Since the emerging crypto asset class is much like venture capital with liquidity, performing a quick market size analysis can provide insights into potential fundamental asset value.
The Stellar Network is attempting to create a worldwide financial network open to anyone. The primary use case of the network is to facilitate faster settlement and lower costs of cross border payments. The mechanism to achieve this use case is its digital token “Lumen”. Stellar Lumen (XLM) derives fundamental value from the amount of on-network activity (bridge currency).
Forked from Ripple (XRP)…neutral
The Stellar Network is looking to disrupt the entire global cross-border payments industry. Although total global cross-border payments are in the many trillions of dollars, we chose to focus on a smaller figure: the average daily CHIPS transaction volume. Because XLM is the liquidity mechanism for these payments to settle faster than the current system allows, we use a 10% share of daily volume to build a price target model. We then account for 1% annual inflation in XLM.
Given the assumptions (above) the 2-year Stellar Lumens (XLM) price target is given below: