Cryptocurrency Health Indices: What to Look for before Investing in a Coin/Token

in hive-167922 •  2 months ago  (edited)
Healthy DPoS Cryptocurrency = Vol. of Staked Tokens/ Vol. Unstaked Tokens > 1


Figure 1

Of late, I've been considering some indices that make up a healthy investment in a choice cryptocurrency. I consider an investment "healthy" when it does not suck out value from the project itself. Yeah, we are all used to the term "sustainable development". It is mentioned when development meets the needs of the present without compromising the future.

I know that every investor is worthy of his profit. For real, every investment is made with profit motive in mind. However, it should be noted that where sustainability of the source is not considered a priority, the investment can turn out to a huge loss.

Fifteen (15) months into my engagement of the Steem Hive blockchain, I didn't really understand the value of staking tokens until Steem-engine (SE) came onboard with its related tokens. Until then, I was solely a content creator on and all I cared for was for my posts to be upvoted. Sometimes, I would be bitter if an expected value was not attained.

When I began to stake SE tokens - SPORTS, MARLIAN and DBLOG, I now understood why it was necessary for every user of the blockchain like Hive to stake a part (if not all) of the tokens acquired at least for some incubation period while we await mass adoption. I can say that Hive and Hive-engine tokens are still in the bear days (including the bullish LEO). The true value of HIVE hovers around $2, LEO around $5 and SPORTS around $0.01. We'll get there soon, keep staking and hodling.

My engagement of the LeoFinance community and subsequent staking of LEO towards a high target has opened my eyes to some tokenomics which one could leverage to make an investment healthy and sustainable. Not that when nobody is buying a token, it becomes stale and the prices begin to deteriorate. It therefore becomes a concern as to what should be done to keep the demand for a token growing. This should also form a basis for prospective investor to look into.

1. Token Stake/Unstake Ratio

I am taking the LEO token for a case study. During last week's analysis of the activities around the LeoFinance community and LEO token, I was stunned when I saw the above chart which shows the ratio of staked to unstaked LEO tokens which averaged at about 4.3.

That means about 57,000 LEO tokens were powered up while only 12,000 tokens were powered down. That's a healthy system. It simply means that those who are buying into the token are more than those who may be losing faith in the token.


Figure 2

As shown above (Figure 2), the share of the staked LEO is 88.5%, it has increased from the 85% in the previous week. This means that out of the current supply 4.1 M tokens, 3.63 M are and 0,47 M are liquid.

I'm trying to be careful not to talk about the token price in this post. The health of a blockchain project which leverages cryptocurrency is much more than token. I remember buying some tokens last year at about $0.01 and today they are worth $0.001. If we go there, the tables would break.

2. Token Utility


Figure 3

Still in that report was this chart (Figure 2) with the number of unique users that posted from the LeoFinance frontend. The report had it that a total of 907 unique users have posted from the LeoFinance frontend. That shows an increase in the number of new users compared to the previous week. That means, more adoption and more demand.

The chart in figure 3 shows a continuous trend line in a geometrically progressive order. This means that the project is providing for high utility which would further add value to its token demand.

It is important for blockchain/cryptocurrency project investors to be concerned with cryptocurrency health while investing and drawing profit from the investment. Let's be conscious of the fact that cryptocurrency is still in its early adoption days. There is more in the near future. We ain't see the bullish markets yet. Thus, let every project participant help to build their choice crypto project by maintaining a healthy stake/unstake ratio. Always keep it greater than 1.

** All Images from Leofinance Statistics

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You are correct. We are seeing a lot more activity which is bringing up the level of excitement. As I wrote in another comment, I attribute this to the repeated updates. The fact that the team is putting together a road map and following it is vital.

This inspires a great deal of confidence. Also, there is a dedicated group who is interested in making sure this place grows and expands.

The numbers keep bearing it out and it is something we can build upon. It is the excitement that brings in newer people and makes them want to be a part of what is taking place here.

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