Using Messari’s on-chain data to select coins, what investment opportunities have we discovered?

foreword

secondary title

foreword

A lot of investment logic in our currency circle comes from large institutions, and many projects that our currency circle media likes also come from the investment portfolios of these large institutions.

Are these investment logics and investment portfolios bad? not necessarily. but okay? Not necessarily.

But it's easy for us to like these investment logics, it's easy to like these portfolios. There is a strong provocativeness in it, that is, he hits the weakness of human nature. Let you think that others are strong, let you think that you are strong. The investment logic and investor portfolio of these large institutions belong to the investment system of the strong, while most of us are weak. We do not have many information advantages of large institutions, we do not have the low cost of large institutions, and we do not have Anti-risk ability of large institutions.

What is strong and what is weak? The advantage of the strong lies in multiple dimensions such as information acquisition, trend control, in-depth understanding, risk resistance, personal connections, and emotional control. The weak do not have these advantages, and only common sense, time and odds can help them.

Most of us are weak, and what the weak want to pursue is often simpler and more certain, rather than complex investment hotspots and economic model logic.

And the data on the chain may be a very interesting entry point. A simple question is, do you think "a coin, if more people use it, will its value go up?"

I think there is the influence of so-called simple common sense. This simple common sense (or some kind of unspoken consensus) is that we believe that "a coin will increase its value if more people use it".

If you also think that a cryptocurrency, the more people use it, the greater the network value, and the more meaningful investment in the future. Then why not choose investment targets according to the data on the chain of each currency?

secondary title

What is on-chain data? have what?

So what is on-chain data? What are they? Simply put, on-chain data is all data that is natively stored on the blockchain.

This data includes (but is not limited to):

1. Detailed information of each block (time stamp, Gas price, miner, block size, etc.);

2. Details of each transaction (transaction sending address, transaction receiving address, amount transferred in the transaction, etc.);

3. Smart contract information called and used

The data on the chain reflects the network activities of a blockchain and judges whether the network development is healthy and fast. Therefore, many people who study the theory of cryptocurrency valuation always like to fiddle with the data on the chain, trying to find out Newton's law of cryptocurrency valuation.

The data categories we use are the four data categories of transaction volume, NVT ratio, active addresses, and transaction numbers. (It should be noted that the data comes from Messari. Of course, there will be some differences and deviations due to various reasons, and not all currencies are provided, so the data list of many currencies is actually blank, and the results are for reference only. The purpose is to Help everyone understand and use tools to understand what kind of currency chain data is better. In addition, due to the technical reasons of anonymous currency, some anonymous currency data will also have a big deviation in it. All data is based on April 7 for statistical date)

transaction amount

secondary title

transaction amount
Let’s look at the transaction volume first. Taking the 24-hour transaction volume on Messari as a comparison, the top 20 currencies provided by Messari are:
Here are the points from a quick tidying up and thinking:
– On the whole, the transaction volume on the chain, the correlation between the top ten and the overall market value is quite large.
– Due to the low transaction cost of PoS projects, the overall transaction volume is likely to be higher.

– The main trading volume rankings are much brighter than the market capitalization rankings: DCR/DOGE/BAT/KNC/SNT/XVG, etc.

secondary title

NVT ratio

Let's look at NVT again, so let's first talk about what is the NVT ratio? NVT ratio is the abbreviation of Network Value to Transactions Ratio, which is a comparison between the degree of network valuation and network usage.

In the traditional stock market, the price-earnings ratio (PE Ratio) has always been a long-term and effective tool for evaluating companies. It is the ratio of a company's share price to equivalent earnings per share. A high P/E ratio describes an overvalued or high-growth company.

The NVT ratio is known as the price-earnings ratio of the currency circle, because the essence of Bitcoin is not a company, but a value network for payment and storage, and everyone uses the funds flowing through its network as a substitute for "company earnings".

A rise in the NVT ratio indicates an overvalued network, viewing it as a bearish price indicator, while a downward trend in NVT suggests the opposite. As for how low the NVT ratio is, I haven’t seen a very standard and uniform answer for the time being. Some say 30, some say 100, and some say 150. Let’s remember, the lower the better.
We use the NVT ratio on Messari as a comparison. The top 17 currencies provided by Messari are:
Here are the points from a quick tidying up and thinking:
– On the whole, there is little correlation between the transaction volume on the chain and the market capitalization ranking.
– If you do not consider the false high of PoS currencies, several PoW currencies with more network value are: DCR/Zcash/Verge, etc.

Active addresses

secondary title

Active addresses
Let’s first look at the number of active addresses. Taking the number of active addresses on Messari as a comparison, the top 17 currencies provided by Messari are as follows:
Here are the points from a quick tidying up and thinking:
– The active addresses of ERC20 tokens are obviously not as good as other "main network coins" or PoW coins, especially some old mining coins have obvious advantages in this regard.

– There are actually very few users in the currency circle, and those with thousands of active users can be regarded as the best.

secondary title

Number of transactions
Let’s look at the number of transactions first. Taking the 24-hour on-chain transactions on Messari as the evaluation, the top 20 currencies provided by Messari are as follows:
Here are the points from a quick tidying up and thinking:
– As expected, EOS and TRX with deep water content, one is the first and the other is the third.
– Ripple duo XRP and XLM are slightly surprising, one second and one fourth.
– BSV is quite unexpected. The number of transactions is almost the same as that of Ethereum, three times that of Bitcoin, and fifteen times that of BCH.
– Decred is quite satisfactory, continuing its consistent style, and can always be listed, but it is not top-notch. Compared with the market value, its data on the chain is really good.

Conclusion:

secondary title

Conclusion:

I am a cautious small retail investor, and I am a weak person.

I don't know how to go on Twitter, I don't know how to find all kinds of latest blockchain industry information; I don't understand research reports of various institutions, I don't understand how to grasp the development trends of various industries; I don't have expert knowledge I don't have the depth of understanding, and I don't have the network resources of various big shots; I can't manage my investment emotions well, and I can't manage my risk flexibility well.

I have to admit that I am a weak chicken.

However, I am willing to admit that I am weak. What I can do is to avoid my weaknesses as much as possible and vote for those that match my abilities. I think that simple common sense and time will pay off.Data on the chain is a good entry point. After all, I still believe that the assumption that "the more people use the network, the greater the value of the network" will be established and reflected in the long-term investment cycle.