I’ve built a tool called reservegrowth.app to help us better understand the fundamental value of RSR based on Reserve Protocol’s actual economics and wanted you guys to try it out and ideally provide some feedback.
What the tool does
The model runs multiple different versions of how the future might unfold given the provided parameters. It models:
TVL growth in Index and Yield DTFs (with S-curve adoption and a realistic target TVL over the next 20 ~years)
Holders revenue from governance share (vote-locking), staking rewards and platform fees (mint fees, TVL fees, or in the case of ETH+ a yield DTF platform fee as % of collateral appreciation). This a fraction of total revenue, but the part that directly benefits RSR holders.
RSR buybacks & burns (protocol buys back at the calculated “fair value” and burns RSR using protocol fees)
Circulating supply reduction (or increase) over time
Different market regimes and growth assumptions (bear markets slow initial adoption speed, while bull markets accelerate it)
You can freely adjust key variables:
TVL growth rates & Total Addressable Market (as in max TVL for index and yield DTFs)
Fee structures
Unlock schedules
Starting “regime”: Does the model start in a bull / base / bear market (slightly changes the adoption speed)
The output shows a range of possible fair values for RSR based on projected cash flows. So all future cash flows are discounted down to today’s fair value.
Goal of the project
This is not ment to provide financial advice or price predictions (markets can be extremely irrational and unpredictable), but I see it as a tool to better understand how RSR holders can benefit from the protocols mechanics.
The goal: Give the community (governors, RSR holders, builders, and analysts) a shared, transparent framework to stress-test RSR’s valuation based on real protocol fundamentals.
Better collective understanding of the tokenomics can lead to more informed discussions around growth initiatives, revenue share, burns, emissions, and long-term alignment.
Request for feedback
I’d love the community’s input on:
Is the model directionally correct? Any major flaws or missing variables?
Which assumptions feel too optimistic / pessimistic?
What other scenarios or features would be useful? (e.g. different burn mechanisms, revenue share splits, integration with real on-chain data, etc.)
Lots of cool functionality here but wondering if could be simplified and organized according to the 3 questions you lay out in the header “how the protocol might grow, what revenue that generates, and what RSR’s fair value would be based on those fundamentals”, and limited to just 2 or 3 charts that tell that story?
re: right now noticing users may not know which way to go, where to start, and may not invest unless it pulls them in. For example when I see “odds” I start to think this is a prediction market or price prediction which I dont believe is the intention.
Regarding “fair value”, the market seems to increasingly like the P/S ratios tracked at both Token Terminal and DefiLlama although their methodologies differ so you will want to pick one and stick to it, and then its easy to compare against peers to see how the market defines “fair value.” Haven’t seen DCF used in startups (or crypto) as its more common on mature, slow moving companies.
Thanks for the feedback, James! Regarding your points:
This is something I’m definitely struggling with myself: What information is not needed or potentially confusing? I think the “odds table” might indeed be confusing to people. It shows the percentage of simulations ending up above a certain price range given the parameters, but as you said, it will likely be misinterpreted.
I guess one could remove the Index and Yield DTF contributions to holders’ revenue, or the Market Cap of RSR. These are not necessarily needed. I will definitely think about this.
I’ve actually used some of these ratios in early versions of the model, but I personally see these multiples as a simplified version of a DCF. How do you actually arrive at meaningful multiples, and how do they compress over time? At the end of the day, a protocol with a strong growth trajectory justifies higher multiples and vice versa. But how do you determine what growth should be expected, or how does it translate into actual cash flows that would justify paying a premium today?
I’m not saying multiples are wrong, but in my opinion, they just hide the underlying assumptions and make the result less interpretable, even though they’re quite easy to calculate. I have an “implied P/E ratio” graph on the page for those interested, since you can basically calculate a P/E from the DCF, but not the other way around.
I think the core question is: Who is the target audience? My (maybe very naive) interpretation is that investors with a long-term mindset might be more interested in how the protocol generates revenue and how it benefits RSR holders to arrive at a fair valuation. In contrast, the classic crypto crowd would more likely want to see actual market price predictions.
This model is definitely targeted more toward the first group and is not a tool for making price predictions. Whether that’s the right approach is obviously a different story.
Again, thank you for your input, it is highly appreciated!
This is really cool and good-looking. Played around with bear vs bull markets.
Thank you for creating this! Need to dig deeper into which scenarios I find realistic.