Digital Currency Analysis Framework

One of the questions we commonly get asked is, how do you decide what to list on your exchange?

We want to avoid giving a criteria at this stage however we have, in conjunction with our advisors and community, come up with an analysis framework that identifies questions we ask when evaluating a new digital currency for listing. You can find the condensed PDF version here: https://digax.com/Digax_DCAF.pdf.

This may be updated at anytime internally and we intend to put out new revisions on a regular basis. You can also find more information on our website here: https://exchange.digax.com/listings.

Blockchain Liability Risk

Network Integrity - What is the integrity of the digital currencies network? This includes elements such as number of nodes, level of decentralisation or centralisation, consensus method(s) & network stability.

Double Spending - Similar to Network Integrity, what is the risk of double spending on the network?

Transparent Supply - Whether or not we are able to verify the current supply on the network?

Reviewed - Has the digital currencies code been extensively reviewed e.g. source code, smart contract code etc?

Blockchain Complexity - Is the blockchain significantly complicated that it could increase it’s attack vectors significantly?

Contentious Distribution - Was the digital currency distributed through a contentious distribution e.g. fork? Does this pose a significantly increased threat?

Past Incidents - Has there been past technical incidents with the digital currency that were negative and unintended?

Governance

Governance - What are the governance structures within the digital currency? Is there mainly centralised management? Is there mainly decentralised and/or community management? What kind of stakeholders are they and what powers do they have?

Principles - What kind of principles do the digital currency stakeholders have? Would they alter the supply or other significant elements?

Communications

Point of Contact - Do we have an easy point of contact for the digital currency within their ecosystem/community?

Communication - Is communication reliable? Responsive to issues with the network.

Contact - Did a governing party of the digital currency contact us for a listing? We prefer governing parties of digital currencies to wait for us to reach out to them.

Legal

Financial Law - Does the digital currency pass financial related legal requirements in jurisdictions we would offer it?

Type of Digital Currency - Following on from financial related legal requirements. What type of classification should the digital currency be given? Is it a native currency and/or store of value, utility token, network access token, a pre-payment, security etc. Has there been an ICO, Token Sale or similar in the digital currencies history or a benefit from distribution?

AML/KYC (CTF) - Are we able to carry out our AML/KYC requirements at a satisfactory level? Does the digital currency have any features, innovations or lack of history that could impede this?

Consumer Law - Are there any legal requirements relating to consumer protection that we would be subject to?

Confidentiality - Does the digital currency have any elements that might pose a risk to keeping the listing intention confidential e.g. the necessity to consult with additional stakeholders?

Use-case - Is the use-case of the digital currency particularly objectionable or focused around illegal activities?

T&C’s Compatibility - Is the digital currency compatible with our T&C’s?

Patents & Trademarks - Does the digital currency or our implementation of it violate any patents or trademarks?

Asset Backed - If the digital currency is asset backed, are there contractual relationships and if so what are they? What are the details of any custodians?

Tax

VAT Related Tax - What is the VAT related tax status of the digital currency across the jurisdictions we would offer it?

Broader Tax Status - What is the broader tax status of the digital currency across the jurisdictions we would offer it?

Reporting - Does the digital currency have any specific reporting standards or outstanding/carried out requests from authorities?

Supply

Supply Economics - What is the current emission rate? Is it inflationary or deflationary? Is it significantly high? Is there a specific purpose for it? Is there a supply cap?

Locked Supply - Is there any locked supply? Is it permanently locked? What is it locked for?

Stakeholders Supply - How much % of supply do key stakeholders own? How much does any team currently or previously critical to the development of the digital currency own?

Illegally Obtained Supply - Does the digital currency have any significantly illegally obtained supply? Has anything been done about it? Does it pose a significant threat to consensus e.g. PoS? Are there features of the digital currency that would significantly hamper our efforts to detect deposits of illegally obtained supply?

Supply Distribution - Is the supply widely distributed? Does it appear to be widely distributed amongst unique parties?

Innovation

Innovation - Is the digital currency particularly innovative? Does it offer features or a purpose which no other digital currency does?

Blockchain or Token - Does the digital currency run on its own blockchain related technology e.g. not an ERC-20 token?

Vision & Growth - What is the vision and growth strategy for the digital currency? Is it scalable? Is there a road-map?

Ecosystem

Community - How big is the community? How active are they? What kind of demographic? Have they actively communicated their desire for a listing?

Exchanges - What other exchanges is the digital currency listed on? Does it have a fiat pairing?

Utility - What is the digital currencies purpose? What is it mostly used for? What is the potential for its utility? Does it suit it well?

Geographic Distribution - How well is the digital currency distributed? Is its use-case or stakeholders concentrated to one geographical region?

Funding - Does the digital currency have any kind of capital reserve? How well is it being managed?

Alignment - How well aligned are key stakeholders with other stakeholders desires?

Software/Hardware - What kind of software has the digital currency released? What kind of software/hardware is the digital currency compatible with?

Artificially Inflated - Does it appear that any elements of the digital currency have been artificially inflated?

History & Significance - How long has the digital currency been around? Is there any significance to it?

Transparency/Accuracy - Is the digital currency open source and transparent? Are resources relating to it open source and transparent? If the digital currency had an ICO, Token Sale or similar was it transparent and the information accurate?

Core Team

Experience - What is their experience?

Technical Experience - What is their technical experience?

Number - How many team members are there?

Accountability - Is the core team anonymous?

Financials

Market Capitalization - What is the market capitalization of the digital currency?

Volatility - Does the digital currency have a history of volatility or is it likely to be volatile?

Trading Volume - What is the historic trading volume?

ICO/Token Sale - If there was an ICO/Token Sale or similar how much did it raise? How steep was the bonus structure? How much has it increased or decreased since?

Liquidity - If the digital currency is listed at other exchanges, what is the liquidity like? Are there active market makers?

Transaction Fees - What are the current transaction fees and structure?

Technical

Software - Is the digital currencies software sufficient for enterprise use?

Compatibility - Is the digital currencies software, network and cryptography compatible with our systems and policies?

Functionality - Is there a functional product/service to use the digital currency with?

Digax Stakeholders

Internal Demand - Is there demand from pre-existing Digax stakeholders e.g. customers?

Fork/Snapshot/Airdrop - Was part of the digital currencies distribution a fork, snapshot, airdrop or similar related to any digital asset we already list/hold?

Suitability - Do we think the digital currency would be suitable for pre-existing Digax stakeholders?

External Stakeholders

External Demand - Is there demand from external Digax stakeholders?

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