Token valuation metrics. Part I

Rationale: Protocols will capture most of the value created on a blockchain ecosystem — but the question is how to quantify valuation?

How to measure traction?

The average ticket size is important metric to watch: by limiting the ticket size 0x Protocol has forced whales to buy tokens on secondary markets . This is a form of “community underwriting” : selling only to most dedicated and engaged part of the community that won’t just flip immediately after the ICO

“A platform is when the economic value of everybody that uses it, exceeds the value of the company that creates it. Then it’s a platform.”

Bill Gates

This is a very interesting metric to watch — some projects have capitalization LOWER than the sum of money on their accounts! It’s possible, but rare in regular equity markets.

“A company in decline might have a lot of assets but be losing money. This could be for example a newspaper business which appears to be in a dying industry or a drug research company that raised a lot of money but hasn’t been able to come up with a winning drug. In some cases we’ve actually seen companies “worth” less than the cash they’ve got in their bank account! But it’s still possible for these companies not to be good value if the choice is between continuing to run and lose money or shutting down the business and having to firesale assets and pay redundancies etc.”

Comparing crypto to social networks we can compare enterprise value divided by value per monthly active user

Fundamental research

By combining Messari “vetting” of cryptocurrencies with quant metrics like Tx/Holder per Month one can learn about legit projects with actual usage!

It’s little known fact that some projects don’t issues tokens: they have already been issued and they are reducing the number of tokens via buyback and burn or just burning them in the smart contract.

Examples:

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