TL;DR: Cryptocurrency listing platform, CoinMarketCap (CMC) applied a new evaluative metric to projects, a Fundamental Crypto Asset Score (FCAS). It’s a letter grade based upon three factors: user activity, developer behavior, and market maturity. It’s sure to be controversial.
CoinMarketCap Applies FCAS Letter Grade
The FCAS is maintained by the Boston-based firm Flipside, which is backed by the likes of Coinbase and Digital Currency Group. The letter health grade hopes to provide “a powerful, comparative metric that can be used to assess the health and overall viability of a project and its growth prospects,” the site explains.
User activity is one of two high impact weights on the FCAS, and takes into account customer behavior, “ingesting all activity within a specific blockchain, parsing methods where appropriate, (ie: in ERC-20 smart contracts) and labeling wallet addresses to identify exchanges, projects, contracts, users, and other types of participants,” Flipside explained. It also incorporates network activity, “focusing on the actions of wallets operated by stakers, miners, users, and investors,” and project utilization, a calculation “based on the activity of user-operated wallets (primarily transfers and smart contract calls where relevant) engaging in the intended use-case of a given project.”
Development teams are considered in the FCAS, and are measured by activity and efficiency via community involvement, code changes, and improvements. It appears they’re using GitHub, of course, scouring repositories “beyond ‘commits’ and ‘pushes’ to evaluate projects at a deeper level,” Flipside claims, insisting they “track 30 variables, which are then bucketed into the three factors and rolled up into the overall Developer Behavior score.” It too is considered high impact on the score.
Competing with China and Weiss
The final consideration is market maturity, which seems decidedly fuzzier and is described as “low impact” on the overall score. It “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 less stable the money supply, and the more controlled it is by a few addresses, the worse the money supply score,” Flipside detailed.
CMC might be responding to competition from other aggregation sites such as Weiss Cryptocurrency Ratings, which seeks to install a Wall Street-type rating system onto coins. It bases rankings on three aspects as well, risk and reward, fundamentals, and technology. China’s Center for Information and Industry Development (CCID) periodically releases its Global Public Blockchain Technology Assessment Index, reportedly attempting to take a similar holistic approach to evaluating projects.
After realizing that they had been using incorrect information, @flipsidecryptod updated their #BitcoinCash rating, causing its score to jump by >50%.https://t.co/tDWiQmTzIq pic.twitter.com/6pYp4xGuLd
— Bitcoin (@Bitcoin) March 22, 2019
For CMC, the new ratings are numbered up to 1,000, and the higher the score, the better a coin’s health. Ethereum (ETH) is healthier than bitcoin core (BTC), yet BTC is, of course, ranked above ETH in terms of market cap. EOS, by contrast, is ranked number 5 by market cap, but is healthier, according to the new rating, than both BTC and ETH. Finding the health of project on CMC is accomplished by clicking the coin’s Rating tab and scrolling down.
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