In the traditional blockchain primary market valuation field, comparative valuations are basically used. For example, the total market value of Uniswap (March 7) is 8.3 billion. In a new public chain ecosystem, similar AMM DEX projects may also be valued at 80 million (one percent), or even hundreds of millions.
Comparative valuations have long been criticized because they are very much influenced by the broader market. Project parties all hope to catch up with the bull market when financing, and the project can be overvalued. The VC side is more inclined to pick up leaks in the bear market. But no matter what, from the first round of financing to the final launch of the project, in one to two years, the bulls and bears are transformed, and the risk is magnified due to the concentration in the valuation link.
But comparing valuations is still one of the few options in frustration. The first is that blockchain projects generally lack the cash flow in the discounted cash flow model. Although many projects try to generate stable future cash flow, not many existing projects can guarantee this so-called cash flow. Secondly, many codes in the blockchain industry are open source, and the similarity of projects on the same track (such as AMM) can indeed be very high, and even some projects are directly forked from other projects.
With the cyclical ups and downs of the market, the comparative valuation method is not only dissatisfied, but also provides a basic investment methodology for investors large and small in the market.
This research provides a new social network value model for the market based on Metcalfe’s Law and Barabashi’s Law of Success. The core idea is to place the valuation of a single project (track) in the value network it is in, so as to complete the upgrade of the blockchain valuation from an island to a network.
The following parts of the research will be carried out from three aspects: the first part will deduce the theoretical framework of the value network model; the second part will focus on sorting out the important constituent nodes in the existing blockchain network; the third part will provide empirical research for quantitative verification.
1. Theoretical part
For primary market investment research, in the final analysis, there is only one core: valuation.
The old comparative evaluation method continues to use the experimental method of controlling variables + the classification (sub) subject (governance) view of learning. And although there may be other valuation methods in the market, there is currently no new valuation method that can break through the limitations of the old method at the same time, and can use the old method as a simplified approximation of the new method. And a good new theory should be like relativity to Newtonian mechanics: relativity can explain (high-speed) phenomena that Newtonian mechanics cannot explain, and Newtonian mechanics is also an approximate solution of relativity under certain (low-speed) conditions.
The value network model proposed in this study attempts to provide such a new method to re-examine the blockchain primary market valuation from a higher dimension, while incorporating the comparative valuation method as a simplification.
The Old Method: Comparing the Valuation Method and the Panorama
Specifically, the commonly used comparison valuation models in the primary market are: 1) Find a (or a group of) similar projects already on the market for comparison; 2) Discount according to the development stage; 3) Fine-tune with other factors ; 4) Valuation of the project.
Under this line of thinking, there are also a large number of research reports on the subdivision fields one by one. Similar to traditional financial industry research, Defi, NFT, public chain… Various subdivisions have been gradually derived from the initial categories.
Over time, with the gradual enrichment of one of the tracks, the subdivisions will be further differentiated. For example, Defi is gradually subdivided into DEX (AMM or Order book), Lending lending, Vaults (machine gun pool created by Yearn), perpetual futures contracts (such as Perpetual), perpetual options (such as Opyn)…
Similarly, NFT also has Uni V3, trading market (representing Opensea), chain game assets, avatar (the originator Cryptopunk)…
In addition to BTC and ETH, the public chain has many Pos chains (BNB, Sol, Avax, Dot…). Even BTC and ETH themselves have separate Layer 2, plus cross-chain protocols, and a series of subdivision fields brought about by data storage and operation indexes.
In the end, there always seems to be such a panorama.
Taking 2021 as an example, from February to March, digital paintings with a value of $68 million detonated the NFT track. From March to May, L2 became a hot spot. From June to August, the Axie chain game took off. From September to October, AltL1 skyrocketed. 11 The month ended with a wave of Constitution Dao and ENS airdrops.
It seems easy to come to the conclusion that this is the rotation of the plate, and the hot spots are changing, but it is difficult to say what is the basis of the rotation of the plate. There are people in each section, and everyone who hits a hundred times of coins feels that they have a certain degree of foresight.
But statistics tell us that it’s hard to say whether it’s because of survivorship bias.
The market is an incredibly complex system, so this study can’t really predict what will be the next sector to explode. But this study attempts to find a higher-level perspective on future ecological changes than the relative valuation method.
A blockchain world viewed from the perspective of a complex system.
The Beginning of the New Law: Two Sources of Ideas
Source 1: “The Law of Success”
“First Law — Performance drives success, but when performance can’t be measured, networks drive success.”——The Formula: The Universal Laws of Success, Albert-laszlo Barabasi, 2019
“Performance drives success, but when performance cannot be measured, social networks drive success.” – Barabashi
In traditional financial valuation, performance is determined by profit (interest). Of all financial assets, the performance of bonds is determined almost entirely by interest rates, so bond traders almost only need to look at changes in interest rates (future interest rates) to determine prices. In contrast, the performance of the stock is related to the profitability of the company, so the valuation of the stock price uses a series of indicators on the financial statements to evaluate the operating conditions of the company.
Therefore, the valuation of stocks is much more complicated and less accurate than that of bonds.
In the blockchain industry, it is difficult for projects to even give enterprise-style “financial statements”. The only few data can only be the number of transactions on the chain, the number of currency holding addresses, TVL, the number of community members, and some projects may be counted as income (thanks to TokenTerminal).
Not to mention that in the primary market of the blockchain industry, performance is harder to measure.
So to apply the “law of success”, since the success of a project cannot be measured by performance, then success is driven by the network. The valuation of the project (track) can also be transformed into the valuation of the network where the project is located.
Examples and composability
Think of the Cosmos ecosystem as the epitome of the entire blockchain world. Because of the composability of blockchain, projects are generally connected and interact with each other. All projects together form an ecological network, a chaotic network at first glance.
Cosmos Ecological Map
While widely connected (like statistically a maximum of 7 connections are needed between any two people in the world), each item has a different place in the network. For example, the Cosmos chain in the picture below is relatively central in the entire ecosystem and is closely connected with many other projects. Therefore, the valuation of the Cosmos chain can actually be converted into the valuation of the value network centered on Cosmos.
Cosmos Ecology Figure 2
The valuation of the network has long been discussed in Carl Shapiro and Hal R. Varian (1999), which is the famous Metcalfe’s law.
Source 2: “Metcalfe’s Law”
The value of a network is proportional to the square of the number of nodes in the network, expressed by the formula (Shapiro & Varian, 1999):
The mathematical proof of Metcalfe’s law has been demonstrated in Carl Shapiro and Hal R. Varian (1999), but the network nodes in the law are abstracted as homogeneous. In the value network of valuation, the difference of each node should not be ignored. This heterogeneity has two levels: the value of the node itself and the tightness of the connection between the node and the central project.
Therefore, a split and refinement of N in the formula of Metcalfe’s law is made, and the following new formula is obtained:
VN represents the value of a surrounding node, aN represents the degree of connection between this node and the central item, and N represents the number of connected nodes around.
(Note: The nodes of the value network here are not the verification nodes in the usual blockchain network)
It can be seen from the formula that the network value of the project is determined by VN, aN and N. At the same time, because each project can find its own value network, the value network of each project is unique.
In short, the value of a project depends on whether its own value is needed by many other people or projects (whether N is big enough); whether the people or projects who need it are successful (is there a big VN); and Is this need strong and irreplaceable (size of aN).
As shown in the left half of the figure below, the value of the Cosmos chain (and $Atom tokens) can be considered to come from all project nodes connected to it, which form the value network of the Cosmos chain. The connection between them is maintained by the IBC communication protocol, and is also guaranteed by other projects airdrops to $ATOM stakers. Undoubtedly, the strength of other projects (or the high value of their currency) will lead to the strength of the Cosmos chain (the high value of $ATOM) in a high probability. At the same time, the closer this connection is, the deeper the mutual influence between the two parties, and the deeper the two-way value binding.
Then compare the value network (Cosmos chain and Cornos chain) of two projects in the Cosmos ecosystem. The number of nodes connected by the former is significantly more than that of the latter, and it can link powerful nodes such as Terra and Osmosis. Therefore, in terms of value, the Cosmos chain far exceeds the Cornos chain. In this sense, it is actually saying that the “ecology” of the Cosmos chain is much better than that of the Cornos chain.
Of course, the Cornos chain is not without value. Although it does not connect as many as 4 nodes, the value of the Cosmos chain, Terra chain, Juno chain and Crypto.org chain is not small. Moreover, this connection is not loose. The value is only comparable. Compared with those projects with few connected nodes, the connected nodes are not strong enough, and the connection is still loose, Cornos is still valuable.
Comparison of different parts of Cosmos ecology
New Law: Value Network Valuation Methodology
The same project will be in different value networks when viewed from different dimensions. For example, in the blockchain ecological network, it is in the value network composed of various projects. From an investor’s perspective, projects exist in the value network of the portfolio. At the same time, there is also the user’s preferred Dapp list network, the partner’s interactive network… Strictly speaking, all the networks are intertwined to form the total social value network of this project. In the case of a perfect valuation, this total social value network should be considered.
But as a model, it is inevitable to simplify reality.
1) Determine the boundaries of the network
But for decision-making, there is no need and should not have too many dimensions and variables. Kahneman’s 2021 book, Noise: A Flaw in Human Judgment, recommends no more than five variables for decision-making. Although the variables of the model do not necessarily need to comply with the five restrictions, statistically, too many variables can easily lead to the autocorrelation of the internal factors of the model and weaken the explanatory power of the model.
In this case, how to choose the value network node (decision point) of the project to invest people can show their magic.But what is certain is that the choice of value network boundaries (decision points) will determine the final valuation.
2) Evaluate the value of each value network node and how closely it is connected to the project
Valuations are never precise. However, each value network node (decision point) still needs to be weighted. The weighted coefficient needs to comprehensively consider the node value and the degree of closeness.
3) Assess the future resilience of the network
Although the main task in valuation is to determine the current value of the project. But in today’s fast-changing industry, there needs to be redundancy for premiums and discounts.
4) Add up all values (and potential changes)
The final estimate is obtained by summing the values of all important decision points.
old law and new law
As far as the decision-making process is concerned, the network model is no different from other methods, but the dimensions and perspectives will be richer.
The comparative valuation method is actually a simplified equivalence of the value network of the valuation target and the value network of the reference project. The value network model allows each project to have its own niche.
Perspective and Projection
Imagine if an item in the cosmic ecology is a star in the universe: it will be gravitationally connected with other stars around it to form a small galaxy; if you zoom out, this small galaxy will form a larger galaxy with other small galaxies galaxies; further zoomed out, each large galaxies will form a small corner of the universe.
Similarly, multiple projects are interconnected to form the ecology of the Cosmos public chain. The Cosmos public chain ecology and BTC, ETH and other public chain ecology form the entire public chain track, and finally the public chain track and several tracks form the blockchain industry.
Schematic diagram of the Cosmos ecology with a gradually widening perspective
For the universe, the light projected this three-dimensional 3D universe onto the 2D mirror of the telescope. In the blockchain industry, the panorama table projects a high-dimensional ecological network. Therefore, behind each flat panorama is actually a three-dimensional value network.
Example map, from 3D to 2D, Cosmos Ecology Map & Blockchain Overview
unstable complex system
Like all other complex systems, instability is the norm in this mutually assigned value network.
Therefore, various projects (tracks) are born and disappear, and many times this instability is simplified and explained as plate rotation.
There are roughly two types of freshmen.
There are completely new creations: many projects that are currently classified as infrastructure, it is difficult to say that they will not become new tracks (such as Deus Ex Securitas, which uses AI to audit project contracts in ETH Denver 2022), or try to use new areas. Blockchain solves old problems (such as the game off-chain + asset on-chain model currently being tried by some chain games).
Newborns can also be strips of old functionality. A typical example is L2. ETH itself integrates the functions of asset contract transactions, but L2 plus sidechains may strip out some functions of the ETH main chain and only focus on core functions.
The opposite of the new birth is the passing away.
Similarly, there are both abandoned solutions (such as some early L2 solutions, useless air coins, projects that are no longer developed), and combinations of old functions (such as some Defi Aggregator projects).
2. Carding part (an important track of the current blockchain)
The following research in this part will give a list of the main track projects we have sorted out from the perspective of the value network projection.
1. Pub Chain
The public chain is the core of the entire blockchain, and the public chain has also become the value network center of their respective ecosystems. But like many definitions of the industry, the connotation of rapid growth has made the definition itself increasingly blurred. For the purpose of precise expression, there are the following 4 subdivision types for public chains.
BTC represents the legacy of blockchain. With a minimalist design, it still brings together the value of the blockchain, occupying about 40% of the entire market, and becoming a window for the outside world to understand the blockchain.Bitcoin has too many titles to count. The pros and cons of BTC are also lengthy. However, BTC is no longer the previous BTC. With the L2 Lightning Network and the smart contract side chain represented by Stacks, BTC gradually has its own ecological network. (For details, please refer to the previous study “A New Perspective of Bitcoin Ecology: From Cornerstone to Bridge”, https://www.defidaonews.com/article/6716230)
ETH is the present of blockchain. As the largest contract development community, the number of projects developed on it far exceeds that of other public chains. There are also endless expansion plans for L2. Even EVM compatibility has become a necessity for many other new public chains. This year is also expected to see Ethereum move from Pow to Pos. Defi, NFT, Chain Games, L2, almost all major events in the blockchain in recent years are related to ETH. Even the “Ethereum killers” of the year expressed their desire to coexist with ETH in the future multi-chain ecosystem. No matter whether you like it or hate it, the ecological network of ETH after switching to POS will still be the market focus for some time to come.
Polka & Cosmos
The Polka ecosystem and the Cosmos ecosystem are like two sides of a multi-chain alliance. Using the analogy of a political system, Polka is like a federation, which has a strong power but welcomes other projects to join the organization in the form of parachains. Cosmos is like a confederation, each member has a relatively independent autonomous status, and is connected with each other through the IBC communication protocol to form an ecosystem together.
These are called “Ethereum” killers when ETH gas fees are the highest in the first half of 2021, attracting users with the label of high-speed and low-cost Pos. However, after several forks of ETH in 2021, gas has been greatly improved, and it may be upgraded to ETH 2.0 of POS by the end of 2022. But even so, the multi-chain ecology will still become the mainstream in the future, because the top Alt L1 projects have already formed their own ecological network.
Head projects: BNB, SOL, AVAX, Near, Fantom
2. L2: Lightning Network
L2 currently only has application scenarios in BTC and ETH, so the current value of L2 largely depends on the future value and positioning of BTC and ETH.
At present, the L2 Lightning Network of BTC has already undertaken most of the payment and transfer functions, and in the future, the task of bridging the BTC ecosystem and other ecosystems may be completed by the Lightning Network.
ETH’s L2 solutions are very diverse. Sharding, “packaging” roll-up, zero-knowledge proof, this is the forefront of blockchain technology progress, many solutions may not be directly adopted, but for example, zero-knowledge proof zk-rollup can be used for privacy protection and other fields. The focus on ETH L2 itself is to study the underlying logic and technological trend of the blockchain, which can be said to be the real infrastructure construction.
Head projects: Lightning Lightning Network, Optimism, Arbitrum, Polygon…
3. Identity (wallet, domain name, KYC, privacy)
There are many subdivisions in the identity track, but the essence is still to provide entry services for the public chain. At the same time, identity corresponds to “people”, and the number and participation of users determine the value of identity applications. For example, the largest wallet application Metamask, according to Token Terminal data, the monthly transaction fee income (data on March 15) is about 10 million US dollars, which is already very amazing, and it is one of the few projects with considerable cash flow.
Starting from the private key and mnemonic, the first batch of identity applications are the official wallets of each public chain. Then gradually developed a general-purpose wallet that supports multiple chains. Now the wallet itself has begun to integrate encrypted asset management, especially the functions of staking, trading and NFT display. For wallets, each evolution marks a new network of value.
The public key and the domain name begin to be bound, and each public chain also has its own official or semi-official domain name application.
In addition, privacy projects are also trying to cut into the public chain and identity track. At the same time, regulation may gradually require the binding of public keys and real identities. There are no leading projects in these two fields, but both may be the birthplace of new value networks.
Head: Metamask, ENS
The storage track has been around for a long time, and Filecoin had a token listing as early as December 2017. But before the outbreak of NFT in 2020, the storage track did not improve. After all, in the early days of Bitcoin and other tokens, customers ran full nodes, and simple transactions did not generate too much data. After the development of smart contracts in Ethereum, the amount of data has indeed reached a new level, but it still has not reached the point where large-scale storage is required. Until 2020 and the NFT outbreak. At the same time, Filecoin has become a hot spot in the market. The storage track completes the function of cloud storage in a decentralized manner. As the blockchain world evolves into the Metaverse, the need for storage will almost certainly increase.
Storage is relatively simple in the face of the network, which is the blockchain ecology composed of projects. The link of the connection is the storage requirement of the data.
Head projects: Filecoin, Arweave
5. Oracle Oracle
In theory, oracles can put all information on the chain. However, due to the “prediction” mechanism of the oracle itself, only the most valuable information will be needed first, such as the market price of each currency.
It is worth mentioning that the oracle machine was only created to meet the quotation demand of Defi projects on Ethereum. The value also relies on the prosperity of Defi on Ethereum. However, Chainlink is no longer limited to providing quotations for EVM-compatible systems. At present, the project party is trying to be compatible with more ecosystems such as Solana. Chainlink’s total market cap has reached 12.67 billion (March 15). The performance (below) is also impressive.
(Chainlink data, source: https://chain.link/, 3.15)
Solana also has its own native oracle project – Pyth. Although the number of currency quotes provided is far less than that of Chainlink, Pyth is supported by Wall Street market makers Jump Tradin and Optiver, which has its own advantages in connecting with traditional financial markets. Therefore, even if it belongs to the oracle machine track, the value network of Pyth still has the assignment of traditional finance.
Head project: Chainlink, Pyth
6. Trading institutions (cross-chain function, and other function alternatives)
At present, the vast majority of transactions are still carried out in centralized exchanges. At the same time, a large number of cross-chains are also realized through the exchange’s deposit and withdrawal functions. It’s just that the current regulatory pressure on exchanges is the greatest, and China’s regulation in the second half of 2021 is mainly aimed at these centralized exchanges. And although there are many exchanges in the market, the industry situation has stabilized, and several major exchanges have occupied the dominant position in the industry. In this “Red Sea” market, the key to game-breakers (if any) is how to introduce new value-added nodes to their value network.
Top centralized exchanges: Binance, Coinbase, FTX.
7. Stablecoins: Frax (Curve), UST
Stablecoins took over as a medium of exchange as Bitcoin faded out of the blockchain’s unit of account. At present, the vast majority of the market is USDT and USDC, which are on-chain USD stablecoins issued as collateral in USD currency. Tether and Circle are the “banks” of the blockchain. In addition, there is the USD stablecoin Dai, which is collateralized by native blockchain assets on the pure chain. As well as the semi-algorithmic stablecoin Frax, and the Luna-backed UST.
While Bitcoin still plays an important role as a bridge between reality and the blockchain, this function is being shared by USDT and USDC, among others. Even on the real side, stablecoins are easier for new players to accept.
Top projects: USDT, USDC, MakerDAO, Frax, UST.
8. Cross-chain: Bridges, IBC
The earliest cross-chain track was used to map BTC assets to ETH, with WBTC as a typical example. Later, with the gradual formation of the multi-chain structure, there were more and more cross-chain projects. On the one hand, the market welcomes the on-chain transfer of assets to connect various public chain islands, but the recent attack on the cross-chain bridge has also made this field controversial. Moreover, in terms of cost and efficiency, the cross-chain function of centralized exchanges has always been a competitive option.
The value of a cross-chain project comes from the network at both ends it connects.
Head project: WBTC, Ren
9. NFT markets and creation
Since the outbreak of NFTs, a series of projects have sprung up. But just like FT, the first thing that stands out is the exchange. And Opensea already has a fair share of the market. Many NFT exchanges also provide the function of uploading pictures into NFTs. Therefore, the value of such platforms is not only the transaction itself, but also the group of artists behind it.
Head projects: Opensea, Rarible, SuperRare
DAO may be an important part of the blockchain and Metaverse in the future, but there are no typical projects in the market. But DAOs have positive implications for connecting blockchain players and promoting the industry. Of course, there are many types and functions of DAOs, so I will briefly sort them out here.
Head projects: snapshot (voting), Juicebox (crowdfunding), discord (community), mirror (media)
The following three tracks are the current blockchain terminal products. As a terminal product, it faces ordinary users first (although giant whales account for a high proportion), providing users with financial value or entertainment value, and even becoming a productivity tool for users. It’s a lot like a blockchain’s “consumer goods” marketplace.
The Defi Summer in 2020 is, in a sense, the first applications of blockchain. AMM, Lending, Vaults, Liquidity Mining. Among the current top-ranked tokens by market value, in addition to the public chain, a considerable part of the rest is the platform tokens of each Defi.
Even for the new public chain (AltL1), AMM, lending and Vaults in Defi have become the infrastructure of the public chain and will be given priority to development by officials.
Heads: Uni (AMM), Aave (lending), Yearn (Vaults)
12. NFT（collection & art）
At present, the mainstream of NFT is still avatars and collections, as well as game props. Although these occupy the mainstream of the NFT market, they can all find their homes in the Metaverse in the form of chain games.
Heads: Cryptopunk (avatar), NBA Top Shot (collection), Axie Infinity (game prop)
Chain Games satisfies people’s initial imagination of the Metaverse, and Chain Games also requires almost all blockchain tracks so far. So in this sense, Lianyou can bring together the value of the entire blockchain industry. It’s just that it still takes time to develop products that are mature enough to change the industry.
Head: Axie Infinity
3. Empirical Study
The bridge status of BTC and the linking role of exchanges
As a bridge between the encrypted world and the real world (see the previous study “A New Perspective of Bitcoin Ecology: From Cornerstone to Bridge”, https://www.defidaonews.com/article/6716230), BTC is connected with fiat currency on the real side, Link other native encrypted assets on the encrypted side. On the one hand, capital will vote with money for the blockchain industry represented by BTC; on the other hand, BTC will act as collateral for other on-chain assets in a sense (Wrapped assets and trading pairs in centralized exchanges), thus Condensing the value of the entire blockchain.
This phenomenon is re-examined from the perspective of value network.
When hot money pours in, the market value of BTC is artificially high, but because most of the value of other mainstream projects comes from BTC, the market generally rises, even if it is known to be artificially high.
On the contrary, with the increase in the number of blockchain projects, especially those around BTC, the greater the value created by these projects, the higher the value of BTC, which is ultimately reflected in the market value denominated in fiat currency.
This effect is bidirectional. The empirical evidence is that the correlation between almost all mainstream tokens and BTC is not weak, and the correlation is also bidirectional.
The chart below selects the top 30 projects ranked by liquid market capitalization on March 10, 2022 (except BTC, stablecoins and wrapped assets). From the time when statistics are available, the correlation analysis is made based on the ratio of their daily rise and fall and the rise and fall of BTC. The results show that, with the exception of Shiba showing no correlation, and Leo and Stellar being weakly correlated, the other 27 projects are strongly correlated with the rise and fall of BTC.
In addition to being directly affected by wrapped assets, the impact of BTC is also transmitted through the centralized exchange CEX. For each project, being able to enter a mainstream exchange also means entering a more valuable network, having a closer relationship with other tokens, and being able to assign values to other projects more easily.
In order to verify the effect of the exchange, the event study was used in the research in the figure below, and the previous correlation was divided into two stages, before and after the time of the mainstream exchanges. The exchange should choose Binance as much as possible. If it is not listed on Binance, select the exchange with the largest trading volume of the currency to determine the listing time.
In the Top 30, 11 projects do not have the data before listing on mainstream exchanges. Among the remaining 19 projects, except for Doge and Fantom, 17 projects have shown increased correlation with BTC after listing. While Doge and Fantom showed a slight decline.
This can prove to a certain extent that mainstream exchanges like Binance do provide a considerable role for BTC to connect with other tokens.
3. Empirical evidence of factors aN, VN and N
In order to demonstrate that each of the three factors can work independently, the remaining two variables will be controlled for as much as possible in the following research. And simplify the value of the project to market capitalization.
1. (aN) The degree of closeness of connection: the closer it is to ecologically similar projects, the higher the market value
In almost every public chain ecosystem, there are almost all projects that the public chain project parties need and strongly support. Among them, the DEX of the AMM system is the most extensive. Even in AltL1 after ETH, AMM is already an indispensable infrastructure for a public chain, such as Pancakeswap in the BNB ecosystem. Of course, there will be other AMM projects in the ecology, but in almost the same public chain ecology, using a similar structure mechanism, the market value can only be supported by the official support or not, that is, the tightness of the connection aN. .
2. VN: Similar official projects (AMM) in different ecosystems, the market value is positively correlated with the market value of the project’s public chain.
To examine the impact of the value of surrounding powerful nodes, you can still use the market value of AMM projects in each ecosystem to compare. However, in order to control the tightness of the connection, here we select official projects in different public chain ecosystems and the market value of the public chain for comparison.
Although there are special cases of the near ecology, basically the official AMM in the larger ecology also has higher value.
3. VN: The market value of the public chain is positively correlated with the number of ecological projects: the more prosperous the public chain, the higher the currency value.
The value of the public chain is undoubtedly based on the prosperity of the ecology. And the public chain with more ecological projects, the higher the market value.
This study uses social network value for the first time in the blockchain primary market valuation, providing the market with an alternative to comparative valuation methods. At the same time, we re-examine the various segments of the current blockchain industry from the perspective of network value. Finally, under this understanding framework, the market phenomenon is explained empirically.
1. PlatON Cloud Map 2021 Blockchain Industry Ecological Profile – Application Ecological Group https://forum.latticex.foundation/t/topic/4622
2. The Formula: The Universal Laws of Success, Albert-laszlo Barabasi, 2019
3. Cosmos Ecological Map https://mapofzones.com/
4. Metcalfe’s Law: Carl Shapiro and Hal R. Varian (1999). Information Rules. Harvard Business Press. ISBN 978-0-87584-863-1.
5. Kahneman, Noise: A Flaw in Human Judgment, 2021
6. A New Perspective of Bitcoin Ecology: From Cornerstone to Bridge, https://www.defidaonews.com/article/6716230
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