Remco Valuation Crystal Ball: Fair Value $3.65

4 min readJun 16, 2019

I. Monetary Model

Monetary Model is useful for valuing Cryptocurrencies because it attempts to measure the value provisioned to users of a Cryptocurrency network, then relates that value to coin supply and velocity to derive the value of an individual coin.

In instant case, we have considered the size of the market (total Remittance Industry Size) as $ 6,13,000 Mn for 2018 & consider 5% CAGR. For the Year 2018, Potential percent penetration (market share) for REMCO has been considered a 0.32% i.e transaction value of $ 1,961 Mn. (In the Year 2017 Remco sister company’s had a transaction value of $695 Mn).

The velocity ( the average frequency with which a unit of money is spent) for the year 2018 has been considered 1.1. After adjusting the transaction value with velocity, we arrived at a value of coin $ 1,783.27 Mn. We divided the fair value of the coin with the as on date outstanding coin 2000 Mn, & we arrived at a value per coin of $ 0.89 for the Year 2018.

I. NVT Ratio

The Network Value to Transactions (NVT) Ratio is viewed similarly to the stock market PE ratio, which can be used as a proxy to gauge over or undervaluation of digital assets like Bitcoin. The NVT is calculated as Market Cap (Network Value) divided by the $ transaction volume.

In Instant case, we have taken an average of 90 days NVT ratio of 15 token companies. We have made certain adjustments on Industry multiple of NVT Ratio by giving appropriate small company discount & Newly Company discount of 40% to Industry average NVT Ratio of 15 Token Companies, after giving discount we arrived at Industry Adjusted NVT Ratio of 23.28x. After calculating the industry Adjusted NVT Ratio of 23.28x, we multiplied the same with REMCO 2017 Transaction Value of $695 Mn to arrive at Fair value REMCO. Thus we obtained the Value of Coin $16,180.43 Mn, after dividing the same with the outstanding coin of 2000 Mn. We arrived at fair value of $8.09 per coin,

Note- NVT is a proxy for fundamental utility value of the network, a 90-day Moving Average is a better proxy for long-term fundamental value than a 28-day Moving Average, hence for valuation of REMCO we have considered 90d NVT Ratio.

I. Cash Flow Model

Key Assumptions

The model works for quarterly, for 36 quarters (9 years seems like a reasonable length of time for a platform to scale to the point of capturing the vast majority of the opportunity.)

Beyond 360 quarter- we have considered the terminal value

Model captures (QonQ) growth in transaction

Cash Flow comes through fees of token holders

To arrive at a fair value- we have discounted the fees to token holders based on a Discount Rate.

Logistics function (S-curve distribution) has been used to define the no. Of user growth

Valuation of Remco

² Token Supply (Outstanding Token as on date) — 2,000,000,000

² Distributions to all token holders start at $4,06,854 for Q3 2018 as per our S-curve distribution Model. The distributions grow modestly at first. There is a steep growth in distributions several quarters leading up to the inflection point in the S-curve which occurs in Quarter 18 of the model (Q4 2022). By Quarter 28 (Q2 2025) 99% is achieved. At the end of the 36 Quarter Terminal Value of distributions to token holders into the distant future can be modeled as a perpetuity.

² These cash flows to token holders including the Terminal Value are discounted back to the present using a Discount Rate. A quarterly Discount Rate of 10% is used.

² The Present Value (“PV”) of the distributions (including Terminal Value) is calculated as $3950 Mn. Based on a total token supply of 2,000,000,000 Tokens, each token has a justified value of $1.97 (which is the PV divided by the token supply) at the point of the project start.

Fair Value

For Calculating the Fair value of REMCO, We have given equal weights to all three Globally accepted Methods. Although here the point has to be noted that Cash Flow Model & NVT Ratio is most suited for newly launched Tokens.