Steady State Assumption

The steady state assumption posits that a protocol will eventually reach a period of stable, predictable growth and profitability. This stage occurs after the initial phase of rapid adoption and market expansion.

In the context of digital finance, this assumes that the protocol's market share, fee structures, and user base have matured. It is a necessary simplification for long-term valuation models, as modeling infinite volatility is mathematically impossible.

Analysts look for signs of network maturity, such as consistent daily active users and stable transaction volumes, to justify this assumption. If a protocol fails to reach this state, it may face stagnation or obsolescence.