We use Metcalfe’s law to calculate an estimate of a cryptocurrency’s value. The methodology we used is based on a paper by Timothy Peterson.
The formula uses three components:
M: Metcalfe’s number based on number of active accounts. Increases in n increase value.
A: a decay factor based on the number of transactions (t). Higher t means smaller A. Smaller A increases value.
b: inflation caused by the issuance of new coins. Increases in b decrease value.
The general formula is:
We also must take into account periods of extreme pricing, such as those resulting from price manipulation or investor bubbles. Adjusting for these factors, we have developed a valuation model for each of the following cryptocurrencies:
*Bitcoin's model uses 60-day periods.
Explanatory power is the extent to which Cane Island’s network economic model explains a cryptocurrency’s 30-day price change. For example, Cane Island’s model explains 98% of Ethereum’s monthly price changes. Based on these results, as well as the theory behind the model, we believe we have one of the most robust and valuable tools for valuing cryptocurrency ever developed.
Standard error is a degree of accuracy associated with the model. About 68% of observed prices fell within the range predicted by the model. For example, if ZCash’s forecast price is 120, then there is a 68% chance its true price will fall between $80 and $160.
 Peterson, Timothy, Metcalfe's Law as a Model for Bitcoin's Value (January 22, 2018). Alternative Investment Analyst Review, Q2 2018, Vol. 7, No. 2, 9-18.. Available at SSRN: https://ssrn.com/abstract=3078248 or http://dx.doi.org/10.2139/ssrn.3078248
 Two documented examples are Gandal, Neil and Hamrick, JT and Moore, Tyler and Oberman, Tali, Price Manipulation in the Bitcoin Ecosystem (May 2017). CEPR Discussion Paper No. DP12061. Available at SSRN: https://ssrn.com/abstract=2977479 and Griffin, John M. and Shams, Amin, Is Bitcoin Really Un-Tethered? (June 13, 2018). Available at SSRN: https://ssrn.com/abstract=3195066 or http://dx.doi.org/10.2139/ssrn.3195066