Classification Index and Digital Asset Topology
Cryptoken Board UÜ is happy to announce a first industry coverage of the topology of blockchains — as more aptly put in conventional finance as industry classifications. Cryptocurrencies became officially an asset class after the St. Louis Fed governor James “Jim” Bullard announced a publication in 2021. This nascent financial industry developed a parallel blockchain architecture comparing to legacy banking institutions providing both payments and programmable finance paving a way for a next generation of decentralized applications.
Over the past 3 (+) years, many regulatory agencies including CFTC have voiced their opinion publicly on whether Bitcoin and Ethereum are considered digital commodities or securities, using somewhat an ambiguous methodology causing confusion across international jurisdictions and regulatory framework bodies alike.
We want to take this opportunity an introduce a very important topic, called is topology (taxonomy) of blockchains. Since there are no official guidelines from the crypto industry, nor consensus reached on indexing methodology / studies / publications, nor agreements between various service providers, our team at Cryptoken Board UÜ along with our analysts is introducing a formal valuation indexing methodology covering this topic! In the following section we are introducing CB global investable market 500 GIM500 classification system along with a sample report!
We’re proposing a framework for both Industry and Sector classifications along with their respective definitions respectively. This type of study was first broached / introduced by Messari Crypto, a huge credit to their team however, one major short coming is that we found limited data available and many projects were not classified. We thereafter went beyond their initial scope of study and parsed the entire universe which we promptly define here as the Global Investable Market 500 GIM500 (including top 500 crypto issuers ranked by market capitalization).
If you classify one index holding, you must extend that analysis to the entire market. Investment banks on Wall Street / Bay Street built entire teams to research topologies of conventional financial instruments providing this type of value for their clients and investors.
the chart shows a Wall Street version of the GICS® Classification Methodology (Global Industry Classification Standard0 that includes 11 sector allocations: Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financial, Information Technology, Communication Services, Utilities and Real Estate.
The Messari classification Index was first introduced in 2020 and it provided a comprehensive study but omitted various issuers. It’s the gold standard when it comes to trying to understand how structure of blockchains, compares to conventional practices such as popular GICS® sector classification that we find aptly in public equity finance.
Crypto market has produced many indices, and classifications — all entirely different from each other. We want to use the Cryptoken Board CB index methodology to help investment practitioners in digital asset space with construction of their portfolios, as we take into account taxonomy of blockchains. We believe that Messari index classification system,, and published by our team at CB must be adopted globally!
In this report, we present a sample market portfolio and showcase how classifying digital assets by Industry and Sector can be used to better show risk, portfolio allocation. Cryptoken Board UÜ is a innovative investment specialist consulting firm located from Tallinn, Estonia with a team of investment professionals and software engineers dedicated to helping clients with cryptocurrency (on-boarding) digital assets (portfolio construction). We procured at Cryptoken Board UÜ a set of propriety investment metrics and ready-to-use data platforms helping clients with risk management and portfolio allocation / selection practices.
Decentralization in cryptocurrency space is a forgone conclusion in our humble opinion, ignited a brand new paradigm of innovation that demonstrates some clear advantages of blockchain digital assets such as block-link consensus modules, validating of nodes, data transfer, and utility transfer data in real time. This includes compostability and immutability of transactions. A true innovation over the conventional finance. However, we must be clear that each blockchain is rather unique and modus operandi are specifically designed to execute a particular type of functions. In this article, we would like to introduce a formal classification method that can be deployed with all service providers and asset managers alike — taking into consideration blockchain functions!
Please find our definition for Digital Asset Topology or DAT with (7) Industry Classifications and (40) Sector Classifications along with their respective definition 👇
📌 INDUSTRY CLASSIFICATION
1] Currency Primarily used as Money, Payments, and Store-of-Value.
2] Infrastructure Serves The protocol foundation for various use-cases.
3] Financial Networks Dedicated to crypto-asset financial services.
4] Services Specific applications implemented on blockchain-networks.
5] Media and Entertainment From social networks to content generation.
6] Mining Applications Designed to mine cryptocurrency protocols.
7] Tokenization Platform Designed to help tokenized new digital assets.
📌 SECTOR CLASSIFICATION
1] Currency Decentralized currencies operate as money and stores of value. They are globally accessible and controlled by no single entity or group.
2] Stablecoins Stablecoins are cryptoassets that are constructed to maintain a market-price that doesn’t vary significantly from some benchmark, often a fiat currency like USD, EUR, or CNY.
3] Payment Platforms Payment platforms are focused on payments, often for a specific use or industry. Some blockchain-based payment platforms attempt to integrate multiple blockchain assets into one platform for ease of payment, possibly employing smart-contracts for more complex applications.
4] Rewards System Rewards system assets are often given to users as they engage with a network, and can often be used on the network to make purchases or use certain services.
5] Smart Contract Platform Smart contract platforms operate as a global computer, capable of executing arbitrary code — called smart contracts or ‘dapps’.
6] Interoperability Interoperability-focused blockchains provide services that can link one chain to another. These are often intended as core chains or platforms on which wider ecosystems of more use-case-specific chains can operate together. Wallet.
7] Enterprise & BaaS Enterprise and blockchain-as-a-service platforms help entities create and run their own dedicated blockchain platforms.
8] Internet-of-Things IoT assets incentivize participation in IOT networks.
9] Supply Chains Blockchain networks geared towards supply chain management generally tokenize real-world assets, allowing precise tracking of asset provenance in realtime.
10] Application Development Application development platforms use onchain tokens to incentivize development of blockchain-based tools.
11] Centralized Exchange Platform This sector refers to tokens that exist primarily on centralized exchanges for use on those exchanges.
12] Decentralized Exchange Platform Decentralized exchange platforms allow the conversion of one cryptoasset to another without a middleman mediating the transaction.
13] Lending Platform Blockchain lending platforms generally collateralize loans using on-blockchain assets, but may offer other loans or lending functions using blockchain networks.
14] Asset Management Asset management platforms offer ways to manage on-chain assets.
15] Rating & Reputation Blockchain-based rating and reputation platforms allow for rating systems that don’t rely on centralized parties.
16] Prediction Markets Decentralized prediction markets use onchain-assets to create economic incentives to correctly predict the outcome of events.
17] Crowdfunding Platform Crowdfunding platforms raise money via a native blockchain token and allocate to projects, often through community vote (either on-chain or through a Foundation).
18] Distributed Computation Distributed computation assets create a market for CPU/GPU power distributed globally across participating computers.
19] Distributed Storage Distributed storage assets create a market for storage space distributed globally across participating computers.
20] Identity Decentralized Identity systems use blockchain networks to create identity records that aren’t controlled by any single entity or group.
21] Healthcare Healthcare platforms leverage blockchain technology to facilitate payments and/or management of patient records in the medical industry.
22] Energy Market Energy market crypto-assets enable more efficient trading and allocation of energy-grid resources without reliance on a traditional middleman.
23] Timestamping Services Timestamping services underpin decentralized digital-rights management by using the permanence and irrefutability of blockchains to prove that a piece of content existed at a certain time.
24] Artificial Intelligence Assets focusing on AI, using blockchain-based incentives.
25] Advertising Decentralized advertising platforms incentivize new markets through ad-network-specific on-chain tokens.
26] Content Creation Content creation chains incentivize content-creation by fostering a micropayment market between content-consumers and publishers.
27] Gaming (non-gambling) Assets focusing on enabling, or being used within, gaming platforms.
28] Gambling Industry Gaming/Gambling industry assets often use properties of blockchains to achieve provably-fair gambling; a property unique to blockchain-based gaming platforms.
29] Social Platforms Decentralized social media platforms provide communities without any one entity controlling the network.
30] Virtual & Augmented Reality Assets focusing on enabling, or being used within, virtual reality or augmented reality platforms.
31] Memes Tokens Tokens representing faux pas.
32] Crypto Collectible Crypto Collectibles are non-fungible tokens designed to be unique and tradable.
33] Privacy Privacy-focused decentralized currencies incorporate technology designed to make it difficult or impossible for 3rd parties to track the flow of coins from one sector to the next.
34] On-chain Governance On-chain Governance assets incorporate the ability for various stakeholders to directly signal or vote for certain outcomes with respect to development of the protocol/asset itself.
35] Consensus Innovation Chains that implement novel approaches to the technical process of achieving network consensus. DAO .
36] Scaling Chains that focus on scalability of the core network protocol. 37 Misc Very specific-focus assets which likely do not fit into a broader category.
38] Possible Scams These assets show signs of being scams, and are either currently under investigation, or are ‘near scams’ where no explicit intent to deceive, yet there’s sufficient obvious misleading/improper conduct present to warrant this classification.
39] Scams Scam chains are released with intentionally misleading or false information. Coins we list under this category must have well-documented histories showing intent to deceive, and/or exhibit extraordinary claims with consistent inability to produce evidence justifying such claims. Other coins & blockchain assets may also be scams. This list is not exhaustive.
40] Synthetic Assets Synthetic asset issuance, based on the asset management protocols.
Do we have a better understanding on the definitions of GIM500 Industry and Sector Classification ? Each blockchain issuer can and will be categorized in this way, for instance Ethereum would fall into category of INDUSTRY (infrastructure) SECTOR (smart contract) similar to others like Tron and Aptos. We have classified the entire market universe and provided comprehensive coverage!
Additionally, to show use-cases of this practice, let us now present various sample portfolios categorically, with a set of funds we derived from ICONOMI portfolios which can be better used to visually display data & classification system in practice. The charts below are organized by market capitalization, taking into consideration risk allocation of blockchains aka topolgogy. We are presenting here (8) eight different pie chart allocations along with their respective index classifications per below that graphically showcases this method in action + ticker format.
1 Cryptoken Board World #CBWORLD
2 Cryptoken Board Venture #CBVENTURE
3 Cryptoken Board DeFi #CBDEFI
4 Cryptoken Board NFT #CBNFT
5 Cryptoken Board Dynamic 25 #CBDYNAMIC
6 Cryptoken Board Moderate 25 #CBMODERATE
7 Cryptoken Board Balanced 25 #CBBALANCED
8 Cryptoken Board Conservative 25 #CBCONSERVATIVE
Our goal, and purpose / ethos is to democratize financial information, and make content readily available to everyone! Cryptoken Board UÜ is an advocate for digital assets and hopes to share more information on blockchain best practices, for which reason we’ve decided to publish this study, and share with our community GIM500 topology classification and definitions!
To learn more about our index methodology and the classification system re: both Industry and Sector topology studies, feel free to connect with our team, we would be happy to share our modeling exercises. We hope that this post will inspire others to add formal risk analysis to their products and service offerings respectively. Thank you for taking the time to read this article, and make sure to subscribe to our channel and add notification to stay updated both on Medium and Twitter.
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