[VALUATION] Although there are several moving parts and unknowns, our preliminary analysis gives an initial fair value (Mcap) of $SOLID between $68M-$90M
P/E multiple measures a protocol’s Mcap based on its earnings power. The low estimate uses the P/E of the Crypto-Native AMMs of 17.2x and high of 23.3x (+25% premium to Listed Exchanges). This gives $SOLID an initial Mcap range of $69M to $93M
2/ Dividend Yield
Dividend yield represents the cashflows generated by the protocol that are directly attributed to token holders. The low estimate uses $CRV staking yield of 6% and high of 2.3% based on Listed Exchanges. This gives $SOLID an initial Mcap range of $66M to $176M
3/ Bribe-Driven Valuation
Bribes represent a source of revenue for token holders (assumed to be 50% APR). The low estimate uses a 2-wk bribe value of $13.6M and a high of $24.5M based on $CVX bribes in Rounds 12 & 8 (+25% premium to Round 8), respectively…
4/ … The model further assumes the top 25 protocols’ long-term % share in $SOLID to be 70%. This gives $SOLID an initial Mcap range of $35M to $63M
5/ 0xDAO-Driven Valuation
0xDAO partnership includes: $OXD, $BOO, $TOMB, $SCREAM, @Reaper_Farm, $BEETS, $LQDR, and $TAROT. The partnership in total holds 7.4M $SOLID or 37% of all allocation. $OXD can be burned and mint $oxSOLID or share representation in the $OXD protocol…
6/ … which indirectly presents 37% of $SOLID initial Mcap. The low estimate assumes the 8 partners will hold 10% of the protocol and high of 25% of the protocol. The model also reflected an accumulator premium of 2.7x based on $CVX Mcap relative to $CVXCRV Mcap…
7/ … Based on the above model assumptions, this gives an initial Mcap range of $72M to $86M
8/ Key Assumption: Projected TVL and Trading Fees
Based on our preliminary research, with existing liquidity in the $FTM ecosystem & the expected new capital to flow in, we expect an indicative $SOLID TVL of $522M, an annual trading volume of $40B, and total trading fees of $4M
9/ Again, many things about the $SOLID launch are moving uncertainties and the implications of $OXD and $SEX partnership may complicate how the launch will play out.
This is our indicative estimate of the fair Mcap of $SOLID and we invite others to comment and share their views!
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[BULL CASE] After releasing our base case indicative valuation for $SOLID, we have received numerous responses requesting for the bull case valuation. Based on our preliminary analysis, we project an initial Mcap of $375M - $527M.
With the launch of $SOLID, the $FTM ecosystem would be at the forefront of DeFi innovations. $SOLID tokenomics are designed specifically for protocols and is expected to serve as the liquidity hub for existing and new projects looking to list their tokens...
2/ ... $SOLID takes inspirations from the $veCRV model while incorporating changes to better align incentives (e.g. rewarding trading volumes, increasing governance value, etc.). It is expected to start an economic war similar to the $CRV & $CVX bribe and accumulation war.