Valuing cryptocurrency projects is a notoriously difficult process. Given that traditional valuation models, like discounted cash flow (DCF) or book value analysis, are not necessarily applicable to most projects, it’s important for investors to find alternative means as a base for their investments.
While some might look to technical analysis as an alternative, the data largely shows that technical indicator events do not have strong predictive value for finding above average or negative returns. This is due to the high volatility of the cryptocurrency markets that are mainly driven by fundamentals.
Therefore, investors must search for unique metrics for evaluating blockchain projects. Currently, one of the best metrics for monitoring retail investor activity is social network data, including popular sources like Telegram and Reddit. Generally, investors look for projects with active social channels and well-run communities.
While social analytics are useful, the overall impact of this metric can be significantly convoluted and manipulated by ‘dead users’ from long-expired marketing pushes and bad actors that seek to manipulate prices for short-term gains.
Investors looking for additional metrics should consider tech development progress, a relatively unique feature of blockchain projects that is commonly measured via GitHub commit activity. Monitoring tech development activity is especially applicable, as most cryptocurrency projects have not yet released commercial products that can be evaluated. While GitHub commits are not a perfect indicator, they do offer an interesting insight into the growth and activity of a project’s core development.
Here are the top 10 cryptocurrency projects by total commits on GitHub over the last three months.EOS (EOS) | $12.2B | $10.94B Mkt Cap | 2,245 GitHub Commits CoinCodex
Description: EOS is a decentralized operating system which c...