This panel was moderated by Alex Wenham, Digital Asset Product & Strategy Lead at Bloomberg. Vangelis Andrikopoulos, Investment Analyst at CoinFund, Anais Rachel, Independent Analyst, and Matthew Sigel, Head of Digital Assets Research at VanEck, share how to DYOR when investing in crypto.
Taxonomy of Crypto Assets
Matthew states that from an end market perspective, the crypto assets can be categorized into three main markets: finance (worth $3 trillion), tech infrastructure (worth $500 billion), and an emerging metaverse market (potentially worth $2 trillion in 5-10 years).
He also points out various categories of crypto assets, such as consensus layer, execution layer, app-specific blockchains, and decentralized finance (DeFi), with differing characteristics like product-market fit, network effects, and cash flow.
Pay Attention to Blockchains Mechanisms, Tokenomics, DAO Governance, Userships, Developer Activities, and the Whole Ecosystem
Vangelis emphasizes the difficulty of coming up with a standard analysis method to value and invest in crypto assets. These tokens are programmable and there are a lot of variables that can change the equation.
Focusing on Ethereum, Anais reminds the audience that each blockchain and protocols have different tokenomics: burn mechanisms, token supply cap, or monetary policies. She states that the burn mechanism of the blockchain, such as Ethereum and Avalanche, is a direct result of how much the network is being used.
It’s also important to see which network has the most vibrant developer activities (such as the number of commits per developer on a quarterly basis) and daily active addresses (instead of the daily number of transactions).
Anais also highlights the importance of investigating the whole ecosystem. When she analyzes Ethereum, she also takes Layer 2 protocols, such as Polygon zkEVM, into account.
Vangelis recommends considering factors such as the estimated market share in five to seven years and decentralized autonomous organizations (DAOs) governance to see how the networks are kept safe and how the rewards are distributed.
Anais thinks the first step to investing in crypto assets is to understand what you are looking for as an investor. Researching the application layer will be different from investigating a consensus layer.
She uses data platforms, such as Token Terminal, to acquire relevant data, download it, and make assumptions. However, it’s important to keep in mind that road maps change, hacks occur, and there are hard forks. She shares that she wouldn’t project anything more than 10 years ahead of time, not yet in the crypto industry.
