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New metric from the @placeholdervc team to assess relative valuations of smart contract platforms:
Network Value to Token Value (#NVTVratio).
Network Value to Token Value (#NVTVratio).
@placeholdervc 2/ The #NVTVratio divides the network value of a smart contract platform by the total value of all assets launched on that platform.
For example, #Ethereum currently trades at ~2x the value of all the assets on its platform, whereas #EOS trades at 234x.
For example, #Ethereum currently trades at ~2x the value of all the assets on its platform, whereas #EOS trades at 234x.
@placeholdervc 3/ A hope here is the #NVTVratio can help us get around faked transaction volumes and other forms of manipulation that have thus far made the #NVTratio less useful for smart contract platforms.
@placeholdervc 4/ The ratio has its own flaws, but our thinking is the market price of assets is the most "efficient metric" #crypto has.
Dividing the total market value of the base asset (eg, $ETH), by all the assets secured by it (eg, ERC20s, ERC721s, etc), yields a less manipulated metric.
Dividing the total market value of the base asset (eg, $ETH), by all the assets secured by it (eg, ERC20s, ERC721s, etc), yields a less manipulated metric.
@placeholdervc 5/ As with PE or PS ratios in stocks, the higher the value of the #NVTVratio, the more richly (speculatively) the market is pricing the asset.
With $EOS at > 200x and $ETH at 2x, #Ethereum is looking massively undervalued on this basis.
Or, $EOS+friends = massively overvalued
With $EOS at > 200x and $ETH at 2x, #Ethereum is looking massively undervalued on this basis.
Or, $EOS+friends = massively overvalued
@placeholdervc 6/ It's long been a discussion in #crypto whether the value of all the assets anchored into a platform can be greater than the value of the base platform's asset (for security reasons).
Such a scenario signifies an #NVTVratio that is < 1, which we have yet to see.
Such a scenario signifies an #NVTVratio that is < 1, which we have yet to see.
@placeholdervc 7/ Thank you to @alexhevans who pulled the data from @CoinMarketCap's tokens page: coinmarketcap.com/tokens/views/a…
We're sure the data can be improved & sincerely hope member(s) of the industry run with and improve this metric to the benefit of all
cc @coinmetrics @onchainfx @TheTIEIO
We're sure the data can be improved & sincerely hope member(s) of the industry run with and improve this metric to the benefit of all
cc @coinmetrics @onchainfx @TheTIEIO
@placeholdervc As @marketcapone has pointed out, the CMC data under-represents $EOS data, and so EOS should be more in the 8/9x range, placing it 4-5x more richly valued than $ETH:
Better data w/ uniform methodology would be great to build out the reliability of NVTV.
Better data w/ uniform methodology would be great to build out the reliability of NVTV.
