ABSTRACT
This chapter discusses one of the most difficult and controversial topics in the crypto market, namely token economics and valuation. The chapter starts by discussing the main barriers to token valuation, such as the inherent broadness of the tokens’ nature and purpose, the lack of track record, and the lack of fundamentals. It then explores whether and how some of the most important economic and valuation approaches of traditional economics (supply and demand, quantity theory of money, economics of utility) and finance (discounted cash flow model and technical analysis) can be applied in the crypto ecosystem. The chapter makes a relatively extended reference to technical analysis, as perhaps the only type of traditional analysis that can be directly performed in the crypto market, exactly as performed in the traditional financial markets.
