Dispersion of coins, order book information, and traditional consumer growth metrics are 3 beneficial ways to compare cryptoassets, according to 3 crypto market players.
On Monday, throughout a panel at Messari‘s Mainnet event, Kaiko CEO Ambre Soubiran, Coin Metrics Co-founder Nic Carter, and Flipside Crypto CEO Dave Balter talked about on how blockchain information and cryptoasset metrics can be beneficial when comparing various assets on themarket
Here’s what they stated.
Tracking the dispersion of coins
When the subject of beneficial metrics for comparing cryptoassets was brought, Carter was first to respond with his choice for tracking the dispersion of coins on various cryptoasset networks.
“You guys might be expecting me to say realized cap here, but I would actually say something like the dispersion of addresses,” stated Carter. “So, the number of addresses with certain thresholds of value in them because that’s a pretty strong, kind of, indication of the growth of the holders of that asset.”
For Carter, there is no single metric he was referring to here. Instead, a variety of metrics can be utilized to comprehend the level of dispersion found in the ownership of the UTXO (unspent output from bitcoin deals) set or account holder base.
Carter utilized the number of addresses holding a minimum of BTC 0.1 on the Bitcoin network as an example information point.
“If you look at the chart on Bitcoin, it looks a little bit like the price chart, actually,” stated Carter. “It has these actually fast growth stages [followed by] small concentration. just, usually, the pattern is growth, as the userbase gets more distributed.”
Carter added that this sort of information can also work when determining the relative success of various forks that break off from a specific cryptocurrency. The holdings of bitcoin cash (BCH), bitcoin SV (BSV), and bitcoin gold (BTG) have actually ended up being more focused because they introduced, as BTC has actually continued to end up being more extensively distributed.
” You may juxtapose [coin dispersion] against deal worth or deal count for some of those fork coins,” stated Carter. “You see that they have an apparent vibrancy because there are lots and lots of transactions going on, but if you look into it a bit deeper, you see the transactions are kind of like for the insertion of arbitrary data, for tipping services, or actually just could be straight up spam transactions. And it’s not a function of actual commerce happening really.”
According to Carter, the entities negotiating are mainly the exact same entities: “And there’s not evangelism going on. There’s no additional, new dispersion. There’s no user acquisition.”
Having a look at liquidity
For Soubiran, it’s also beneficial to take a look at metrics around use and speed. With these sorts of information, you can see how money is being moved on a cryptoasset network instead of just how much is being held by users.
“Going back to my bread and butter, I’m completely obsessed with order book metrics and how you can derive order book data to have more liquidity-related insights on the market,” discussed Soubiran. “And so, everything about slippage, market depth, how quickly market depth depletes when you have large market moves—there are so many things that you can learn from order book data that goes way beyond just pure price information. It really gives a lot around market microstructure and how stable the market actually is.”
According to Soubiran, while more financiers are discussing BTC as a potential hedge against increased money printing by federal governments, the reality is the cryptocurrency market is still extremely illiquid. To this point, Kaiko CEO pointed to a current report from her business on how exchange order books were entirely annihilated on Black Thursday.
“Bitcoin is not yet an asset that can be considered a hedge against anything, in my opinion,” stated Soubiran. “However, the hedge narrative is wonderful for us because it brings a lot of attention and a lot of interest to the space because, conceptually, it is a real hedge against inflation. It’s just we’re not there yet in terms of size and volume.”
Soubiran added that slippage is still quite an issue for BTC traders, as traders can experience 10 basis points of slippage on the biggest exchanges for orders of around USD 50,000 to USD 100,000, with the issue ending up being much even worse for bigger trades.
“Market orders above USD 150,000 to USD 200,000 start being quite expensive in terms of how much of the order book you’re actually eating up,” stated Soubiran. “So, if we just look at that from a price stability standpoint, an order of USD 100,000 to USD 200,000 can start messing up the price quite significantly . . . on the largest exchanges.”
Where is the consumer information?
While Balter concurred with the responses offered by Carter and Soubiran, he added that metrics utilized to track growth of traditional companies might work when taking a look at cryptoasset networks.
” If you may look a couple of years out, an investable asset may be one that has real consumer metrics, things that you may comprehend possibly as you’re even investing in equities today: user growth, retention, [customer acquisition cost], [and loan-to-value],” he stated.
“My sense is what we’re missing in this space is more prominent indicators of ecosystem performance that would indicate that these assets are actually growing as real organizations.”
Soubiran pointed out that this is what Messari, who was putting on the conference, is currently trying to build.
According to Balter, part of what Flipside Crypto works on is identifying various types of users of the various cryptoassets they track on their platform.
” When you start taking a look at stakeholder habits in stablecoins, you’ll see that DAI is actually the only one that is being utilized deeply for decentralized financing, while Tether is primarily being utilized for arbitrage. That begins to give you a sign of where are their consumer metrics, where [is] their real use … So, I would like to see much more of these types of real indications of what type of use, not just what type of tokens are being moved around, however what type of use is taking place for these types of assets.”