Burn Rate
The rate at which a protocol spends its treasury or resources over time.
In-Depth Explanation
Burn rate includes team salaries, grants, security audits, liquidity incentives, and other operational costs. High burn rates during growth phases may be intentional; sustained high burn without revenue growth is concerning. Compare burn rate to revenue trajectory to assess sustainability. Many protocols reduced burn rates aggressively during the 2022-2023 bear market.
Related Terms
Runway
The length of time a protocol can continue operating given its treasury balance and burn rate.
Treasury
Protocol-owned assets held in smart contracts, typically controlled by governance for funding development and operations.
Emissions
New tokens distributed by a protocol as incentives, typically to liquidity providers or users.
More in Valuation
View all →Market Capitalization
Market CapThe total value of a token's circulating supply, calculated as price × circulating supply.
Fully Diluted Valuation
FDVThe theoretical market cap if all tokens (including locked, unvested, and unissued) were in circulation.
Price to Sales Ratio
P/SValuation metric comparing market cap (or FDV) to annualized revenue.
Price to Fees Ratio
P/FValuation metric comparing market cap (or FDV) to total fees generated, regardless of fee distribution.