Valuing crypto assets relies on accurately forecasting growth, and monitoring project specific data is crucial to this. We have identified five essential project-specific information and data to track.
Open decentralised platforms are unique in the amount of data freely available to all. If anything, the sheer quantity of the data available poses the challenge, and it might be more efficient and economical to use service providers that streamline the onchain data.
Onchain data provide insight into the existing growth trends and serve as proof points and verification of prior growth assumptions. The data can be tracked on the project level as well as aggregated to monitor sector trends.
The most important project specific information and data to track are
- User growth (transaction volume, transaction count, number of active users, etc.)
- Revenues earned by the protocol
- The share of revenues that are channelled to cover costs in some way (for example, paying liquidity providers, adding to a safety reserve to support the protocol, directing it towards the project treasury or a specific development budget)
- Holding and flows in and out of project treasuries
- Token issuance, burn, vesting, distribution as incentives
Below is an example of project specific onchain data.
INCOME STATEMENT — AAVE
It is important to remember that often the protocols charge fees in cryptocurrencies (e.g. transaction fees on blockchains). Many other growth metrics (e.g. the volume of tokens locked in a staking protocol) are also measured in cryptocurrency. During crypto bear markets, the translation into fiat may disguise real growth and make it appear muted. To observe the underlying growth trends, we need to strip away the translation effects from the data.
For long term forecasts, it is reasonable to assume that a protocol’s success will translate into an appreciation of the price of its token, and this should be reflected in fiat currency-based forecasts.
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