DeFi Protocol Model

At the centre of the template is a TVL roll-forward that moves from the opening balance to a closing balance each year, with the average of the two used as the revenue base.

• Reserve composition is split across six buckets, including T-Bills of different maturities, overnight repo and a crypto liquid tranche.
• Each bucket carries its own allocation percentage and gross yield, and a blended yield is calculated from those weights, so the model captures how shifting the mix changes the portfolio's earning rate rather than assuming a single flat return.
• The blended yield steps down year by year as rates normalise, which matters because holding a single rate constant would overstate later-year revenue.

The protocol earns net reserve yield by taking gross yield on average TVL and passing a share through to stakers, with the retained spread flowing to the business. A stability fee is charged on average TVL, and mint/redeem fees apply to gross flow volume, calculated from average TVL multiplied by an annual turnover rate.

• Liquidation revenue is modelled separately through event counts, average liquidation size and a penalty rate. Together these four lines feed the income statement, where operating costs are deducted and token emission is treated as a non-cash stock-based compensation charge.
• The cash flow statement adds that non-cash charge back, and an equity line called Token Grant Reserve accumulates it so the balance sheet stays balanced. Dilution is captured in the token count, not in the discounted cash flows.

The balance sheet uses a strict one-to-one backing structure: reserve assets equal stablecoin liabilities, so there is no structural gap. Treasury cash is a separate asset built from opening equity plus cumulative operating cash flow, while retained earnings roll forward with net income.

• When TVL grows, reserve purchases appear as an investing outflow and stablecoin issuance as a financing inflow, so the two offset and net cash movement equals operating cash flow.
• A suite of integrity checks verifies that the balance sheet balances, reserve allocations sum to one hundred percent, the cash reconciliation holds, token supply stays within the cap, net reserve yield remains positive, treasury cash stays solvent, and the discount rate exceeds terminal growth.

A single scenario input drives TVL growth, mint turnover, staker share of supply and a yield multiplier, with bear, base and bull settings. That toggle also changes the discount rate used in the DCF, so the valuation moves with the scenario.

• The DCF discounts pre-SBC protocol earnings, and dilution is handled through the maximum token supply. The model reports fully-diluted value per token, circulating market capitalisation, and an EV to TVL multiple, alongside a peer comparison table and a redemption stress test that calculates liquidity coverage.
• A sensitivity grid shows how fully-diluted value responds to discount rate and terminal growth, and how year-five earnings respond to TVL growth and reserve yield, helping you see which assumptions matter most.