We offer a rating on the level of trade diversity for the pre-selected TOP-20 tokens judging by the volume of general capitalization
Investors’ interest toward cryptocurrencies continues to grow. Since the beginning of 2017, the cryptocurrency market’s capitalization has grown 34.6 times. The market’s record capitalization in 2018 made up $813.9 billion. The hype over ICO and their tokens (usually issued on the Ethereum base) has a special role in the market’s rapid growth.
In this mini-study we will try to single out and observe this critical category of crypto-assets (especially for ICO) – tokens. Then, after creating a topical TOP-20 list judging by the volume of general capitalization, we will analyze the uniformity of the trade volume distribution of these assets. To do this, we will create a rating on the level of trade diversity for the pre-selected TOP-20 tokens. We will then conclude this article with a qualitative comparison of the leaders and losers (based on the composite indexes) among the world’s leading tokens.
TOP-20 tokens listed by capitalization (values are true for the beginning of May 2018).
We must note that only one of the 20 tokens was issued on the basis of the NEM blockchain (Ontology), while the remaining 19 were issued on the basis of the more popular Ethereum.
TOP-20 tokens listed by the level of diversity of their trade volumes across exchanges. The more uniform and decentralized the token’s trade volumes are, the higher the token ranks in this rating.
For example, the trade volume of the clear leader – EOS – is more or less uniformly spread across a large number of exchanges (over 90, 7 of which are the world’s largest). In contrast, BNB and Maker token trading is more focused on one or two platforms, which makes them more vulnerable and highly dependant in the long-term outlook. Moreover, manipulation of the exchange rate in the case of exchange monopoly becomes highly likely.
Circumstantially, high rates of decentralization and uniformity of trade for any token shows its high and genuine demand in various market segments and countries, thus demonstrating the project’s economic stability and ‘health’.
Composite rating of the token – this is a more detailed glance on the leaders and outsiders of the trade diversity rating. This is a more complex evaluation of what has been done in the previous, second section.
This rating shows the general composite index consisting of the following components for every token:
- Green: The general trade volume
- Red: The general number of exchanges where it is traded
- Yellow: The uniformity of distribution and diversity of this token’s trading across various exchanges
Top-5 leaders in the composite rating:
Top-5 outsiders in the composite rating:
As an example and for maximum visualization, we compare the structure of trade volumes across exchanges for EOS – the undoubted leader, and the diversity rating’s outsider – Maker.
It is worth noting that this token rating’s leaders are united in one way. They are all planning on switching to their own blockchain. The ‘giants’ are beginning to feel cramped in the somewhat limited token economy, which, by the way, significantly gives way to the capitalization of the common cryptocurrencies. For example, EOS and TRON – token leaders, will soon be converted to coins belonging to their own blockchain, hence leaving this rating.
Another important aspect is that the BNB example shows that even a significantly centralized and monopolized token can be significant and in high demand. Well, this expressed counter-example with BinanceCoin is more of an exception to the rule. In general, Rating No.2 is a relatively objective reflection of any token’s economic demand and health. To avoid such distortions, as is shown in the BNB example, the next proposed step of analysis is a composite index.
The number of exchange services with the listing of the token, the total capitalization and the uniformity of the trade volumes distribution (diversification of trade volumes) are those three reference characteristics that allow to create a composite index fully characterizing the economy of tokens (see graphs No. 3&4 from Top-5).