AAVE — Valuation (Based on AAVE V2 Data operating on EthL1)

Since it is actually possible to carry out some sort of fundamental analysis for tokens, considering these protocols are actually generating revenues that can be tracked on chain, I thought I’d try valuing AAVE using a Discounted Cash Flow valuation methodology, using projected cashflows from all of AAVE’s revenue streams for the next 5 years (spread, flash loans, loan origin fee) to calculate NPV using total supply.

Assumptions:

· TVL per asset (Deposits) and Flash loan usage grow at a rate based on historical trends. Assuming an incoming bear…


Introduction

While learning about how blockchain ecosystems can be the building blocks of transparent, easy to use, permissionless, efficient businesses — one of the platforms that had an instant impact on me, and one that I would encourage anyone to explore in order to get a feeler of what blockchain technology can really do, is AAVE. Before we dive in to what AAVE exactly is and how it functions– there are a few core concepts that we should get out of the way.

Ethereum

While many of us may have heard of Ethereum because of its native token, ETH — quite…


When it comes to crypto-assets, the headlines are usually bagged (pun intended) by the big two, Bitcoin and Ethereum, or the really small hundreds — more popularly known as shitcoins (usually coins with no max. supply cap, worth almost nothing, and that have no use cases). And Doge.

Crypto enthusiasts looking for value usually dive into the middle of this spectrum.

You hear stories about how a $1000 investment into Bitcoin in 2009, would’ve made you a crypto billionaire in 2021, or about how somebody made a million dollars out of a $100 investment into “SafeMoon” back in March ’21…


Be your own Banker

“When the going gets tough, only the financially literate survive”. I don’t really remember who said this, but to start this off, I feel it is as good a quote as any..

Let me ask you this–when was the last time you thought about handling your own money? Most of us just let bankers deal with it for what we might think is an insignificant fee. Investing — we leave that to other people too, customarily because they’re better at growing wealth than us, but also because we’re not really paying attention to the details. I could say the same…


I’m just thinking out loud here.

With traditional finance slowing, inflation wreaking havoc, and individuals still financially illiterate (relatively) — there seems to be a need for alternative financial instruments that offer higher returns than banks are currently providing (the best savings interest rates right now are 6% p.a. at IDFC bank on a regular savings account), and without too many people assuming too much risk.

While relative to our global counterparts, India is still better off (interest rates aren’t dipping down below 0%), the common man still has close to no financial exposure, and his only source of wealth…

Mohit Pandit

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store