How should investors value DeFi projects? A new paper might have some answers

Cointelegraph

Published Dec 20, 2020 07:06PM ET

Updated Dec 20, 2020 08:40PM ET

A new paper released on Thursday from a team of crypto researchers hopes to add to a body of work that will eventually identify “the Black-Scholes of decentralized finance (DeFi)” — an equation that will allow investors and users to properly value DeFi projects and potential profit/loss metrics in popular DeFi verticals such as liquidity mining.

Why is such an equation important? At first blush, liquidity mining is simple enough to explain: in exchange for providing liquidity to automated market makers like Uniswap, users are rewarded with trading fees or governance tokens, often denominated in APY percentages.

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