Market Multiples and Comparables

(Benchmarking against live protocols)

Finally, we anchor your raise to reality.

This final model is the one we focused and include in the audit where we asses whether the project’s listing valuation is aligned with market standards and comparable projects in its niche.

We combine data from top competitors, recent launches, and historical performance to give a clear picture of where the project stands, and whether its valuation makes sense.

We start by comparing the listing and current valuations of the project with the top five competitors in the same category.

We then compare it to all launches from the past year within the same niche. To provide a more current view, we also isolate and analyze the last 15 launches separately, looking at both their listing FDV and current FDV, which also sets the foundation for the performance analysis that follows.

This model tells you:

“The market has already priced projects like yours — here’s your range.”

Final Words

Each model solves for a different piece:

• DCF anchors to protocol revenue potential

• MV = PQ connects value creation to token price

• Comps keep you grounded in market reality

Our recommendation? Don’t pick just one. Use all three.

The DCF gives you a risk-adjusted, forward-looking projection.

The token model connects economic design to value realization.

The comparables give you market context.

Need help on your tokenomics valuation?

Confused about how to value your token? We’re not. → Talk to our team