Valuation Models
💹Understanding Token Value:
Valuation models help determine the worth of a token within its ecosystem.
Let's explore two key models and see how they apply to Bitcoin (BTC), Binance Coin (BNB), and Shiba Inu (SHIB).
1-Key Models:
Equation of Exchange: Estimates a token's value based on its usage (velocity) and total supply.Network Value to Transactions
2- Ratio (NVT): Compares a blockchain's market value to its transaction volume, similar to a price-to-earnings ratio in stocks.
Real Examples: Bitcoin, Binance Coin, and Shiba Inu
1-Bitcoin (BTC) 🪙
-Equation of Exchange: Bitcoin’s value is driven by its limited supply (21 million) and its usage as digital gold.NVT
-Ratio: Bitcoin often has a high NVT ratio, indicating it’s used more as a store of value rather than for frequent transactions.
*Fun Fact: Think of Bitcoin like a rare collectible. Not many transactions, but each one is worth a lot!
2-Binance Coin (BNB) 🚀
-Equation of Exchange: Binance Coin’s value is driven by its use within the Binance ecosystem for trading fee discounts, transaction fees, and more.NVT
-Ratio: Binance Coin has a lower NVT ratio compared to Bitcoin, reflecting its frequent use in the Binance exchange and ecosystem.
*Fun Fact: Binance Coin is like the VIP pass for the Binance platform, offering discounts and special features!
3-Shiba Inu (SHIB) 🐕
-Equation of Exchange: Shiba Inu’s value is largely driven by community engagement and social media trends. It has a large supply, which can lead to volatility.NVT
-Ratio: Shiba Inu has a lower NVT ratio, showing frequent use for microtransactions and community-driven activities but often driven by trends rather than inherent value.
*Fun Fact: Shiba Inu is like the playful token you use to participate in a fun and engaging community!
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#bitcoin 🪙 #binancecoin 🚀 #shibainu 🐕