All About Token Health — A Comprehensive Scoring System for Cryptocurrency
Centic is a scoring platform for entire entities in Web3 Space. Besides the Crypto Credit Score — the scoring system for the credit risk of wallet addresses, Centic also develops a scoring system for cryptocurrencies called “Token health”. Before delving into Token Health, let’s first have an overall understanding of the typical scoring system for crypto coins and tokens.
Scoring System for Cryptocurrency in the Market
How the scoring system for cryptocurrency is used in the market?
The scoring system for cryptocurrencies refers to a methodology used to assess and evaluate the quality, health, or potential of individual cryptocurrencies within the crypto market. There isn’t a universally standardized scoring system
This scoring system can be a helpful tool for investors and enthusiasts to evaluate and compare different crypto tokens based on their respective scores.
Main Factors Contributing to the evaluation of each cryptocurrency
The market typically considers various factors such as market capitalization, trading volume, development activity, community engagement, and overall project transparency.
To be more specific, let’s see how those factors are implemented in the popular scoring systems used currently in the crypto industry:
- Market Capitalization: Many organizations now are evaluating digital assets based on their market capitalization, which is calculated by multiplying the token’s price by its circulating supply. This metric gives an indication of the relative size and popularity of different tokens.
- Development Activity & Project Transparency: Some agencies assess cryptocurrencies based on several factors, including risk, reward, technology, and adoption. To sum up the result after considering all the factors, they give grades to cryptocurrencies to provide investors with an assessment of their overall quality and investment potential.
- Community Engagement & Project Transparency: Digital coins and tokens are also assessed by the metrics related to developer activity, community engagement, and liquidity analysis. This will show the fundamental strengths and weaknesses of different cryptocurrencies.
- Trading Volume: Several organizations also track and analyze the accurate trading volume by filtering out wash trading and other fraudulent activities. This will give a more reliable measure of a token’s actual trading activity.
The Token Health Scoring of Centic
What is the Token Health of Centic?
Centic’s “Token Health” scoring system is a comprehensive and innovative approach to assessing the overall health and performance of crypto tokens. This scoring system takes into account a range of factors to provide users with valuable insights and a holistic understanding of each token’s status.
Currently, Centic has been processing the Token Health of 1738 cryptocurrencies, including Stablecoins, Blockchain coins, meme coins, utility tokens and so on.
How Token Health is calculated?
The token Health scoring system is identified by 4 levels with scores ranging from 0 to 1000. In general, scores in the 600 to 800 range indicate the coin/ token has fair status, while the range over 800 to 1000 means “good” health, showing that the coin or token is performing well on the market. In contrast, coins or tokens scoring below 600 may indicate a downtrend or a period of decline.
To make it clearer how Token Health is calculated, let’s find out more about the 7 factors contributing to the score:
Market Cap
Market capitalization is a crucial determinant of a cryptocurrency’s value within the market. It serves as a key indicator, showing the total worth of the cryptocurrency based on its circulating supply and current market price.
Trading Volume
This factor refers to the number of tokens traded and the trading volume ratio to market capitalization over 24h or 7–100 days.
Trading Volume represents token activity and performance
Price
This factor refers to the highest price-to-current ratio that the cryptocurrency ever achieved
Price Stability
This factor refers to the price of the cryptocurrency over 24h or 7–100 days
Transaction
This factor refers to the number of transactions over 24h or 7–100 days
Holder
This factor refers to the number of token holders and the ratio between capitalization and holders
Holder Distribution
This factor refers to the rate of ownership distribution
Conclusion
As there are more and more tokens emerging after the projects and with the robust crypto these days, the need for a Scoring System stands clear. While there are many factors to consider the prestige of a token but lacking a standard, Token Health is a well-rounded scoring system for cryptocurrency that presents the accurate status and quality of the coins/ tokens.
Centic is a data analytic platform that provides the scores of all entities on Web3 Space and integrates on-chain data in blockchain space and off-chain data in reality.
By providing a comprehensive evaluation system, we assist users in confidently making the right investment decision both in the traditional and digital world.
