How do traditional and crypto businesses compare and what impact does this have on tokens?
Let's look at:
--> Supply
--> Utility
--> Fundamentals
--> Evaluating Stocks
--> Evaluating Tokens
--> Governance
π§΅π
Let's look at:
--> Supply
--> Utility
--> Fundamentals
--> Evaluating Stocks
--> Evaluating Tokens
--> Governance
π§΅π
Supply:
AMZN shares are inflationary, but investors won't be too concerned - there are no Olympus DAO-like hyperinflationary shares.
In crypto, we like to experiment, so pay extra attention. Inflation doesn't need to be bad, if the business grows with it.
AMZN shares are inflationary, but investors won't be too concerned - there are no Olympus DAO-like hyperinflationary shares.
In crypto, we like to experiment, so pay extra attention. Inflation doesn't need to be bad, if the business grows with it.
Utility:
This is where tokens are a lot more complex to evaluate.
Nobody just evaluates shares without the business.
You shouldn't do this in crypto either, but paying attention to utility and mechanisms is a lot more important.
You know this. Let's look at the business side:
This is where tokens are a lot more complex to evaluate.
Nobody just evaluates shares without the business.
You shouldn't do this in crypto either, but paying attention to utility and mechanisms is a lot more important.
You know this. Let's look at the business side:
Fundamentals:
If the tokenomics are great, but the project or business is not, then thatβs a huge red flag.
An obvious part for traditional businesses, but often overlooked in crypto.
These questions might help you assess a crypto business.
If the tokenomics are great, but the project or business is not, then thatβs a huge red flag.
An obvious part for traditional businesses, but often overlooked in crypto.
These questions might help you assess a crypto business.
Evaluating stocks:
Various metrics exist. Investors try to get an idea of earnings or (if they don't exist yet) revenue.
Price to sales (P/S) ratios of smaller tech companies might be a anchor-point for crypto projects. They range between 4-6x.
Various metrics exist. Investors try to get an idea of earnings or (if they don't exist yet) revenue.
Price to sales (P/S) ratios of smaller tech companies might be a anchor-point for crypto projects. They range between 4-6x.
Evaluating tokens:
@tokenterminal gives good insights, showing that LooksRare with a P/S of 3.2x fits somewhat in the 4-6x range of smaller tech companies.
Sounds great? Let's bring in the token.
@tokenterminal gives good insights, showing that LooksRare with a P/S of 3.2x fits somewhat in the 4-6x range of smaller tech companies.
Sounds great? Let's bring in the token.
If we overlay revenue with tokens spent on incentivising this revenue we can see a strong correlation.
Crypto businesses might often look better on paper, because of the way they use tokens.
Crypto businesses might often look better on paper, because of the way they use tokens.
This great breakdown goes even deeper, showing that when deducting token emissions revenues don't look that great anymore.
Evaluating tokens like shares is a great idea, but the token often plays a very different role.
newsletter.banklesshq.com
Evaluating tokens like shares is a great idea, but the token often plays a very different role.
newsletter.banklesshq.com
Token Terminal has since added even better data points
Governance:
If we look at crypto businesses like real businesses, governance becomes interesting.
Instead of searching for a number-go-up mechanism, try to find those that have sustainable revenue and a path towards profit.
A pure governance token might be a good proxy then.
If we look at crypto businesses like real businesses, governance becomes interesting.
Instead of searching for a number-go-up mechanism, try to find those that have sustainable revenue and a path towards profit.
A pure governance token might be a good proxy then.
In summary, it's important to look at both business and mechanism
Donβt disregard either
Crypto should be evaluated with the tools that exist for traditional businesses
The token makes things a little more complex though, and require us to evaluate both business and mechansim
Donβt disregard either
Crypto should be evaluated with the tools that exist for traditional businesses
The token makes things a little more complex though, and require us to evaluate both business and mechansim
Read the full breakdown of the topic here:
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