The Solution

A Robust Cryptocurrency Index

In traditional asset classes, MSCI, FTSE Russel etc. provide indices based on market capitalisation and price series. Most cryptocurrency indices have also adopted this approach. The Real Digital Asset Index (RDAi) is different.

The Real Digital Asset Index

RDAi addresses each of the challenges discussed in the previous section through intrinsic value analysis of cryptocurrencies. In market capitalisation-weighted indices, changes in the market value of larger cryptocurrencies move the indices overall trajectory. In RDA Index, changes in market value of larger cryptocurrencies do not move the index's overall trajectory.

Rather, as cryptocurrencies acquire real digital asset (RDA) attributes, the overall RDA Index Level appreciates. RDAi uses attributes-weighting to clarify which cryptocurrencies are a reliable store of value and hence a bonafide medium of exchange.

RDA Attributes

RDA Attributes are qualities that defines the reliability of a cryptocurrency as a store of value. RDA attributes are found more in some cryptocurrencies than in others which enable those cryptocurrencies to attract and retain value. The more real digital asset attributes constituted within a cryptocurrency, the higher its intrinsic value.

Derived from four data sources respectively, four RDA Attribute groups underpin the RDAi analysis: They are illustrated as follows:

Business Ecosystem Stability

This is a component representing resilience and the capability to maintain a stable state of socio-economic equilibrium that keeps the project alive and sustainable. This attribute reflects the value brought to the token by the strength of the team, suppliers, investors, partners, customers and the influence of competitors and regulators.

Digital Utility

Much of the speculation around the value of digital assets stems from their promise as investment vehicles, and this area is subject to intense regulatory scrutiny from securities agencies. However, for other tokens, at least a proportion of their value is intrinsic to their actual use case within a payment or software application ecosystem. A pure utility token may still rise in value if the ecosystem for which it is developed undergoes growth and demand increases, however this attribute examines the extent to which the token has inherent value due to its use-case.

Technology Efficiency

All cryptocurrencies may be regarded as innovative technologies, however with a 10 year history now to draw upon, different technologies may be regarded as having distinguishable track records of effectiveness. As a range of different consensus mechanisms and mainnets proliferate at this time, our algorithms compare a diverse range of indicators to yield evaluations of how efficient and secure are the specific technologies in use.

Market Sentiments

In an era when hype has had far too much influence on pricing, the RDAi is keen to ensure sentiment is viewed with the appropriate lenses as another important factor alongside the core RDA attributes above. The role of sentiment on price cannot be downplayed particularly in smaller marketcap coins. The credibility of influencers varies considerably in terms of their long-term predictive relevance, and our algorithms distinguish between their speculative impact on asset value vs. their endorsement of asset's intrinsic worth. Hence, RDAi tracks the market sentiments related to Business Ecosystem Stability, Digital Utility, and Technology Efficiency of each asset in scope.

RDAi Systems Architecture

RDAi systems architecture consist of 4 functional tiers, namely;

(1). Source data aggregation tier
(2). Attributes evaluation tier
(3). Index calculation tier
(4). Index presentation tier

The RDAi proprietary algorithm operates across all four tiers to generate index data that are distributed via SaaS and API channels. The architecture provides a model by which users can create flexible and custom RDA Indices: New source data or/and RDA attributes can be introduced at any tier to generate indices that reflect a specific market viewpoint.

RDAi Data Set

The existence of RDA Attributes in a crypto-asset determines its reliability as a store of value and consequently determines its intrinsic value. To model the intrinsic value of a crypto-asset, A, we specify a mapping (ES, DU, TE, MS) -> R that quantifies the intrinsic value of the asset as a function of its attributes. For our purpose R is restricted to a range between 0 to 1.

A measure of the intrinsic value of cryptoasset, A, is hence defined by the RDA score function r( ), where

r'( ) is a scoring function for the RDA Attributes (ES, DU, TE, MS) constituted within A.

RDA Score

The RDA Score is the core metric of RDAi. RDA Score is a measure of the intrinsic value of a cryptocurrency on a 0 - 1 point scale. The RDA Scoring function evaluates a cryptocurrency against all four groups of RDA attributes and produce a RDA score between 0 and 1 inclusive. An RDA score of 0 indicates that the cryptocurrency is lacking RDA attributes across the board: Such asset is regarded as an unreliable store of value. A score closer to 1 indicates that the cryptocurrency has a high number of RDA attributes and is consequently a more reliable store of value.

RDA Index Level

The sum total of RDA scores is the RDA Index level: RDA Index Level = . The RDA Index Level is a measure of how the cryptocurrency market is faring as a comparison over time. For a given basket (e.g. RDA 30 Index), a level of say 20.00 indicates a market that is sustained by 66% intrinsic value.

Real Digital Asset Price (RDAP)

Real Digital Asset Price (RDAP) is the objective price of a cryptocurrency.


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