New Valuation Framework for Blockchain Economy: Decentralization Gross Domestic Product

Traditional valuation methods for Blockchain networks have misconceptions, equating Blockchain networks to enterprises and using stock valuation formulas. This approach overlooks the essential characteristics of Blockchain networks.

Blockchain networks, especially smart contract platforms like Ethereum, are essentially emerging digital economies with their own reserve currencies. These currencies not only serve the native network but also play the role of reserve currency in expanded networks, even transcending network boundaries.

The proof-of-stake Blockchain introduces a mechanism similar to bonds, where participants collateralize assets to protect the network in exchange for rewards. These features reflect that Blockchain networks are becoming digital nations, not only in terms of technology but also in aspects such as monetary jurisdiction, values, and historical culture.

In order to better assess these emerging digital economies, we propose the concept of Decentralization Production Total Value (GDP). It not only measures the total amount of currency but also includes the economic activities of the entire Blockchain ecosystem.

Decentralization Gross Domestic Product includes the following key indicators:

1. Market Cap: Measure of Currency Sovereignty
2. Total Locked Value ( TVL ): Reflects the capital utilization rate in DeFi
3. Transaction Fees: Revenue from Economic Activities
4. Stablecoin: The degree of integration of foreign capital and currency
5. Protocols, Applications, and NFTs: Economic Infrastructure and Cultural Assets
6. Protocol and Application Fees: Economic Activities of Enterprises in the Blockchain Economy

Through these indicators, we can more comprehensively measure the scale and vitality of the Blockchain economy. As the largest smart contract platform, Ethereum performs outstandingly across various metrics, reflecting its status as a mature and diversified Blockchain economic entity.

This framework helps investors, policymakers, and developers better understand the true value of Blockchain networks as digital sovereign economies. As the Blockchain economy develops, frameworks similar to GDP will become increasingly important.