In 2015, Ethereum pioneered a new era of blockchain: the token (token) era.
Broadly speaking, "token" represents a utility or an asset that is usually issued on an existing blockchain. In contrast, “coin” is a cryptographic asset that is a native asset of a blockchain, primarily used as a currency ("coin" and "token" are sometimes used interchangeably, but we are This article still distinguishes them). For example, BTC and ETH are "coin", while MKR and BAT are "token".
The concept of crypto tokens existed before Ethereum. For example, a colored coin can use BTC to tokenize certain targets without issuing new assets. This can be done by "staining" by using
OP_RETURN mark a specific currency.
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Ethereum has introduced a new, more user-friendly way to create tokens. Ethereum uses a simple smart contract that allows anyone to easily launch their own tokens for anything.
Soon, there are thousands of tokens on the Ethereum platform. The proliferation of tokens makes token standardization more and more important (ensuring that tokens can be exchanged). The ERC-20 implements a standard interface that makes it easy to exchange any ERC-20 tokens and integrate ERC-20 into cryptocurrency and decentralized applications (dapp). At the beginning of 2018, ERC-721 was also adopted as the official token standard, which is specifically used to represent unique and irreplaceable digital scarce tokens (for example, CryptoKitty or uniquely encrypted artwork).
Since then, the pace of change in the Ethereum token has been accelerating. In this article, we will explore the evolution of Ethereum tokens and see where they might go.
I. Comparison of network value and token value (NVTV)
One way to evaluate tokens is to look at the market value of the smart contract platform's native assets (ie, ETH) and then compare it to the total market value of the tokens issued on that platform. We call this ratio the “network value and token value” (NVTV) ratio, a concept proposed by Chris Burniske .
In this case, we calculate the ratio by dividing the market value of ETH by the total market value of the selected maximum ERC-20. Although thousands of other tokens have been introduced on Ethereum, the selected tokens account for the vast majority of the total market value of ERC-20 tokens.
The full list of tokens we use can be found in the footnote below.
Through observation, we can find that the NVTV ratio of Ethereum has been steadily decreasing. On April 1, 2019, the NVTV ratio of Ethereum hit a record low of 1.57. As of November 10, this ratio has rebounded to 1.90. ERC-20 assets: ant, bat, bnb, cennz, ctxc, cvc, dai, fun, gnt, gusd, ht, icn, knc, leou eth, link, animal, gno, lrc, mana, mkr, omg, pax, Pay, powr, ppt, qash, rep, salt, srn, tusd, usdc, usdt
The realized market value (Realized cap) tells a similar story. Realized cap is a cryptographic currency metric created by Coin Metrics that is calculated by estimating each supply unit at the price of the last move. This measure is in stark contrast to traditional market capitalization estimates. We can approximate the measure that the realized market value is the average cost basis.
The realized market value version of Ethereum NVTV is also steadily declining and is currently at an all-time low of 2.57. The declining NVTV ratio indicates that tokens have consistently surpassed ETH in valuation.
Since the middle of 2018, most of the increase in the market value of tokens has come from a specific subset of ERC-20 tokens: stable coins .
The figure below shows the market capitalization share of utility tokens, trading tokens, and stable tokens. We use a simple advanced taxonomy to classify tokens, but we can also use other groupings and taxonomies/
- “utility tokens” are a subset of tokens that are usually issued during the ICO boom period as a way to raise funds and make payments, access specific services or functions in the project ecosystem or The way to participate in a specific event, such as voting.
- "Exchange token" is a subset of utility tokens created by cryptocurrency exchanges (eg, BNB for currency security). Exchange tokens are often used to raise funds for exchanges and provide functions such as discounts on transaction fees.
- “Stable currency” refers to the type of token that is anchored with the value of its token and another asset (usually the legal currency such as the US dollar). Currently, Tether is the largest stable currency in the industry, and other stable coins built on the Ethereum platform include DAI, USDC, PAX and TUSD.
Although the exchange tokens made progress in early 2019, BNB switched its ERC-20 tokens to the currency chain version in April, which led to a sharp fall in the market value of the Ethereum exchange.
On July 1, 2018, the total market value of the Ethereum utility token was $7.52 billion, while the market value of the exchange token was $2.98 billion and the stable currency was $109 million.
As of November 10, 2019, the total market value of the Ethereum utility token was $5.19 billion, the market value of the exchange token was $2.55 billion, and the market value of the stable currency was $3 billion.
The chart below shows the percentage of the market value of the three token categories. A full list of assets for each category is listed in the footnote.
Utility tokens: ant, bat, cennz, ctxc, cvc, fun, link, loom, gno, gnt, icn, lrc, mana, mkr, omg, pay, poly, powr, ppt, qash, rep, salt, sr, Wtc, zrx;
Stabilizing coins: dai, gusd, tusd, usdc, pax, usdt_eth;
Exchange tokens: bnb, ht, knc, leo_eth;
In addition, most of the increase in stable market value comes from a specific stable currency: Tether (USDT);
As we mentioned in our previous Network Status Report, Tether exists in several different protocols. The two largest protocols currently are the Omni protocol (built on top of Bitcoin) and the Ethereum protocol. In the past few months, a large number of USDT based on the Omni version has been transferred to the version based on Ethereum.
Second, the total number of token transactions exceeds the ETH transaction count
Historically, the Ethereum total token transaction count has been lower than the Ethereum non-monetary transaction count (ie total transaction count minus ERC-20 and ERC-721 transaction counts, mainly consisting of simple ETH transmissions). However, since May 2019, the number of token transactions has successfully surpassed the number of non-monetary transactions. As of November 10, the daily trading volume of ERC-20 is about 303,000, and the daily trading volume of ETH is about 290,000.
The table below shows the transaction counts for ERC-20 (red line), ERC-721 (green line), and non-monetary transactions (blue line) using a 7-day rolling average.
The rapid increase in the number of ERC-20 transactions is also attributed to the USDT. The table below shows the market share of the 10 ERC-20 tokens with the highest daily trading volume (the past 30-day average) during the 2019 period. Among them, USDT began to take the lead in May, and it currently accounts for more than 80% of the top 10 token transactions.
Third, ERC-721 may be on the verge of extinction
Although ERC-20 has been the main token type of Ethereum so far, we can see that the growth rate of ERC-721 token is very fast.
As of the end of October, the ERC-721 transmission count has exceeded the transmission count of ERC-20 and ETH at the same time. Previously, at the end of 2017, the transmission count of the ERP-721 reached its peak in the craze of the CryptoKitty, and in November, the transmission count of the ERC-721 exceeded the peak of the CryptoKitty transmission count.
Since each token of ERC-721 represents a unique token, many tokens are usually bundled together and transmitted as part of a single transaction. The following table shows the transmission counts for ERC-20 (red line), ERC-721 (green line), and ETH transmission (blue line) using a 7-day rolling average.
The peak transmission of the ERC-721 token is related to a card game called "Gods Unchained", a card game built on the Ethereum blockchain, which was blasted by a protest. The World Card was also sold at a price of 33,333 ETH, equivalent to $6.2 million.
Although there are currently only about 4,600 ERC-721 contracts, compared to 184,000 for ERC-20 contracts (more than 12 million for non-monetary contracts), the ERC-721 contract has been growing rapidly during 2019. .
Since January 1, the number of ERC-721 contracts deployed on the Ethereum platform has increased by nearly 350%, while ERC-20 contracts and non-monetary contracts have increased by approximately 39% and 36%, respectively.
In addition, the overall use of Ethereum smart contracts is growing, and related contract calls have been steadily rising, and recently hit a record high. With the continued growth and development of the Ethereum smart contract economy, tokens will likely become an increasingly important part of the Ethereum ecosystem.
The figure below shows the Ethereum contract call count (using a 7-day moving average for smoothing).
The Ethereum tokens have undergone tremendous changes during their short life cycle. There is no doubt that they will undergo rapid changes. We will continue to monitor Ethereum's NVTV, Stabilization Coin and ERC-721 to view the platform. The development trend.