How do you measure a crypto asset? For years, the easy answer was to look at its price.
When we launched the CoinDesk Bitcoin Price Index (BPI) – the world’s first index for bitcoin – in September 2013, we were at the forefront of creating an average price using multiple exchanges. The goal was to create a reference rate for a new form of asset, one that would help better understand it on its way to greater adoption.
Since then, the BPI has established itself as a gold standard for journalists (our own and others), researchers and investors, while bitcoin, the world’s oldest and most valuable crypto-asset, has spawned a new economy.
But the market for crypto-assets has expanded dramatically and it is no secret that this growth has outstripped the understanding of what remains a new technology phenomenon.
As the market grew in complexity, there was no shortage of data providers rushing to the market. But how good were their insights?
Often excluded from available tools are many of the essential elements that we know have driven the growth of crypto-assets – developer interest, social activity, even the use of a crypto-asset’s blockchain.
At CoinDesk, we believe we have created a more comprehensive way to view cryptocurrency market data, a unique product that for the first time allows anyone to visualize a complete picture of a crypto-asset market.
Rather than price alone, our tool relies on the full range of data now assessed in the field of cryptoeconomics, a word that, although perhaps unfamiliar, has come to describe the study of crypto-asset economies .
Since its advent, the discipline has been developed and refined by industry leaders. Now for the first time, we put these factors at your fingertips, for your exploration.
The CoinDesk Crypto-Economics Explorer is a tool designed to provide a more complete picture of the economic activity for crypto-assets. With our new data insight product, you can examine the extent to which exchanges support their economy and whether developers are actively working to improve their core code.
The result of our work is a series of 28 factors related to price, exchange, network effect, developer base and social data that allow you to measure crypto assets against each other and against bitcoin.
To normalize our data, we created the Bitcoin Benchmark, which makes it easier to compare bitcoin and other crypto assets.
You can read the full breakdown of the Crypto-Economics Explorer here.
The benchmark is a proprietary volume-weighted price index that draws from market prices across 16 different exchanges. We take these prices, as well as the market cap, and compress that information into a single data point.
It takes the form of a percentage that can be used to compare the price activity of any asset relative to bitcoin.
But as we said, looking at the price is only one way to measure a network’s health – one that doesn’t accurately indicate whether a crypto-asset is actually being used.
Our Exchange Benchmark aims to expand on what is currently tracked by including factors such as the total value traded at crypto exchanges and trading volumes.
However, we ask a variety of other questions. How many exchanges list the crypto asset? How many trading pairs does that asset have across exchanges? And what volume of fiat currency is it being exchanged for – a good indicator of the amount of liquidity moving in and out of crypto exchanges.
Our network benchmark looks at data points specific to the blockchain in question, such as the number of transactions in the chain, mining profitability and how many nodes the software is running. Combining these data points can show us how the network attracts miners, traders and other key economic players.
Our developer metric tries to measure how active the developer base of an asset is, by answering questions like, How many developers are working on the protocol? How much code is proposed, tested and deployed on GitHub?
Our social benchmark demonstrates a unique phenomenon in crypto: that discussion, debate, and even governance take place primarily on social networks. This data point measures how many followers and subscribers a project has across various platforms and attempts to indicate how much interest there is in the network.
These five scores, when combined, provide the first Crypto-Economics Explorer ranking compared to bitcoin.
To be clear, an asset can have benchmark scores higher than bitcoin’s and we fully expect to see this as we observe their growth and development in the coming years.
What you see today is just the first version of what we hope will become the industry standard for visualizing the health and growth of the world’s most important crypto assets.
We are already developing new ways to examine and explore the vast amount of data produced by cryptocurrency networks – and we will ship those features as part of our broader development roadmap for the Crypto-Economics Explorer.
Simply put, the tool you see today will change, evolve and grow along with the ecosystem itself – and we hope that you, our users, can be a part of that process.
If you are working with a project that is not represented in the Crypto-Economics Explorer and would like to see your data represented, we are excited to work with you to collect this data and add it to the Crypto-Economics Explorer .
to share more information.
We encourage you to use the tool, compare various assets and tell us what you think.
Disclaimer for Uncirculars, with a Touch of Personality:
While we love diving into the exciting world of crypto here at Uncirculars, remember that this post, and all our content, is purely for your information and exploration. Think of it as your crypto compass, pointing you in the right direction to do your own research and make informed decisions.
No legal, tax, investment, or financial advice should be inferred from these pixels. We’re not fortune tellers or stockbrokers, just passionate crypto enthusiasts sharing our knowledge.
And just like that rollercoaster ride in your favorite DeFi protocol, past performance isn’t a guarantee of future thrills. The value of crypto assets can be as unpredictable as a moon landing, so buckle up and do your due diligence before taking the plunge.
Ultimately, any crypto adventure you embark on is yours alone. We’re just happy to be your crypto companion, cheering you on from the sidelines (and maybe sharing some snacks along the way). So research, explore, and remember, with a little knowledge and a lot of curiosity, you can navigate the crypto cosmos like a pro!
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