First-of-its-kind benchmark tracks growth of tokens based on the ERC-20 protocol
SharesPost, the leading provider of liquidity solutions to the private growth asset class, has announced the launch of the SharesPost Token Index, a tool designed to better track the growth of the token market. The Index focuses on a select group of tokens based on the ERC-20 protocol, and uses factors such as market capitalization and trading history to assign a weight to each token based on price and circulating supply. As such, the Index is able to accurately reflect the market’s overall maturity in real-time on a daily basis while minimizing liquidity risk and transaction costs.
SharesPost Founder and CEO Gregory Brogger said: “As interest in cryptocurrencies and blockchain continues to rise, we saw a need to provide a meaningful measure of token performance to help inform investor decisions and make the market more comprehensible for everyday people. Our resulting growth Index addresses this need, while reflecting our larger mission of providing liquidity to the private growth asset class through trading, asset management, research, and data.”
The Index uses a market capitalization formula to calculate a total value based on daily pricing data. Specifically, the Index draws upon the volume-weighted average price of each token from a white list of exchanges. The tokens chosen for the Index were selected because they are representative of the broad blockchain sector, come from credible projects, and have defined utility. As a result, the Index excludes tokens that are pegged to a particular asset or currency.
Using July 1, 2018 as the baseline, SharesPost reviewed the Index’s performance back to Q3 2017 and compared the data to Bitcoin and Ethereum prices. Although the token market has suffered short term volatility, the assets present an opportunity for longer term investors. Cumulatively, the Index has grown 17 percent since October 2017, with Ethereum dropping 17 percent and Bitcoin increasing by 59 percent over that time frame.
“As more institutions continue to dive into the crypto world, a consistent and comprehensive tool for analyzing tokens is integral to effectively evaluate and interpret the market. Our mission is for the SharesPost Token Index to be that tool, providing much-needed clarity to a nascent and ever-evolving industry, ” said Rohit Kulkarni, Head of Research for SharesPost, Inc.