Definition ∞ Protocol valuation is the process of determining the economic worth of a blockchain protocol or its associated digital asset. It involves assessing factors such as network utility, transaction volume, developer activity, and tokenomics. This valuation aims to quantify the protocol’s intrinsic value and future potential.
Context ∞ Protocol valuation is a subject of considerable debate and analysis within the cryptocurrency industry, especially as new projects emerge and established ones evolve. Discussions often focus on the methodologies used, the challenges of quantifying decentralized network value, and the implications for investment decisions. Understanding protocol valuation is key to comprehending the financial narratives surrounding digital assets and their underlying technological infrastructure.
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