Assessing Dacxi Coin’s Commercial Demand and the Need for a New Era of Token Valuation Metrics
As the crypto market evolves, it becomes increasingly evident that traditional approaches to assessing token value, based primarily on technology metrics, are inadequate. With financial analysts entering the field, the crypto industry is naturally shifting toward emphasizing commercial demand as a critical determinant of token value. This article delves into the complexities of this shift, exploring the valuation of Dacxi Coin, an innovative project poised to disrupt the global equity crowdfunding market.
I. The Problem with Traditional Crypto Valuation Metrics:
1. Justifying Market Capitalization through Ecosystem-based Analysis:
A coin’s current value is simply the price someone would pay for it today, factoring in the liquidity of the market for that coin. Market capitalization, a widely-used metric for valuing crypto projects, is calculated by multiplying the total number of coins in circulation by the current market price of the coin.
In the absence of credible income streams for most assets, the industry has justified a token’s market capitalization and its future potential based on ‘ecosystem metrics’, such as the number of developers in its community, dApps launched, projects built, follower community, or daily users. However, as an asset driven by demand and income streams, a crypto-token’s ecosystem only serves as an indication of market strength or potential. Ultimately, this approach is as flawed as the ‘counting eyeballs’ strategy used during the 1990s Internet Dot Com boom.
2. The Case of Ethereum:
Ethereum (ETH) exemplifies the limitations of traditional valuation metrics. With a market capitalization of $225bn, analysts struggle to justify this valuation based on its annual revenue from fees (less than $2bn). Its $19bn in locked ETH in staking is based on that fee income, so it delivers approx a 5% return, which is unjustifiably high. The valuation is 100 times fee income, with leading commentators predicting 200-500% price growth. Ethereum may have the world’s largest and strongest ecosystem, but justifying a 500 times fee income growth is challenging, especially considering the rise of strong competitors offering much lower fees and the entry of major companies like Google, Microsoft, and Ant Financial into the token platform space.
3. Commercial Realities:
While these ‘ecosystem’ metrics were the only credible valuation argument in the early days of crypto development, they fail to capture critical aspects of a project’s commercial viability, such as income generation and the competitive landscape.
II. The Need for a New Approach to Crypto Valuation:
1. The Importance of Commercial Metrics:
To accurately assess a crypto project’s value, like all financial sectors, the industry will shift its focus to commercial metrics like project income and the likelihood of competitive price pressure. By emphasizing these factors, investors can gain a more comprehensive understanding of a project’s potential and make more informed decisions.
2. Adjusting for Market Dynamics:
The crypto market is continuously evolving, and as new players enter the space and existing projects mature, it is crucial for valuation methods to adapt accordingly. By incorporating commercial metrics into valuation models, analysts can better account for market dynamics and more accurately predict future capitalization growth.
3. Aligning Valuations with Traditional Finance Principles:
Incorporating commercial metrics into crypto valuation models can help bridge the gap between the crypto world and the traditional finance sector. By aligning valuation methodologies with principles used in mainstream finance, crypto projects can attract a broader base of investors, fostering greater market stability and growth.
III. Dacxi Coin: A New Benchmark for Token Valuation:
1. The Launch of the Dacxi Chain and Tier 1Exchange Listings:
As the Dacxi Chain approaches its launch and listing on Tier 1 exchanges, the question of Dacxi Coin’s valuation takes center stage. Traditional metrics that focus on the developer community and dApp projects are ill-suited for valuing Dacxi Coin, as it is a fundamentally different kind of project.
2. A Unique Value Proposition:
Unlike projects like Ethereum, Uniswap, or Chainlink, Dacxi Chain is not a ‘tokenization infrastructure’ project where its token’s demand and value are based on fee income. Instead, Dacxi Coin serves as an internal currency for a global equity crowdfunding network, facilitating investments across borders and offering a faster, more efficient alternative to traditional fiat systems and stablecoins. A secondary use case for Dacxi Coin is as a Dacxi blockchain currency for fees, like ETH, but its demand is tiny compared to transactional volume.
IV. Valuing Dacxi Coin Based on Commercial Demand:
1. The Global Equity Crowdfunding Network:
Dacxi Coin’s value is driven by the demand generated from transaction volume on its global equity crowdfunding (eCF) network. This network aims to revolutionize the equity crowdfunding option for early-stage investments by providing global scale. Deal issuers gain access to a worldwide pool of investors, and investors gain investment opportunities from across the globe, underpinned by global standards. Blockchain technology has seven potential applications, from tokenized equity to cryptocurrency-based payments to global KYC.
2. The Inefficiency of Fiat Systems and Stablecoins:
Dacxi Chain requires its own currency because traditional international fiat payment systems are too slow and expensive for a global network that will eventually encompass deals and investors from 100 countries using 100 currencies. The network could require investments to be sent from any country to any other country, creating the need for 100 x 100 = 10,000 different currency pairs. The stablecoin option is burdened by limited currency pairs and very negative regulatory challenges. Dacxi Coin is the best option for the network.
3. Demand is based on the Network:
The quantity of Dacxi Coin issued is fixed, so its value is based on demand produced by the Dacxi Chain network. The Dacxi Chain links local equity crowdfunding platforms together in a network. Each platform launches deals for investment, and its investor base invests in deals offered from the network. The Dacxi Coin moves the investments from investor to deal issuer.
4. Demand is Empowered by the Network Effect:
The ‘network effect’ is the power behind digital leaders such as Facebook, Uber, and Amazon. The more users they have, the more network connections they create, adding to the value exponentially. The more eCF platforms join the Dacxi Chain, the more deals attracted and offered, the more investors attracted and investments made, attracting more platforms. Investment volumes should grow exponentially, driving demand for Dacxi Coin exponentially.
V. Estimating Dacxi Coin’s Market Potential:
1. The Early Stage VC Market and the Global eCF Market:
Based on the size of the Early Stage VC market in 2021 at $230bn, a global eCF market worth $100bn annually is conceivable. Considering the growing interest in alternative investment opportunities and the potential of crowdfunding in developing economies of Asia, this projection may be conservative.
2. Market Share and Dominance in the Decentralized eCF Network:
A decentralized eCF network could capture 90% of the market share, with one dominant company claiming at least 80% of that share. In this scenario, Dacxi Coin could potentially command an annual turnover of $70bn.
3. Monthly Turnover Fluctuations:
Given the inherent fluctuations in investment activity, Dacxi Coin’s monthly turnover could range between $3bn and $15bn. The market will decide how much currency will be held to support this turnover.
4. Comparison with Ethereum:
Ethereum’s 100x annual turnover should not be compared with Dacxi Coin’s potential $70bn turnover, as some have suggested. Dacxi Coin will need to be bought and sold to facilitate investments with high currency velocity. Total demand would be a couple of months turnover.
Embracing the Future: A New Era of Crypto Valuation and the Unfolding Potential of Dacxi Coin:
While traditional metrics make it challenging to accurately value most cryptocurrencies, Dacxi Coin’s valuation is refreshingly straightforward. It is based on the expected demand generated by the global crowdfunding platform network set to launch in Q2/2023. As the crypto market continues to evolve, the industry must embrace new valuation methods that prioritize commercial demand, ensuring that investors can make well-informed decisions in a rapidly changing landscape.
As the crypto space matures, it is essential to recognize the limitations of traditional valuation metrics and adopt innovative approaches that better capture a project’s true potential. By shifting the focus to commercial demand and market dynamics, the industry can facilitate more accurate valuations and foster informed decision-making among investors.
The case of Dacxi Coin serves as a powerful example of the need for a new approach to crypto valuation. With its unique value proposition and potential to disrupt the global equity crowdfunding market, Dacxi Coin’s valuation cannot be adequately assessed using technology-based metrics. Instead, its potential lies in the commercial demand it generates as a transactional currency within a rapidly growing market.
As the global eCF market expands and more investors and deal issuers embrace the Dacxi platform, the demand for Dacxi Coin is expected to increase, contributing to its growing value. This demand-driven valuation approach aligns with traditional finance principles, helping to bridge the gap between the crypto world and mainstream finance.
In conclusion, the future of crypto valuation necessitates a paradigm shift that moves beyond traditional technology-based metrics and embraces commercial demand as a critical determinant of token value. By adopting this new approach, the industry can better assess the potential of innovative projects like Dacxi Coin and support the continued growth and maturation of the crypto market as a whole.
The analysis presented in this article underscores the importance of understanding the intricacies of token valuation, particularly as the market continues to evolve at breakneck speed. As the industry matures, investors and analysts alike must be willing to adapt and embrace innovative valuation methodologies that better capture the true potential of crypto projects. In doing so, we can ensure that the future of crypto valuation is as bright and promising as the innovative technologies it supports.
