Valuation Of Marketplace Tokens

With the barrage of new projects that have been coming out in the last year, the question of how to value a specific token has been asked an awful lot lately, understandably so - the vast majority of tokens, with the exception of the few dividend tokens, do not provide a tangible return to their holders, rendering DCF valuation impossible, whereas multiples valuation is rather impossible, as tokens don't represent a stake in the venture.

Many cryptocurrencies can be compared to gold, the price of which, even though nowadays largely driven by speculative trading, historically was determined by the US Government, for example, in 1971 President Nixon announced that each ounce of gold is backed by 38 US Dollars.

Regardless of the fact that there is no real way for one party to proclaim that a token should be backed by a certain amount of dollars, a very similar thing can be done with marketplace tokens under three specific condition with every participant is participating in the process:

1. Products sold on the marketplace denominated in the cryptocurrency
2. There has to be an existing market for the products in fiat currency
3. Pricing of the products has to be decentralized

As long as these two conditions are fulfilled, one can easily compare the prices denominated in cryptocurrency and compare the prices with those of the products sold in fiat. Because of the fact that the participants of the marketplace would determine the pricing and a market for very similar products already existed in fiat, the real value of the tokens could be discovered.

I will provide you with an example so that it is easier to understand:

Product A is sold on marketplace X priced in cryptocurrency and costs 10 tokens, an almost homogenous Product A1 is sold on marketplace Y priced in fiat and costs 20 USD; therefore, the value of 1 token is (20$/10 tokens) - 2$ as its purchasing power is equivalent to that of 2$.