SushiSwap’s governance token, SUSHI, could get to $100, which represents five times its current price, according to John Todaro, head of business development at TradeBlock.
One of the Biggest Successes in DEXs
SushiSwap is a decentralized cryptocurrency exchange based on the Ethereum blockchain. Its price rose to about $19, a 30-fold increase from a low of November 2020. Todaro wrote in Thursday’s Bankless newsletter that the protocol has proven to be one of the greatest success stories in DeFi, with over $100 million in cumulative revenue since its introduction.
SUSHI holders receive a share of SushiSwap’s fees, similar to how stockholder holders can receive a dividend. SushiSwap recently started this mechanism by paying token holders a portion of exchange charges across the network.
Investors and participants in the market will now earn incentives through ownership of a valuable asset. Also, investors can assess assets paying for a prize at a quantitative stage since they can somehow predict future rewards.
Todaro noted that they often price dividend-paying stocks at an expected discount rate on the conventional equity markets by discounting future cash flows to date. In calculating cash flows, he used historical trading volumes and taxes.
The terminal growth rates consistent with the broader industry and economy are modeled at 3 percent annually. The terminal growth rate in line with the country’s GDP in which the business operates can be structured in such models. In the US, it usually ranges from 1.5% to 4% annually. SushiSwap is a young business and thus has a significant risk over more mature, traditional enterprises.
SUSHI’s Smooth Rally
While other DEXes offer similar governance types tokens, SUSHI is different, as SushiSwap is one of the few projects that pays owners to own a coin. Hence, there has been a rise in demand. As of March 15, 2021, prices rose from just $2.1 in December 2020 to about $20.97 – an increase of 915 percent. While several other tokens on the market are glorified methods for speculating on cryptographic content, SushiSwap tries to do something special that is time-testing.
Todaro calculates the intrinsic market value of SushiSwap to be about $12.6 billion, or a cumulative token value of around $100 based on its assumptions.
Todaro cautions investors about significant market threats, including a slump in DeFi crypto-monetary trading despite high valuations. This overall risk in the industry will “heavily impact the amount and thus the trade costs of SushiSwap,” writes Todaro.