Valuation Horizon

The valuation horizon is the specific time period over which an analyst projects the performance of an asset before calculating a terminal value. This period typically ranges from five to ten years, depending on the predictability of the protocol's cash flows.

In the fast-moving crypto industry, a shorter horizon is often used to account for rapid technological shifts. The choice of horizon balances the need for detailed forecasting with the reality of long-term uncertainty.

Beyond this horizon, the model relies on terminal value assumptions, making the choice of the horizon critical to the model's reliability. It forces the analyst to define the boundaries of their predictive capability.