Valuing blockchain networks in the present day seems like déjà vu for anybody who lived via the early web period. Within the Nineteen Nineties, analysts, traders, and founders struggled to use acquainted monetary fashions to a radically unfamiliar know-how. Corporations with little greater than a web site and a pitch deck had been valued within the tons of of tens of millions, generally billions, primarily based on one thing as intangible as “eyeballs.”
It didn’t finish nicely. And but, in hindsight, these chaotic early years provided helpful classes: know-how evolves quicker than finance, and valuation fashions should finally adapt to the form of innovation.
At this time, we’re dealing with an analogous dilemma within the blockchain house. Regardless of rising adoption, maturing infrastructure, and plain cultural and financial momentum, there’s nonetheless no extensively accepted or standardized technique to worth a blockchain community. And the few fashions we now have, whereas directionally helpful, stay flawed or incomplete.
To grasp the place we would go, it’s value revisiting how we received right here.
The First Web Valuation Wave: Eyeballs, Not Earnings (mid Nineteen Nineties-2000)
Within the mid-to-late Nineteen Nineties, the web was a frontier. Traders didn’t know what “success” would appear to be for digital corporations, in order that they leaned on no matter they might measure: web page views, banner advert impressions, distinctive guests, or month-to-month lively customers (MAUs). These crude proxies for consideration turned the de facto metrics for worth. The logic was easy: if tens of millions of individuals had been visiting your website, monetization would finally observe.
Valuations soared. Startups like Pets.com (see picture), Webvan, and eToys raised tons of of tens of millions on the promise of dominance. However income was an afterthought, and profitability was a punchline. When the dot-com bubble burst in 2000, it turned clear that spotlight with out monetization is a poor basis for enterprise worth.
The Submit-Crash Realignment: Revenues and Margins (2001-2005)
After the primary web bubble burst, investor sentiment modified dramatically. The market demanded proof, not simply imaginative and prescient. From 2001 onward, corporations had been anticipated to generate significant income, present gross margins, and transfer towards profitability.
This era noticed a ruthless removing of unsustainable fashions. Solely corporations with actual merchandise, actual prospects, and real looking financials survived. Amazon, for instance, started to shift investor focus from summary future potential to precise operational efficiency. Its means to point out constant top-line progress and enhance margin self-discipline helped rebuild confidence.
eBay turned a paragon of readability: a worthwhile, transaction-based enterprise with a scalable mannequin. These survivors taught traders to judge web corporations extra like conventional companies, with revenue statements that mattered.
The Rise of SaaS and Unit Economics (2005-2015)
By the mid-2000s, a brand new mannequin emerged, Software program as a Service (SaaS), and with it got here a brand new language of valuation. Relatively than counting on unpredictable promoting or retail margins, SaaS companies provided predictable recurring-revenue streams, a game-changer for each founders and financiers.
This period gave rise to metrics like:
- Annual Recurring Income (ARR) and Month-to-month Recurring Income (MRR)
- Buyer Acquisition Price (CAC) and Lifetime Worth (LTV)
- Churn, internet retention, and the Rule of 40 (progress + margin ≥ 40%)
These unit economics allowed for sharper perception into an organization’s operational well being and scalability. Traders started to worth progress effectivity and recurring income, rewarding corporations with sustainable, high-margin fashions and robust buyer stickiness.
SaaS corporations might be unprofitable, however provided that their metrics advised a transparent story: purchase prospects cheaply, maintain them for years, and increase pockets share over time. This method turned the spine of recent tech valuation and stays a dominant lens in the present day.
The Platform Period: Community Results and Ecosystem Worth (2015-Current)
By the 2010s, corporations like Fb, Google, Uber, and Airbnb redefined what worth regarded like on-line. These weren’t simply companies, they had been platforms. Their energy lay in aggregation, knowledge management, and the community results that made them more and more dominant the extra they grew.
Valuation fashions developed accordingly. Analysts started measuring:
- Community results (worth rising with every new consumer)
- Ecosystem depth (third-party developer exercise, marketplaces, plug-ins)
- Person engagement and knowledge lock-in
Corporations had been now rewarded not only for revenues, however for constructing infrastructure others trusted. This was a qualitative shift, valuing strategic place, not simply money circulation.
At this time’s Web Giants: Revenue, Effectivity, and AI Moats
Within the 2020s, tech valuation matured. Public traders now concentrate on operational effectivity, profitability, and free money circulation. Progress in any respect prices is out; the “Rule of 40” is in. (It says that an organization’s progress price plus free money price ought to equal or exceed 40%).
Corporations are valued primarily based on sector-specific efficiency: SaaS has its personal yardsticks, e-commerce others, fintech nonetheless others. In the meantime, intangibles like proprietary AI fashions, knowledge possession, and infrastructure moats are more and more central to how tech leaders are priced.
Briefly, valuation turned each extra specialised and extra rational, tailor-made to what really drives worth in every digital sector.
What This Means for Blockchain
Regardless of all this progress, blockchains stay in valuation limbo. We see makes an attempt to use conventional metrics, like DCF (discounted money circulation), validator income, or protocol charges, however these typically miss the purpose. That is the equal of valuing Amazon in 1998 by its transport prices.
Blockchains are public infrastructure, not non-public corporations. Many depend on subsidies or token emissions that inflate revenues however don’t replicate true demand. Furthermore, as decentralized methods, they aren’t designed to extract income, however to allow permissionless coordination and trustless financial exercise.
Different valuation strategies have emerged—every providing a part of the puzzle:
- MSOV (Financial Retailer of Worth) fashions worth a series by how its token is staked or deposited in DeFi. Useful, however static.
- Onchain GDP goals to measure financial output throughout apps and chains. Good in idea, however onerous to normalize and straightforward to distort.
None of those fashions has emerged as dominant, complete, or extensively accepted. And the information layer side of blockchains remains to be lacking from any valuation framework.
A New Lens: Valuing Velocity and Movement
To maneuver ahead, we’d like fashions that replicate what blockchains really do. That’s why I’ve proposed a valuation framework primarily based on velocity and circulation, a measure of how cash and property transfer via a blockchain economic system. It focuses on utilization patterns, transaction loops, and capital reuse, extra akin to financial circulation than static metrics, and it has parallels with the web’s extra mature platform period, the final frontier of digital economic system valuations.
This mannequin examines:
- Stablecoin turnover and velocity
- DeFi lending, buying and selling, collateral
- NFT buying and selling dynamics (purchases, royalties)
- Layer-to-layer bidirectional asset flows
- Actual World Property tokenization volumes (purchases, royalties, appreciations)
- Actual capital formation and reusability throughout apps
- Medium of change charges for collateralizing, settling, or bridging property and transactions
This method provides a local and resilient technique to measure blockchain worth. It focuses not simply on what sits within the system, however what strikes, and motion is the clearest signal of belief, utility, and relevance, simply as actual cash’s velocity is a generally accepted measure of an economic system’s vitality.
Conclusion: Construct the Mannequin the Future Deserves
The web taught us that each technological shift calls for a brand new monetary lens. Early fashions will at all times be clumsy, however the worst mistake is sticking with frameworks that not match.
Blockchains are nonetheless looking for their rightful valuation narrative.
The valuation frameworks of the long run will likely be constructed, not inherited. And simply as early web traders needed to invent new instruments to grasp what they had been seeing, the blockchain world should now do the identical.
If we get this proper, we gained’t simply worth blockchains extra precisely, we’ll unlock a deeper understanding of their financial and social potential.
