Crypto Model Explanation

&
Crypto Portfolio Dashboard
 Thoughts Thus Far
Three main value creation methods:
1. Day Trader
2. Investor
3. Hodler

Time Frame:
Short Medium Long

Day Trader Investor Hodler

INET Model Explanation
(Long Term)
Chris Burniske
Early days (not for price targets, rather helps to
understand value within a tokens crypto economic
model), overview of a fictional bandwidth coin valuation.
 ‘Chris Burniske’ -
Cryptoasset Valuations
https://medium.com/@cburniske/cryptoasset-valuations-ac83479ffca7
 ‘Alex Evans’ - On Value,
Velocity and Monetary
Theory
https://medium.com/blockchannel/on-value-velocity-and-monetary-theory-a-new-appro
ach-to-cryptoasset-valuations-32c9b22e3b6f
Input tables: Four sections to the
(Assumption Driven) crypto models:

1. INET supply Section A - Number of

schedule Inputs. tokens in float.

2.INET Economy Section B - Quantifies

Inputs. economy of the protocol
using the equation of
3. Adoption curve exchange.
inputs.
Section C - Projects the
percentage adoption of
the crypto asset within
its target market.
Output tables:
Section D - Discounts
Results of
future utility values back
calculations based
to the present.
on inputs.
Current Utility Value (CUV)
and Discounted Expected
Utility Value (DEUV)
J - Curve - How the market values a
cryptocurrency over time.
Initial Token
Enthusiasm
In the Beginning
Rough Times
 Bitcoin
Expanding DEUV - Expectations around future utility growth.
 Equation of Exchange

Used to derive each years (CUV). Given markets are

priced on future expectations, discount future utility
back to present, to derive a balanced market price.
 MV=PQ
Chris Burniske Interpretation when applied to crypto:
M = Size of the asset base
V = Velocity of the asset
P = Price of the digital resource being provisioned
(Not price of the cryptoasset)
Q = Quantity of the digital resource being
provisioned.
 Example
Filecoin
P = price per GB of storage provisioned ($/GB)
Q = quantity resource provisioned (GB’s of storage)
Multiplying $/GB by GB’s = $ (Amount represented
in the filecoin economy to provision cloud storage -
essentially the GDP)

Imperfect as 30%+ of on chain transactions are

exchange related, therefore excluded as they
provide no value.
 Example
V, velocity represents the number of times asset
changes hands over a given time frame.

Bitcoin
Where V = PQ/M, taking Bitcoin in 2016, $160M in
transaction value per day, total = $58B in the year.
Average size of bitcoin’s asset base was $8.9B.
Hence V = $58B/8.9B, or 6.5 - bitcoin changed
hands 6.5 times.
 Example
Small percentage exchanged hands far more than
6.5 whilst the majority was hodled.

This velocity is a hybrid velocity lumping hodlers

together with people who use it as a means of
exchange.
 Example
Looking at how Coinbase users interact with Bitcoin
 Example
2016 we can see 54% of Users hodl’d with a velocity
of 0.

Remaining 46% used Bitcoin as a transactional

medium.
 Example
Using Weighted Average:

Hybrid Velocity = (% Token for Use 1) x (V1) + (%

Token for Use 2) x (V2)

Use 1 is “Strictly as an Investment” with velocity = 0

Use 2 is “Transactional Medium” with velocity = V2

6.5 = (.54) x (0) + (.46) x (V2)

V2 = 6.5 / .46 = 14
 Example
Velocity is then used to find the monetary base
necessary for a tokens GDP.

That then finds the Current Utility Value (CUV) by

dividing the number of tokens in Float (after Bonders
& Hodlers are taken out) by the monetary base.
 January Trends
Just days prior to the market correction January this year
(2018), 11 wallets collectively moved 764,703 bitcoins from
their wallets elsewhere, all within a 24 hour time frame.
Source:
Bitcoin.com
 Token Diversification

Source: Lou Kerner

 Token Diversification
Across token Types, Roles & Supply %:

Type – Native/Application/Asset-backed
Role – Usage/Work/Useless
Supply – Pre-mined/Inflation/Distribution

(i.e. cryptocurrencies, decentralised cloud storage, decentralised cloud computing,

anonymity, decentralised voting, accountable & secure logistical traceability,
decentralised power.)

&

Different consensus algorithms (i.e. PoW, Economy Based [PoS/DPoS], Leader

Based, Virtual Voting, Double Entry Crypto Accounting, Hybrids etc)
Dashboard
Minimum Viable Product
Feature Overview
For our MVP, we plan to focus on Five Key Feature Tables
5 features as follows:
Redflags
1. Macrotokenomics
Macros
2. Potential Portfolio Redflags Market Perform
3. Crypto Market Performance
4. Portfolio Performance +
Exposure + Risk Management Portfolio Perform + Exposure + Risk Management
5. Coin/Token Data

Coin/Token Data
Macros Redflags

Market Perform

Portfolio Perform + Exposure + Risk Management

Coin/Token Data
Microtokenomics

1. Bitcoin % of Market Cap

2. Bitcoin Price
3. Total BTC Volume 24h
4. % change 1h
5. % change 24h
6. % change 7d
7. BTC Unique Addresses
8. Social Volume Bitcoin
9. Bitcoin Positivity Index
Microtokenomics
7. API:
https://www.blockchain.com/api/charts 9. Excel Math:
_api Separate the coin we want from the rest: e.g.
‘ETH’ & sum positive results.
8. API: =SUMIF(result[results__currencies__code],
https://solume.io/login?redirect=%2Fa "ETH", result[results__votes__positive])
pi
Then sum negative results:
9. API: =SUMIF(result[results__currencies__code],
https://cryptopanic.com/about/api/ "ETH", result[results__votes__negative])

E.g. : Divide positive by negative

https://cryptopanic.com/api/posts/?aut = +ive results for ‘ETH’/-ive results for ’ETH.
h_token=AUTH_TOKEN&currencies=
ETH&filter=rising

Divide positive article #’s by negative

article #’s = positivity index.
 5. Math:
% from stop loss of
Potential Portfolio Redflags <insert coin>
= (Cost Price)/(Purchase
All = YES or NO (Based on programmed mathematics) Price) - as a %
1. Are stop losses in place?
2. More $ deployed than we have? (Overleveraged) 6. Math:
3. Any coins we own down 50%+ since purchase? (Week & month prior
4. Do we have 30% of capital in 1 coin type? market cap)/(Current
(Manually entered based on framework) Market cap)
5. Have any coin long positions hit a stop loss?
6. Is Bitcoin growth negative? (week & month)
7. Is Bitcoin total volume low? 7. Math:
8. Is Bitcoin social volume low? (Current total volume)/(All
9. Have all coins had analyst reports completed? time high) - as a % <Add
10. Is Bitcoin current address total low? in conditional formatting>
11. Is Bitcoin positivity Index low? 8. Math:
12. Are majority of global governments pro crypto? (Current total social
11. Math: 10. Math: volume)/(All time high) -
(Current positivity Index)/(All time (Current total as a % <Add in
high [might have to make an addresses)/(All time high) conditional formatting>
assumption]) - as a % <Add in - as a % <Add in
conditional formatting> conditional formatting>
Crypto Market Performance

1. Active cryptocurrencies
2. Active markets
3. Total Market Cap
4. Total volume

Future: Total Daily/Monthly/Yearly

change in volume & market cap
Portfolio Performance + Exposure + Risk Management
Portfolio Performance
1. Daily % change
2. % change since inception
3. Yearly % change
4. Monthly % change
1. Math:
((Profit gain today)/(Position size - profit gain today ))*100
= as a% <Add in conditional formatting (Green is positive,
red is negative>
2. Math:
(Current position size/Initial position size)*100 = as a %
<Add in conditional formatting (Green is positive, red is
negative>
3. Math:
(Current position size/position size as of -
[01/01/YYYY])*100 = as a % <Add in conditional formatting
(Green is positive, red is negative>
4. Math:
(Current position size/end of last months position size)*100
= as a % <Add in conditional formatting (Green is positive,
red is negative>
Portfolio Performance + Exposure + Risk Management
Exposure + Risk Management
1. Average beta
2. Lowest beta coin
3. Highest beta coin
4. Total assets under
management
1. Math:
Bitcoin beta = 1
Therefore coin betas can be
derived from Bitcoin.
Covariance(coin/Bitcoin) =
variance(coin daily % changes
[Over 2 years])/variance (Bitcoin
daily % changes [Over 2 years])
Beta (coin) =
Covariance(coin/Bitcoin)/varianc
e(coin daily % changes [Over 2
years])
Conditional formatting: [beta >1
is red, beta <1 is green]
Portfolio Performance + Exposure + Risk Management
1. Math:
Total Exposure = (total amount
1. Total exposure of fiat currency invested)/(Total
2. Total Beta exposure Fiat Invested)
3. Alpha
4. NVT average 3. Math:
5. NVT low Alpha generated = (Portfolio
6. NVT high year to date performance) - 2.Math:
(Bitcoin 52 week low) Coin beta $ exposure = (size
<Can't find bitcoin YTD of coin position[amount fiat
performance> invested in coin])*(coin beta)

4. 5. 6. Math: Coin beta % exposure = (coin

Coin NVT $ exposure = (size of coin position[amount fiat invested beta $ exposure)/(Total size
in coin])*(coin NVT) of coin position [total amount
fiat invested])
Coin NVT % exposure = (coin NVT $ exposure)/(Total size of coin
position [total amount fiat invested]) Total Beta Exposure = sum all
coin beta % exposure
Total NVT Exposure = sum all coin NVT % exposure
 Coin/Token Data

Import API’s from CMC independently:

https://coinmarketcap.com/api/
Link to ‘A Novel Approach to
Token Valuation Models.
https://medium.com/@axlejams/a-novel-approach-to
-token-valuation-models-757ff1142bae
 Future Add ins
NVT Math:
NVT = network value [coin market
1. NVT average capitalisation]/daily transaction
2. NVT low volume [24hr volume used as a
3. NVT high proxy]

Bitcoin Daily transaction volume:

https://charts.bitcoin.com/chart/dail
y-transactions

1. 2. 3. Math: Used as a comparable with a

Coin NVT $ exposure = (size of coin position[amount fiat invested similar coin.
in coin])*(coin NVT)

Coin NVT % exposure = (coin NVT $ exposure)/(Total size of coin

position [total amount fiat invested])

Total NVT Exposure = sum all coin NVT % exposure

 Future Add ins
1. Crypto market performance:Total
Daily/Monthly/Yearly change in
volume & market cap
2. Arbitrage trading
3. Futures
4. Masternode Tracking
5. ICO updates, Trending
6. Daily Gainers and Losers
7. ‘New’ recently added coins
8. Upcoming Airdrops & Forks
9. Exchange performance indicators
10. Analyst Modelling Tools
11. High Frequency Trading Bot Widget
12. News aggregator
13. Coin correlations to Bitcoin
14. How much of funds is stored offline in
cold storage.
ICO’s & Airdrops
Top Gainers & Losers
Recently Added to (‘x’
exchange)
Exchange Performances -
Particularly dividend
exchanges like ‘Kucoin’.
END