RDA Index Whitepaper


Abstract

Blockchain technology continues to drive free flow of value across industries and world economies, through the explosion of cryptocurrencies and tokenised assets. As the global digital asset marketplace and the regulatory environment continue to grow and mature, the industry still faces extensive volatility and fragmented information sources, which hinder its evolution and create risks for investors at all levels.

This paper presents Real Digital Asset Index (RDAi) as a solution for comparing the intrinsic value of digital assets algorithmically, in a robust, independent and real-time fashion - thus enabling effective benchmarking for all investors, from retail speculators through to institutional professionals.

The Real Digital Asset Index (RDAi) evaluates, scores and ranks cryptocurrencies based on attributes that are fundamental drivers of the cryptocurrency market. Four groups of attributes are weighted and used to rank cryptocurrencies:

(i) Business Ecosystem Stability
(ii) Digital Utility
(iii) Technology Efficiency and
(iv) Market Sentiments.
Introduction

In the decade since the inception of the Bitcoin blockchain, value has begun migrating at an accelerating rate from legacy assets and commodities like bullion, energy and fiat currencies into innovative classes of digital assets such as cryptocurrencies and tokens. The reasons for this transfer of value from traditional assets into digital assets reflect shifting political and economic global trends, technological transformations, and the many advantages and diverse use-cases offered by distributed ledger technologies, to solve a wide range of the world's problems.

The growth remains highly non-linear however:

As at January 2018, over £500 billion had migrated from traditional asset class such as commodities and stocks into cryptocurrencies. By April 2018, the market fell to £180 billion creating panic for investors. Such rapid flow of capital into and out of cryptocurrencies, coupled with a lack of regulatory framework to evaluate and discriminate between cryptocurrencies, has left many analysts and investors doubting their very authenticity as a real (digital) asset class.

With increasing volatility, investors seek clarity beyond market-capitalisation weightings and price series. Despite the emergence of derivatives markets and secondary products, the price fluctuations of recent years and the bear market persisting through 2018 and into the first half of 2019, has demonstrated the risks involved in predicting the behaviour of innovative asset classes using tools developed for traditional assets.

For this reason, we created the Real Digital Asset Index.

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