Business

Ed Drake

CoinMarketCap integrates new ‘health’ metric for crypto fundamentals

Crypto market data site CoinMarketCap has introduced a new metric, designed to assess the relative health of different cryptocurrencies and their fundamentals.

Known as the Fundamental Crypto Asset Score (FCAS), the measure factors in several variables to compare different cryptocurrencies, including market maturity, the level of developer activity in the market and user activity.

According to the announcement, the score, which was developed in connection with Flipside Crypto, combines this data to produce a single meaningful metric, in a bid to represent the ‘growth and development’ of each cryptocurrency.

Flipside explained, “We intake raw blockchain data across relevant projects and parse them internally. Once we clean, analyze, and recreate the raw data elements, we combine them with market data gathered from various sources to inform our models.”

‘User activity’ is defined as the sum total of customer behaviour around a specific coin, and includes network activity and project utilization. This includes analysis of the number of exchanges, transactions, users and other participants within each cryptocurrency market.

‘Developer behaviour’ looks at the level of development activity for the cryptocurrency and the underlying blockchain, an area where cryptocurrencies like Bitcoin BSV shows increasing strength. As many as 30 metrics feed into this result, which aims to contextualize the development community around each coin.

Finally, ‘market maturity’ is a representation of money supply, liquidity, risk and stability in the market.

According to Flipside Crypto, this figure “represents the likelihood a crypto asset will provide consistent returns across various market scenarios by combining assessments of market risk (specifically, exchange liquidity, price projections, price cliff potential, algorithmic prediction consistency, and price volatility), as well as an analysis of the stability of the Money Supply of each tracked project.”

The project has the backing of several major players in the crypto space, including Coinbase and Digital Currency Group.

The new metric provides a basis for comparison between different cryptocurrencies, which will help investors and developers assess the relative strength of competing blockchains.

Despite its overwhelming scale, the Bitcoin Core (BTC) token commands only the second tier of health by FCAs, at ‘A’ for ‘Attractive’. The highest grade, ‘S’ for ‘Superb’ is reserved for tokens that show the optimum combination of user activity, developer behavior and market maturity.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as SegWitCoin BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins. Altcoins, which value privacy, anonymity, and distance from government intervention, are referenced as dark coins.

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