SushiSwap’s governance token, SUSHI, could be worth $100, up fivefold from current price levels, according to John Todaro, head of business development at TradeBlock, a provider of institutional cryptocurrency trading tools and CoinDesk subsidiary.

SushiSwap is a decentralized cryptocurrency exchange built on the Ethereum blockchain. Its price has skyrocketed to about $19, representing a 30-fold gain from a November 2020 low. The protocol has proven one of the biggest success stories of decentralized finance, or DeFi, generating over $100 million in cumulative revenue since launch, Todaro wrote Thursday in the newsletter Bankless.

And similar to the way stockholders might receive a dividend, holders of the SUSHI get a share of the SushiSwap platform’s fees. “Recently, SushiSwap initiated a process whereby a portion of trading fees across the platform are paid out to token holders,” Todaro wrote.

This ownership stake is essentially a dividend, which can be used to value SUSHI, similar to the way a bond’s price is a function of the yield.

• “In traditional equity markets, dividend paying stocks are often valued by discounting future cash flows to the present by and expected discount rate,” Todaro wrote.
• Todaro used historical trading volumes and fees to calculate cash flows.
• Based on his assumptions, Todaro estimates SushiSwap's intrinsice market value at around $12.6 billion, which equates to a token value of about $100.

Despite the lofty valuation, Todaro cautioned investors about considerable risks in the market, including a slump in DeFi cryptocurrency trading.

This industrywide risk could “severely impact SushiSwap’s volumes and hence trading fees,” Todaro wrote.