The Importance of Community to Crypto Currency Valuation
New model shows how community activity drives value
Our partners at Concitor recently published a blog describing a model they built to determine which factors drive crypto valuation. They determined crypto value was not driven by speculation but by four key variables — Community, Opportunity, Liquidity and Capability
We didn’t find these results all that surprising because every project we talk to with tells us how important their community is for their success.
In the blog, Concitor states:
The crypto movement builds on a basic premise of the platform revolution: that by empowering individuals to create value, not just consume it, the whole network thrives. In a tokenized ecosystem, however, the community not only is responsible for delivering a service, it also helps build the technology, communicate the project’s vision and govern its future. The success and vibrance of that community is absolutely essential to the success of a project — and based on our model, the strength of project’s community is also closely aligned to its valuation.
In the blog post, Concitor points out three challenges with managing community efforts including:
- Scale: The first deals with the sheer scale of the challenge: a year old crypto project has to manage a community of investors that rivals some decades old corporations. Most have no structured communication strategy and spend their time playing whack-a-mole on social media trying to address questions across Telegram, Reddit, Twitter and more.
- Identity: The second issues stems from one of the selling points of the blockchain: identity isn’t need to establish trust. That anonymity however creates challenges for tokenized projects, which have no ability to identify the most important members in their community.
- Incentives: Third, most projects lack the ability to activate their community through clear incentivization plans, often relying on pro bono volunteers to manage their Sub-Reddits and answer critical questions about their offering.
As community is so critical for the success of projects, platforms like OmniSparx are being developed to help address these issues and make it easier to build and grow community.
Authenticated and incentivized collaboration tools to help crypto communities communicate and grow. Omnisparx. Learn more at omnisparx.io.