Data is an essential element of an effective market. If market efficiency is the extent to which prices reflect all the information available, having quality information is crucial. And to access information, you need data. Traditional financial markets are rich in data and have high levels of standardization and accessibility, giving the abundant market players for avenues for analysis. The digital asset markets are flooded with data, but this data has less structure and little standardization, complicating many aspects of fundamental and quantitative analysis.
It is somewhat ironic that data is a collision point for digital assets, because an aspect very appreciated by public blockchains is their transparency. Transactions and blockchain data are available essentially immediately to anyone with access to the system. But transparency does not equivalent to accessibility and, much less to conviviality. Without prioritizing accessibility, dissemination and context, masses of raw blockchain data will not automatically improve the efficiency of the cryptography market. And although the complexity of blockchain data can create alpha for wise analysts, the lack of consistent data probably contributes to volatility, dissuading institutional capital.
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Until now, the state of the somewhat disjointed blockchain data has not been a problem given a market dominated by retail flows. But if the market must ultimately become institutionalized (that is, obtaining the involvement of serious beneficiaries such as pensions, endowments and insurance), it must evolve.
To improve, the digital active space can learn from traditional market approaches. The tokens should accumulate value in accordance with the success of a project. Thus, key performance indicators (KPI) should be easily accessible, acting as pages of “investor relations” for token holders. It is not realistic for start -up crypto projects to disclose information as does public companies, but temporary stages can improve the situation.
For example, there are data points that could be relevant to almost all the projects to be disclosed, in particular: supply schedules (with details on inflation and burning mechanisms, as well as unlocks), costs, active users and daily transactions. Naturally, projects will not all have the same indicators – for example, the KPIs for an intelligent contract platform will be different from those of an application or deffi protocol. Intelligent contract platforms may want to show how many applications are deployed in the ecosystem. The Defi protocols may want to present TVL or volumes. Whatever its usefulness, each project should make an effort to disclose as many data points as possible.
Above all, these data should have detailed definitions and methodologies, as well as a reproducible code for how the information is derived from the blockchain. It must also be available with full time stories and easily downloadable or accessible via APIs.
Project efforts to systematically disseminate key information should reduce uncertainty (and volatility) and help capital entries in cryptographic space. Investors should expect this level of transparency and reward which favors the presentation of KPIs, while putting pressure for improvements in portfolio companies that do not.
Larry Fink, CEO of BlackRock, noted in a recent call on results that more transparency and analysis could widen the investment of digital assets, similar to market development such as mortgages and high -performance obligations. There are already strong players like Artemis who provide blockchain data and analyzes and establish standards for digital finance. These suppliers will be essential, as are platforms like Bloomberg and the Qi Capital of S&P are on the traditional markets. However, each project creating digital assets should do its share to improve data availability for investors. As the cryptography market matures in transparency and analysis, as many other emerging markets have done, the space of investment in space should develop materially.
