When dealing with crypto projects, achieving quantitative data is critical.

Quantitative information is objectively measurable, which is why we talk about decisions based on numbers.

Quantitative evaluation is relevant once a project is underway and provides real data that can be checked against competition and expectations.

Tokenomics: Coin distribution, supply, and incentive structure

Token/coin supply can be measured in several ways:

    Max Supply – an explicit limit on the total number of coins/tokens that will exist and will tell you if the token supply is inflationary or deflationary, which has a big influence on the potential value.

    Total Supply – the total number of coins that have been created to date, but are not necessarily spendable, potentially because they have been lost or burned.

    Number of coins in circulation – an estimate of the total number of coins in circulation, that is, those that can be spent. It is a subset of the total supply as it takes into account lost or burned coins.

    Market capitalization – calculated by multiplying the outstanding offer by the current price. Market capitalization is more meaningful than price because it takes supply into account.

Performance: What is the volume and speed of transactions?

This is generally referred to as TPS (Transactions per Second). This data is a great benchmark, but should not be considered the knockout blow.

Different approaches to performance and scalability are constantly being developed, with a strong focus on layer 2 applications, especially within the Ethereum ecosystem, where rollups promise significantly faster transactions and considerably lower fees, leading us to the generation of income.

Income: How much income is generated through commissions?

Cryptocurrency projects are not like traditional businesses in terms of income and cash flow, but commission generation is the closest analog. There are many websites that will show you how much protocols earn in fees but keep in mind that there is tension between users who want low fees and coin owners who want high income.

The win-win scenario is high yield and low fees, along with a token economy that doesn’t erode value through inflation.

Accessible market: What is the size of the opportunity?

Once you know the problem that the project solves, you want to know how many people are crying out for the solution. The market that the project can target is usually expressed in terms of the penetration rate, which is the percentage of the total market that the project is expected to capture.

The accessible market must take into account competition and other dynamic factors such as demographic changes, macroeconomics, and changes in the general adoption of technology (such as smartphones and broadband).

Network: Number of users, validators, and nodes

Although cryptocurrencies are difficult to measure through traditional business metrics, the open-source nature of blockchains provides a wealth of useful data for measuring network health. Some of the main statistics to look for are the following:

    Active users/addresses

    Number of validators

    Hashrate of proof-of-work chains

    Block confirmation time

    Volume and size of transactions

Total Value Locked: How much value have users staked on the project?

The TVL is the strongest indicator that a project’s tokenomics and fee structure are sound because it reflects the added value that users have locked into the project in exchange for performance. Boards such as DefiLlama can be used to filter projects by TVL.

In conclusion, it is important to build a framework for rating projects based not only on quantitative data but also on qualitative information, which can be realistically applied and used.

By Audy Castaneda


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