How Blockchain Networks Redefine Value Assessment

Traditional valuation methods for blockchain networks have limitations, and equating them to enterprises and using stock valuation formulas is inappropriate. In fact, blockchain networks resemble emerging digital economies, possessing their own reserve currencies. These currencies not only function within their native networks but can also serve more broadly as a store of value, unit of account, and medium of exchange.

The proof-of-stake Blockchain introduces a mechanism similar to bonds, where participants protect the network by collateralizing assets and receive rewards. These features reflect the structure of traditional national economies, where financial instruments support defense and operational stability.

The smart contract blockchain network is becoming a digital nation, reflected not only in the technical aspect but also in areas such as monetary jurisdiction, shared values, and historical culture.

To more accurately assess these emerging digital economies, we propose the concept of decentralized production value (GDP). This framework considers not only the total monetary supply but also the economic activities of the blockchain ecosystem. It encompasses the economic activities, protocols, decentralized applications, and market value of cultural assets within the ecosystem.

Key indicators of decentralized Gross Domestic Product include:

1. Market Value: A measure of currency sovereignty
2. Total Locked Value ( TVL ): Reflects the capital utilization rate in DeFi.
3. Transaction fees: Income from economic activities
4. Stablecoins: Represent the integration level of foreign capital and currency.
5. Protocols, Applications, and NFTs: Economic Infrastructure and Cultural Assets
6. Protocol and application fees: Reflecting the economic activities of enterprises in the Blockchain economy.

By integrating these indicators, we can more comprehensively assess the scale and potential of the Blockchain economy. Ethereum, as the largest smart contract Blockchain economy, excels in multiple aspects, with its decentralized Gross Domestic Product estimated at around $700 billion.

This GDP framework offers a new perspective for understanding the true value of blockchain networks as digital sovereign economies. It emphasizes the complexity of the blockchain economy and the potential for global economic integration, providing investors, policymakers, and developers with a more comprehensive assessment tool.

As the Blockchain network continues to develop, this GDP-like framework will help better understand its true value as a digital sovereign economy, providing important references for future investment decisions and policy-making.