While the world was dealing with the Covid-pandemic, the crypto industry market cap went from $750bn to over $2trn. For context, the crypto market cap basically tripled within a year! Not only that, the industry also went public for the first time, with Coinbase making its debut on NASDAQ. Other sub-sectors of the industry, such as DeFi and NFTs, also witnessed increase in value. DeFi TVL was $274bn as of November, and NFT had a trading volume of $23bn. 

Speculation remains the top use case for cryptoassets

Despite mainstream attention and the massive influx of cash into the crypto industry, one thing remains the same; speculative trading is still the dominant use case for crypto assets. Available data shows that transactions in the industry were mostly fiat inflows and outflows from exchanges rather than crypto-to-crypto (peer-to-peer) transactions. This shows that most people purchasing crypto are not using them as a medium of payment, replacement for fiat, or as utility tokens. Instead, they're purchasing them as “speculative investments”.

2021 crypto fundamentals summary

But 2021 bull run wasn't all about speculative trading; the year also saw some acceleration in novel use cases of cryptoasset networks - from the preview release of Holochain launcher to Cardano’s ecosystem revolution. Unfortunately, most users aren't aware of these use cases, and even where they are, the speculative hustle is real!  Fortunately, RDA Index Data Suite shines the spotlight on cryptoassets with strong utility (both actual and potential), stable ecosystem, efficient technology, and sentiments – all of which define the asset’s intrinsic value. By providing insights on cryptoassets’ intrinsic value (IV), we help users see beyond the hype and exaggeration that invariably surround cryptos. 

2021 Top 5 assets by intrinsic value

Based on our attributes-centric RDA IV Ranking methodology, the top five assets by intrinsic value at the beginning of the year were Holo (HOT), Pundi X (Pundix), Ethereum (ETH), PAX Gold (PAXG), and Bitcoin (BTC).  By the end of the year, as at the time of writing, the top 5 are HOT, ETH, PAXG, Cardano (ADA), and Tether (USDT). 

The RDA IV Ranking means that these five assets have the highest RDA points summed up across 4 attribute groups, namely business ecosystem stability, digital utility, technology efficiency and IV sentiments. The overall positive shift in fundamentals of cryptoassets in 2021 is mostly due to the strengthening of their ecosystems and increasing use cases for the assets. The technology landscape on the other hand is largely being re-invented, nonetheless evolving positively to enable web 3.0.

In Holo’s case for example, using a placeholder token (HOT) for its main asset which is yet to be launched (Holofuel), Holo has built a strong and compelling business case to provide low-cost, decentralised, composable cloud infrastructure and application services on the back of laptops and “holoports” running from living rooms across the world.  This has made HOT (even as a placeholder utility token) very attractive to investors without any shilling or hype. However, like most crypto projects, there are horizon risks and issues associated with the delivery and adoption of a composable cloud services running at community scale. The Holo team provided some reassurance in 2021 by pre-releasing two peer-to-peer applications (Elemental Chess and Elemental Chat) as a test of concept for the Holo platform and Holochain at scale.  

Ethereum network on the other hand has enjoyed tremendous ecosystem growth and thereby an increase in the utility of ETH.  ETH’s intrinsic value has been largely driven by upgrades to Ethereum’s core protocol and the various Ethereum Improvement Proposals (EIP) laying down the foundation for “The Merge” with the proof-of-stake Beacon Chain scheduled to take place in 2022/3.

PAX Gold (PAXG) is an ERC20 token that is backed by physical gold.  Being backed by gold is just one of its many attributes that imbued it with a high intrinsic value in 2021.  PAXG’s intrinsic value appreciated due to its inheritance of Ethereum’s fundamental attributes as well as growing its own ecosystem – PAXG is now handled by over 20 storage providers including vaults, exchanges, and wallets.

For ADA, the addition of smart contract compatibility added a new level of utility that drove up its number of use cases and network participation. This smart contract compatibility has opened the ecosystem up for users to enjoy more on chain functionalities. The full decentralisation of block production and the provision of data storage for applications are other major developments that puts it in the top 5. 

In spite of the ongoing controversy around whether Tether (USDT) if fully backed by USD, this cryptoasset continues to gain widespread adoption due to its relatively high utility amongst crypto traders.  USDT continues to expand its reach to other blockchains which makes it inherit a huge amount of technology efficiencies without the need for its own native chain.  In May 2021, Tether launches it seventh blockchain – Bitcoin Cash network. Before that, Tether was already running on Algorand, EOS, Ethereum, Liquid Network, Omni and Tron.

Despite these fundamental developments of 2021, most of these assets are still subjected to heavy speculative trading, and even pump and dump practices.  This continues to create asset mispricing and serious risk for investors at all levels of the pyramid.  This is where RDA Pricing data becomes vital.  RDA Pricing provides investors with asset prices based on intrinsic value, thus clarifying the delta between market and fundamental price as a way to manage risks.

Our accomplishments in 2021

In this last newsletter of the year, we want to take the opportunity to reflect on RDA Index accomplishments in 2021.  Here's a quick roundup of what we did during the year:

We welcomed Dr. Evan Schnidman into the RDA Index family as our Board, Strategy and Partnerships Advisor (Schnidman is the former founder and CEO of Prattle – which sold to LiquidNet in 2019),

Scaled the RDA attributes we are tracking to a higer level of granularity

Signed several distribution agreements with major financial data vendors (Bloomberg, API3, Datarade and others).

Sponsored the National Blockchain and Fintech Conference at Morgan State University

Ingested new constituents into the data suite: Top 500 by market cap as at 30th of October 2021

Rebalanced the reference portfolio used in calculating RDA Prices – implementation postponed to Jan 2022.

Partnered with API3 to provided RDA Index API for the first ever Bitcoin Bankathon by Bank of El Salvador

Launch of our B2C platform for RDA Index data (launched August 2021)

Of course, none of these would have been possible without the hardwork and contribution of our team, partners and customers who continue to support us.  Thank you everyone!

Come on… 2022!

2022 promises to be a more insightful year at RDA Index. We will continue to track and highlight fundamental attributes of crypto assets in an objective and unbiased way: clarifying their business ecosystem stability, technology efficiency, digital utility, and the intrinsic value sentiments behind them. Our comprehensive methodology combines machine learning with algorithmic analysis to provide the necessary data required to differentiate between crypto assets in a real and fundamental way.  The key feature to look forward to from the RDA Index in 2022 Q1 is RDA Compare.

RDA Compare is a graphical analytical dashboard that enables comparison of cryptoassets based on their fundamental attributes. RDA Compare is a game changer that will boost market intelligence and asset transparency across the industry. RDA Compare will be available exclusively FREE of charge to existing customers. So, if you haven’t done so yet - now is the best time to SUBSCRIBE to the RDA Index platform so you can use the RDA Compare feature for free in 2022.  Following the release of RDA Compare, the rest of our work will focus on refinement of the platform and roadmap items which consists of delivering a mobile app, ESG taxonomy of assets, and establishment of the RDA 10 Index Fund.

We are very excited about the future of RDA Index and the benefits we are bringing to the industry in 2022. 

On behalf of all of us at RDA Index, I wish you and your family a happy new year!