Token Research: INS Ecosystem Valuation

Token valuation can be tricky. ICO valuations are even trickier. The truth is that just like in the traditional world most crypto companies (otherwise referenced as crypto econonomies, dapps, ecosystems, protocols, etc.) will fail. A study recently published by Deloitte found,

about 90 percent of projects developed on GitHub become idle, and the average life span of a project is about one year, with the highest mortality rate occurring within the first six months.

This may seem shocking, but compared with traditional startups, which research shows that as many as 75 percent of venture-backed companies fail.

Let’s just go ahead and get it out of the way that investing in start-ups is risky business, ICOs or otherwise— but VCs have made piles of money doing it for ages, and now your daughter’s boyfriend just cleared more than your annual income because he spent his student loans on Ethereum. What gives?

The fact of the matter is we are in a revolutionary time, where disruptive technologies and blockchain technology allow for massive innovation, value creation and harvesting of existing markets that is all but unprecedented. As a consequence, we’re seeing a plethora of ICOs and money grabs with little to no thought put into the business other than a mechanism for raising capital for their “great idea.”

So what’s the answer?

Let’s take a second and assume that you have already “done your homework” and have come to the conclusion that the project utilizes blockchain technology to solve an existing problem and that problem is either unable to be solved more effectively with other technology. You have also concluded that the team behind the project are likely to succeed in their quest, the proper “advisors” are in place, the Github repository is on fire, the community (network effect) is “pumping,” etc.

But the big question that remains to be answered is this: If the project is successful, how will that value accrue to the token?

We set out to answer such a question with the result of developing our fundamental valuation framework for investing, which you can read about here. To take this ambition a step further, we have applied our methodology to the valuation of the INS Ecosystem utility token to see the effect varying levels of potential success would have on the network and how that value would ultimately accrue to the token. We threw in some qualitative research as well — because the project itself is pretty cool, but the real value is in leveraging the framework to quantify exactly how value would accrue to the token given your own assumptions about the projects success.

You can read our full report on INS via the link below:

https://aenigma.capital/aenigma_ins_valuation.pdf

We are always interested in hearing your thoughts, and look forward to a thoughtful discussion in the comments below.

Do note that the contents in this article and in the report linked above do not constitute investment advise and readers are encouraged to make their own assumptions.