Crypto Metrics
Understanding value creation is crucial for assessing the potential and sustainability of projects.
High level indicators.
- Relative Market Dominance
- User Engagement
- Market Cap per Daily Active User
- Developer Ecosystem
- Fee Generation
- Performance
Metrics
Metrics used to interpret the value of a cryptocurrency project:
- Fully Diluted Valuation (FDV)
- Total Value Locked (TVL)
- Total Supply
- Maximal Extractable Value (MEV)
- Insider Distribution
- Whale Concentration
- Transaction Volume
- Revenue and Fees
- Token Price and Market Cap
- User Growth
- Liquidity
- Borrowing and Lending Rates
- Risk Metrics
- Governance Participation
- Innovation and Development Activity
- Network Value to Transaction Ratio (NVT)
- Social and Community Engagement
- Arbitrage Opportunities
- Impermanent Loss
- Yield and Return on Investment (ROI)
- Circulating Supply
- Annual Inflation
- Centralisation
- All Time High
- Current Cycle Low
Crypto Value Capture Questions
Fully Diluted Valuation
Fully diluted valuation (FDV) is the total value of a cryptocurrency project assuming all of its tokens are in circulation.
- The total supply of tokens may change due to the minting of new tokens, or due to token burning, which removes tokens from circulation.
- FDV is calculated using the formula Token Price X Total Supply, which gives a projection of the cryptocurrency's market cap when all tokens are in circulation.
Total Value Locked
The amount of assets locked in a DeFi protocol's smart contracts.
Importance: It indicates the level of trust and adoption of the protocol and is a measure of the protocol's size and liquidity.
Maximal Extractable Value
The total value extracted through MEV strategies.
Importance: It provides an overview of the overall impact of MEV on the network and helps in assessing the magnitude of value extraction
Transaction Volume
The total value of transactions processed by a DeFi protocol.
Importance: It provides insights into the activity and usage of the protocol, reflecting demand for its services.
Revenue and Fees
The income generated by the protocol, often through transaction fees or service fees.
Importance: It reflects the profitability and sustainability of the protocol.
Token Price and Market Cap
The price and total market value of the protocol's native token.
Importance: It provides a quick snapshot of the perceived value and market sentiment towards the protocol.
User Growth
The number of users or addresses interacting with the protocol over time.
Importance: It indicates adoption, network effects, and the potential market size for the protocol.
Liquidity
The availability of assets within the protocol to facilitate trading or lending.
Importance: It impacts the efficiency and usability of the protocol, affecting transaction slippage and interest rates.
Borrowing and Lending Rates
The interest rates charged for borrowing and earned for lending assets within the protocol.
Importance: It influences user behavior, affecting the demand for borrowing and lending services.
Risk Metrics
Various metrics assessing the risks associated with the protocol, such as collateralization ratios, liquidation levels, and smart contract vulnerabilities.
Importance: It helps in evaluating the stability and security of the protocol.
Governance Participation
The level of involvement of token holders in the governance of the protocol.
Importance: It reflects the decentralization and community engagement in the protocol's development and decision-making.
Innovation and Development Activity
The frequency and quality of updates, upgrades, and new features introduced by the protocol.
Importance: It indicates the protocol's commitment to improvement and adaptation to market needs.
Network Value to Transaction Ratio (NVT)
The ratio of the network's market cap to the transaction volume flowing through the network.
Importance: It is used to assess the valuation of a network relative to the value being transmitted through it.
Social and Community Engagement
The activity and engagement level of the community on social media platforms and forums.
Importance: It provides insights into the community support, discussions, and sentiment around the protocol.
Arbitrage Opportunities
The presence of price discrepancies across different platforms or assets that can be exploited for profit.
Importance: It reflects market efficiency and liquidity and can impact user behavior and protocol interaction.
Impermanent Loss
The temporary loss of funds that liquidity providers can experience when providing liquidity in automated market makers.
Importance: It affects the incentives for users to provide liquidity to decentralized exchanges.
Yield and Return on Investment (ROI)
The earnings generated by utilizing the protocol, often through yield farming or staking.
- Importance: It is a key consideration for users when choosing between different DeFi protocols and strategies.