SOL & the Digital City: A New Way to Value Layer 1 Tokens

Most valuation frameworks for SOL borrow from traditional finance. Analysts take the network's revenue, assign a multiple, and arrive at a price target. Others run a DCF or apply the monetary equation of exchange (MV=PQ). Each of these approaches has merit, but each also breaks in important ways when applied to a Layer 1 token. For example, SOL holders have no claim on protocol revenue. There are no dividends. Fees accrue to validators, not token holders. The frameworks built for equities and currencies weren't designed for assets like SOL, and the results tend to reflect that.

In this piece, we introduce a new framework. We call it the DFDV model (Demand-Float Derived Valuation), and it starts with a simple observation: Solana should be valued like a rapidly growing digital city. New participants are arriving constantly: AI agents, DeFi protocols, tokenized assets, retail traders, DePIN networks, and institutional allocators. All of them need SOL to operate within the city. They need it for gas, for staking, for liquidity, for collateral, for settlement. And the amount of SOL that's actually available to buy in this digital city is remarkably small.

We estimate that approximately 90% of SOL’s supply will be structurally committed in the long term. Stakers hold the bedrock. DeFi protocols occupy the commercial district. Institutions and ETFs have acquired their corporate campuses. Apps have claimed the plumbing. Long term, this leaves roughly 10% of the total supply as the genuine free float, the only land in the city actually for sale. Our model then asks: how many dollars are competing for that scarce 10%? We lay out four major sources of demand, each grounded in observable activity and projected forward to maturity. The clearing price between supply and demand is the implied value of SOL. In our base case, we arrive at a $10k price target.

We want to be clear about what this model is and what it isn't. It is a framework, and an imperfect one at that. The assumptions are debatable, the inputs are stress-testable, and we've built it that way on purpose. The full spreadsheet is open for anyone to plug in their own numbers and arrive at their own conclusions. Our objective is not to be overly prescriptive or precise. Our goal is to illustrate a simple idea: we believe Solana is heading to trillions of dollars in market cap, and the existing valuation toolkits don't fully explain why. This model, available here, is our attempt to fill that gap.

How Assets Are Valued

Every asset class has a dominant valuation framework shaped by the nature of the asset itself. For example, equities are often valued via discounted cash flow ("DCF") analysis and revenue multiples because companies generate earnings that belong to shareholders. Commodities like gold and oil are priced by supply and demand dynamics because they don't produce cash flows. Their value is set by how much of the commodity exists relative to how many people need it. Real estate sits somewhere in between: income-producing properties can be valued on rental yield, but land and owner-occupied properties are priced on scarcity and demand for location.

The challenge with Layer 1 tokens like SOL is that they don't fit cleanly into any of these categories. They're not equity (no claim on earnings), not currency in the traditional sense (no central bank, no monetary policy mandate), and not a pure commodity (they have programmatic utility beyond storage of value). As a result, analysts have borrowed frameworks from adjacent asset classes – primarily DCFs, revenue multiples, and the monetary equation of exchange (MV=PQ) – and adapted them for crypto. Each has merit. Each also breaks in important ways when applied to SOL.

Where Existing Frameworks Fall Short

For Solana, the most common approaches involve taking a revenue forecast for the network — fees, MEV, tips — and assigning a multiple to derive a price target. For example, RockawayX assumes Solana can achieve a $1.5T market cap based on 30x “revenue.”  This approach can be directionally useful for gauging the scale of the opportunity, but it has a fundamental gap: assigning a revenue multiple to SOL conflates the network's economic activity with the token's value. 

Similarly, the DCF approach treats SOL like a stock and runs into the same issues. There are three main problems: 

1. There are no claimable cash flows. SOL holders have no legal claim on protocol revenues, no right to validator fees, and no contractual entitlement to any income stream. Even if you treat protocol revenue as a proxy for free cash flow, you hit a category error: fees are paid to validators, competed away by market forces, and shaped by MEV dynamics. None of it flows to the token holder. A DCF values claims, but SOL is not a claim.

2. There is no defensible terminal value. A traditional DCF assumes the firm exists indefinitely and cash flows converge toward a stable growth rate. For SOL, that anchor doesn't exist. The protocol can be forked, usage can migrate, token economics can change via governance, and competing chains can absorb demand.

3. SOL is a commodity, not a security. You wouldn't derive a price target for gold via DCF. You wouldn’t value oil using a DCF. Running a DCF on the commodity of a digital network has the same structural problem: you're applying a framework built for companies with management teams allocating capital to an open protocol where no one controls the revenue, no one sets the margins, and no one decides how value gets distributed.

The third approach, MV=PQ, the equation of exchange, is also limited because of a single variable: velocity (V). The model says the market cap of a token should equal the economic output of its network, divided by how fast the token changes hands. One issue with this framing is that velocity is ambiguously defined in crypto. Should velocity simply reflect total network transactions? How does staking/unstaking get counted? How do you measure CEX activity? Small definitional choices materially move the implied market cap. Lastly, and perhaps most crucially, if velocity is high (i.e., if people buy SOL, use it, and sell it quickly), then the implied market cap stays small no matter how much activity flows through the network. This is the problem that's haunted the vast majority of tokens that came to market during and following the 2017 ICO craze: MV=PQ chronically undervalues tokens because it models them as money you spend, not assets you hold.

Each of these frameworks shares the same blind spot. They focus entirely on what an L1 does (how much it moves, how much it earns). We believe the real price driver is what SOL represents: a piece of finite space inside a digital economy that's rapidly growing.

The Framework: SOL as Digital Land

The core idea is simple: SOL is priced like land in a growing city, not like equity in a company.

For example, rental yield is one input to real estate valuation, but it's rarely the dominant one. An empty lot in Manhattan sells for millions despite generating zero income. Land prices are ultimately set by how many people want or need to own a piece and how little of it is for sale. In other words, price is determined by the imbalance between demand and available supply.

Our model has two sides. The supply (“S”) side asks: how much SOL is structurally committed and off-market? The demand (“D”) side asks: how many dollars are competing for what remains? Price is just the clearing mechanism between those two forces:

Price of SOL = Total Demand / Total Supply (Free Float of SOL)

This framework deliberately sidesteps the traps that break traditional models. We don't focus on fees, revenue, or velocity. We ask a simpler question: how much SOL will rational participants remove from the circulating supply by staking, locking into DeFi, and holding, and how much demand is competing for what remains (the free-float)? We call it the DFDV model: Demand-Float Derived Valuation.

Supply Side: How Much Land Exists?

The question isn't how much SOL exists; it's how much is actually available to buy. By 2040, Solana will have roughly 750M SOL in circulation (568M today, 4% inflation, with inflation tapering to a 1.5% terminal rate). This could prove conservative, as SIMD-0411, a governance proposal to double the disinflation rate from -15% to -30% annually, would reduce cumulative emissions by more than 22M SOL. Additionally, 50% of base transaction fees are still burned on every Solana transaction, providing a modest but persistent offset to new issuance. Since SIMD-96 redirected 100% of priority fees to validators in February 2025, the net burn is smaller than it was historically, but the base fee burn mechanism remains structural. We model supply on the published inflation schedule and do not incorporate fee burns in our base case.

We break supply into four buckets based on the economic rationale for holding, because each has a different likelihood of ever hitting the open market:

Staked SOL (65% of circulating supply, ~488M SOL). This is the anchor. Stakers provide network security and earn yield for doing so. The staking ratio has held between 65–70% through every conceivable market regime: the FTX collapse, multiple network outages, and a full bear market cycle. If stakers didn't unstake when SOL went to $8, they're not unstaking for marginal price moves. While the 2-3 day unstaking period isn't a hard lock, it functions as one behaviorally. Additionally, with the rise of liquid staking tokens (jitoSOL, dfdvSOL), stakers can now deploy their SOL in DeFi while remaining staked. This means stakers never need to unstake to access liquidity, removing one of the primary incentives to ever return SOL to the free float.

DeFi-locked SOL (10%, ~75M SOL). This is productive capital, such as liquidity pools, lending collateral, perps margin, etc. It's locked in smart contracts, earning yield, and not available for open-market sale.

DATs, ETFs, and Institutional Holdings (10%, ~75M SOL). This includes digital asset treasuries (“DATs”), ETFs, fund allocations, and increasingly, operational reserves at financial institutions. Solana ETFs saw over $1.0B in net inflows from their launch in late October 2025 to the end of December. Additionally, Goldman Sachs disclosed a $108M SOL position via ETFs as of 12/31/2025. As banks tokenize assets on Solana, they'll need SOL the same way they need central bank reserves: to settle, to run validators, to post collateral. We believe many of the institutions that will buy SOL will become long-duration holders who buy to operate instead of making a speculative bet. We model 10% of circulating supply, up from ~4-5% today, which could prove to be conservative if even a handful of major institutions begin holding operational balances.

App Reserves (5%, ~37.5M SOL). Protocol treasuries, rent deposits, operational gas floats. Small, but structurally necessary, and expected to grow linearly with the number of applications deployed on the network.

That leaves roughly 75M SOL (10% of the total supply) as the genuine free float. This is the only land in the digital city, actually, for sale.

But what if staking drifts down to 55–60% of circulating supply over time? We address this more fully in the FAQ below, but our view is that this rotation won’t necessarily hit the free float. For example, if the ratio dropped from 65% to 60%, it’s likely a portion of this will migrate into DeFi in search of higher yields rather than hitting the open market. 

It’s also worth noting that the staking ratio has remained fairly stable over Solana’s history. Even the largest unstaking events in Solana's history (FTX estate, a16z rebalancing) were driven by forced liquidations and operational decisions, not by stakers rationally choosing to sell. Additionally, with liquid staking tokens now representing 16%+ of circulating supply (or 20% of total staking supply), a growing share of SOL never needs to leave staking at all. Even if the buckets shift, the free float stays fixed at roughly 10%.

Demand Side: Who's Bidding for the Land?

With only 75M SOL available, the question then becomes: how many dollars are competing for this limited supply? We lay out four sources of demand.

Bucket A: RWA Settlement Collateral ($525B of Demand)
As real-world assets (“RWAs”) tokenize on Solana (equities, treasuries, real estate, commodities, etc.), participants will need SOL for margin, validator bonds, LP pairing, and settlement reserves. Our hypothesis is that tokenization will represent the largest bucket of demand in the next five years.

We assume a $50T global tokenized RWA market at maturity (BCG estimates $19T by 2033, Standard Chartered $30T by 2034). We assume Solana captures 30% of that market, up from roughly 6.5% today and above Solana’s share of 19% of the tokenized equities value. Of the RWAs hosted on Solana, we assume only 3.5% of the value is held as SOL for gas, liquidity provision, validator economics, and settlement collateral. That gives us $50T × 30% × 3.5% = $525B in structural SOL demand.

Bucket B: Stablecoin Settlement Reserves ($150B of Demand)
Moving any asset on Solana requires SOL, including stablecoins. SOL isn't needed as a payment currency (stablecoins handle that) but rather as operational fuel, and that fuel is often consumed through three distinct mechanisms. First, SOL is burned: 50% of base transaction fees are permanently destroyed with every transfer, removing a small amount of SOL from circulation each time. Second, SOL is held: liquidity providers pair SOL against USDC in pools, market makers hold SOL inventory for settlement, and validators must stake SOL to produce blocks. Third, SOL is demanded at the application layer: aggregators like Jupiter route the majority of swaps through SOL as an intermediary, and bridge protocols require SOL collateral on the Solana side. Every stablecoin transaction on Solana touches the first mechanism since gas is non-negotiable. Swaps, liquidity provisioning, and cross-chain transfers engage the second and third mechanisms. The question is, long-term, how much SOL the system needs to hold at any given time.

Solana processed roughly $12T in stablecoin volume in 2025. We assume $50T at maturity, or roughly 30% of global stablecoin flows. A 0.3% reserve ratio (the percentage of annual volume that must be held as SOL at any given time) gives us $50T × 0.3% = $150B. 

Bucket C: Agentic AI ($27B of Demand)
This is the newest bucket and, in our view, the one with the most upside. The pace of agent proliferation is accelerating. OpenClaw (formerly Clawdbot) surpassed 100,000 GitHub stars within weeks of launch in early 2026, turning local AI assistants into autonomous economic actors that manage wallets, trade assets, and pay each other onchain. Frontier models like Claude Opus 4.6 are making agents dramatically more capable at coding, problem-solving, and reasoning. 

At the protocol level, every Solana transaction requires gas paid in SOL. Gas abstraction services exist that let end users pay in USDC, but these work by having a relayer pay the SOL on their behalf, meaning the SOL demand doesn't go away. Rather, the demand shifts to infrastructure providers. For AI agents specifically, the more relevant point is operational. Agents interacting with DeFi need SOL in positions, agents competing for execution priority need SOL for priority fees, and agent platforms need SOL for account rent and program deployment. Every agent that transacts on Solana creates persistent SOL demand, whether it pays gas directly or through a relayer.

The data is early but directionally favorable for Solana, which is emerging as the dominant settlement layer for this new economy. In 2025, AI agents accounted for $31B in DEX volume on Solana. The x402 payment protocol, backed by Coinbase, Google Cloud, and Cloudflare, processed 75M transactions and $24M in volume by December 2025. Franklin Templeton reports that 70% of AI agents choose to operate on Solana; x402 transaction data shows Solana capturing roughly half of agentic AI volume as of January 2026. 

We forecast demand as follows: the global AI agent market reaches $200B by 2030, then grows 10x to $2T at full maturity. 30% of agent economic activity moves onchain (via x402 and crypto-native rails), Solana captures 30% of this activity (versus today's 50% on x402), and agents hold 15% of their spending flow as SOL at any given time (gas pre-funding, operational wallets, priority fee staking). That yields $2T × 30% × 30% × 15% = $27B.

It’s possible this number could be substantially higher as the AI agent economy is in its first inning. There is no reliable baseline for how many agents will exist, how much SOL each will hold, or what share of agentic commerce/finance will settle onchain versus on traditional rails. The $27B figure is an initial estimate for near-term demand but should not be considered a precise forecast.

Bucket D: Consumer Demand ($50B of Demand)
Solana's onchain economy extends well beyond institutional use cases. Memecoin trading on Solana generated $482B in volume in 2025. Solana launchpads did $762M in revenue, doubling in 2025. Decentralized Physical Infrastructure Network (DePIN) protocols on Solana, such as Helium and Render, account for over $1B in market cap as of 02/20/26 and generated $17M in onchain revenue in 2025, and operate over 238,000 registered nodes, according to Syndica. Helium Mobile surpassed 450,000 subscribers in September 2025 and partnered with AT&T and T-Mobile for carrier data offloading. 

These subsectors of consumer demand require SOL at the protocol level, and many require SOL at the application level as well. Memecoin and project token trading routes are almost entirely through SOL pairs. DePIN protocols require SOL for node staking and data payments. Launchpads require SOL for token purchases. This makes consumer activity more SOL-intensive per dollar of volume than stablecoin transfers.

We estimate Solana's consumer and network-native economy reaches $5T in annual transaction volume at maturity. For reference, Solana processed $1.5T in spot DEX volume alone in 2025, plus an additional $451B in perps DEX volume, with the network still early in its adoption curve. We apply a 1.0% SOL holding ratio, higher than Bucket B's 0.3%, given that consumer trading is more SOL-intensive, which yields $5T × 1.0% = $50B of demand.

One important caveat: consumer activity will likely be more cyclical than the other buckets. For example, memecoin volume fluctuated between 30% and 60% of total Solana DEX activity throughout 2025. DePIN is showing promising signs, but it’s too early to tell how much long-term traction there will be. The durability of this demand at scale is less certain than that of RWA settlements or stablecoin flows. That said, consumer demand is also a clear, observable source of SOL demand today, and excluding it entirely would understate the network's current economic reality.

Price Derivation
Total exogenous dollar demand ($752B) divided by free-float SOL (75M) yields an implied price of $10,027 per SOL. Solana's implied market cap via this methodology is $7.5T.

FAQs and Limitations

No model is perfect. Below are the limitations we think matter most, and how we think about them.

"Why can't you just value SOL based on the revenue it generates? Like a rental property."
Just because you can, doesn’t mean you should. A DCF values claims on future cash flows, but SOL holders have no contractual claim on anything, and protocol revenue accrues to validators, not token holders.

Going back to the real estate metaphor: you can value a rental property on the income it generates. But that only works for income-producing properties. It fails to explain why an empty lot in Manhattan sells for millions, or why someone pays $30M for a penthouse they'll never rent out. Most real estate value isn't rent-based. It's scarcity-based. People buy land because they want or need it (to live, to build, to operate), and pricing is determined by supply/demand dynamics. The same dynamic applies to SOL. Stakers hold because they're securing the network. DeFi protocols hold because they need liquidity. AI agents hold because they can't function without gas. Validators hold because they can't produce blocks without a stake.

"Staked SOL isn't really locked. People can unstake in 2–3 days."
Technically true. Behaviorally irrelevant. The staking ratio has held 65–70% through the FTX collapse and multiple network outages. If stakers didn't sell when SOL went from $260 to $8, they're not unstaking for marginal price moves on the way down (the way up might be different, addressed below). Unstaking means forfeiting ~7% APY. And with liquid staking tokens (jitoSOL, dfdvSOL), SOL HODLers don't even need to unstake to access liquidity. 

"If SOL goes from $80 to $800, won't stakers sell? The supply lockup isn't static."
Probably, yes. As the price of SOL rises, you’d expect the free float to increase. We don't assume a static supply forever. But the empirical evidence indicates this is not a major risk. For example, when SOL rallied 32x from $8 to $260, the staking ratio didn't decline. The people staking tend to be validators with infrastructure commitments, institutions with mandates, and long-term holders who view staking as a default state vs. a trade. That said, suppose the staking ratio drops from 65% to 60% at higher prices (which we view as a meaningful profit-taking event), that's 37.5M SOL hitting the free float, expanding it from 75M to 112.5M. Assuming constant demand, the implied price drops from ~$10,027 to ~$6,684: a 33% decline. But the reality of this drawdown is that the sell pressure is likely to be self-correcting: as the price retracts, yield becomes more attractive, and the incentive to unstake fades. But perhaps most critically, price appreciation creates demand faster than it frees supply. Higher prices attract more RWAs, more stablecoin volume, and more institutional participation, each of which requires holding SOL to operate. The few stakers who sell into strength are replaced by an expanding base of participants who need SOL to function.

“RWAs don't need SOL to exist on Solana. You can tokenize an asset and never touch SOL. This implies the 3.5% collateral ratio in Bucket A is doing too much work."
Fair. Not all RWA collateral will be posted in SOL, as USDC and other currencies will absorb some share. However, market makers providing liquidity need SOL in their pairs. Jupiter routes the majority of swaps through SOL as an intermediary. Settlement requires gas paid in SOL. Whether the right number is 2%, 5%, or 1% in the long-term is debatable. To illustrate the impact on the model, at 2%, Bucket A Demand drops from $525B to $300B, and the implied price of SOL falls roughly 30% to $7.0k. The model is transparent about this sensitivity, and the spreadsheet includes tables so investors can stress-test it.

"Why do stablecoin flows need SOL? Is this just for gas fees?"
Mostly, yes. The bulk of SOL demand for stablecoins comes from gas, LP reserves, and market-maker inventory. The 0.3% reserve ratio captures that thin operational layer. The per-dollar demand is tiny, but the volume is enormous at $50T at maturity. It's worth noting that fee abstraction already exists on Solana, as services like Circle's Gas Station and Bitget Wallet let users pay gas in USDC today. But this doesn't eliminate SOL demand; it simply relocates it. Under the hood, a relayer still pays SOL for every transaction. The SOL requirement shifts from the end user to the infrastructure provider, but someone in the stack is always holding SOL. The real risk isn't fee abstraction itself, it's whether fee abstraction reduces the total amount of SOL that needs to be held across the system, since relayers can batch and optimize in ways individual users can't. This, in turn, could compress the operational layer. 

"AI agents just need gas money. That's fractions of a cent and shouldn’t be a big driver."
Per agent, yes, the requirements are small. But the model aggregates all AI agent demand. Ten million agents each holding $5, transacting 24/7, is $50M in SOL parked permanently. A billion agents, which is plausible if every app, API, and SaaS product embeds an autonomous agent, gets you to $5B+ in persistent SOL demand. Notably, gas isn't the only requirement. Agents interacting with DeFi need SOL in their positions. Agents competing for execution priority need SOL for priority fees. Agent platforms need SOL for account rent and program deployment. The bet is on aggregate agent transaction volume reaching trillions of dollars in scale. 

"Inflation is uncapped and dilutes holders."
Solana's inflation follows a fixed disinflationary schedule, declining 15% per year from an initial 8%, with a terminal rate of 1.5% (see solana.com/staking for the full schedule). Currently at ~4%, inflation rewards go to stakers who overwhelmingly restake and compound. As such, new issuance doesn't meaningfully increase the free float. Instead, it recirculates within the staked supply. Inflation only pressures price if new tokens hit the open market, and empirically, stakers continue to hold. It's also worth noting that much of the perceived inflation pressure on SOL in 2023-2024 was not inflation at all. It was token unlocks from early investors and the FTX estate liquidation, which were one-time events tied to vesting schedules and bankruptcy proceedings, not ongoing issuance. Those unlocks are largely behind us. The net effect of actual protocol inflation on free float is close to zero.

"The demand buckets aren't independent."
Partially true for Buckets A and B since both require institutional adoption of public chains. This is less true for Bucket C, since AI agents on Solana don't require mass institutional buy-in, just developers building (which is already happening). If institutional adoption disappoints, Buckets A and B likely underperform together. The model doesn't pretend otherwise. But even Buckets B + C alone (~$177B) implies a price of ~$2,360 at 10% free float, or roughly 28x today’s price.

"How is this different from MV=PQ?"
MV=PQ says if SOL moves fast, the market cap can stay small. In other words, it asks how much SOL needs to circulate. The DFDV model asks how much SOL needs to be held. In this model, it doesn't matter how fast the free float changes hands; instead, what matters is how many dollars are bidding for the free float. Velocity is not the primary determinant of the price-setting mechanism.

"$7.5T market cap… that's bigger than NVDA. Is this realistic?"
This is the wrong comparison. SOL isn't a company. It's infrastructure. You don't compare the value of the U.S. dollar money supply to Nvidia’s market cap, and you shouldn’t compare Solana’s value to a company’s market cap. That said, the opportunity for Solana is enormous, and a long-term market cap in the trillions reflects that. For example, McKinsey estimates that all of global value transfer is $1.8 Quadrillion, and this figure doesn’t include agentic commerce. The more important question is whether public blockchains will capture material market share from legacy rails. If you don't believe that, the entire model fails. If you do, $7.5T is what the math produces under our assumptions. We'd rather be transparent about the implied scale than anchor to a smaller number that requires conservative or consensus thinking to get there.

Conclusion

Valuation ultimately comes down to identifying what sets price. For equities, it is cash flow. For commodities, it is supply and demand. For Layer 1 tokens like SOL, we believe the dominant driver is structural holding behavior. The DFDV model reframes SOL as scarce operational real estate inside a growing digital economy. As more activity migrates onchain, more participants must hold SOL to operate, whether for staking, liquidity, collateral, or settlement. Price, in this view, is the clearing function between persistent demand and a relatively constrained free float.

This framework is not a prediction but a tool. Every assumption can be debated, stress-tested, and adjusted. Adoption may exceed expectations or fall short. Free float may expand over time. What matters is the structural insight: if public blockchains capture a meaningful share of global value transfer, then the assets that power them may be valued on scarcity and necessity rather than traditional cash flow metrics. The DFDV model is our attempt to quantify that dynamic and provide a transparent lens for thinking about long-term value.

In service of SOL Per Share Growth,
DeFi Development Corp.

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