What is RDA Index?

RDA Index is an intrinsic value rating system for cryptoassets.

Motivation

In the decade since the inception of the Bitcoin blockchain, value has begun migrating at an accelerating rate from legacy assets and commodities like bullion, energy and fiat currencies into innovative classes of digital assets such as cryptocurrencies and tokens. The reasons for this transfer of value from traditional assets into digital assets reflect shifting political and economic global trends, technological transformations, and the many advantages and diverse use-cases offered by distributed ledger technologies, to solve a wide range of the world’s problems.

The growth remains highly non-linear however:

As at January 2018, over £500 billion had migrated from traditional asset class such as commodities and stocks into cryptocurrencies. By April 2018, the market fell to £180 billion creating panic for investors. Such rapid flow of capital into and out of cryptocurrencies, coupled with a lack of regulatory framework to evaluate and discriminate between cryptocurrencies, has left many analysts and investors doubting their very authenticity as a real (digital) asset class. With increasing volatility, investors seek clarity beyond market-capitalisation weightings and price series. Despite the emergence of derivatives markets and secondary products, the price fluctuations of recent years and the bear market persisting through 2018 and into the first half of 2019, has demonstrated the risks involved in predicting the behaviour of innovative asset classes using tools developed for traditional assets.

For this reason, we created the Real Digital Asset Index.


Real Digital Asset Index

Behaviours consistent with speculation and long-term investment still account for the vast majority of crypto-asset usage. Without any significant change in their underlying fundamentals (e.g. technology, team, computational infrastructure, utility, etc) crypto-assets such as Bitcoin have ranged from £0.00 to £10,000 within a space of 8 years. Such unprecedently increase in the “dollar” value of an asset without a preceding change in its fundamental reliability as a store of value has raised questions about the speculative value of crypto-assets.

As an alternative to the speculative valuation approach, the Real Digital Asset Index (RDAi) use attribute-weightings to clarify which cryptocurrencies are a reliable store of value and possess intrinsic value.

In a market capitalisation-weighted index, changes in the market value of larger cryptocurrencies move the index’s overall trajectory. In RDA Index, changes in market value of larger cryptocurrencies do not move the index’s overall trajectory. Rather, as a cryptocurrency acquires RDA attributes, the overall RDA Index Level appreciates.


Real Digital Asset Attributes

RDA Attributes give intrinsic value to crypto-assets. RDA Attribute is a quality that defines the reliability of a crypto-asset to store value and to possess intrinsic value. RDA attributes are found more in some crypto-assets than in others which enable those assets to attract and retain value. The more a crypto-asset is characterised by RDA Attributes the higher their intrinsic value. In the RDA Index system, the following four groups of RDA Attributes determine the intrinsic value of crypto-assets.

Business Ecosystem Stability (ES): This is a component representing resilience and the capability to maintain a stable state of socio-economic equilibrium that keeps the project alive and sustainable. This attribute reflects the value brought to the token by the strength of the team, suppliers, investors, partners, customers and the influence of competitors and regulators.

Digital Utility (DU): Much of the speculation around the value of digital assets stems from their promise as investment vehicles, and this area is subject to intense regulatory scrutiny from securities agencies. However, for other tokens, at least a proportion of their value is intrinsic to their actual use case within a payment or software application ecosystem. A pure utility token may still rise in value if the ecosystem for which it is developed undergoes growth and demand increases, however this attribute examines the extent to which the token has inherent value due to its use-case.

Technology Efficiency (TE): All cryptocurrencies may be regarded as innovative technologies, however with a 10 year history now to draw upon, different technologies may be regarded as having distinguishable track records of effectiveness. As a range of different consensus mechanisms and mainnets proliferate at this time, our algorithms compare a diverse range of indicators to yield evaluations of how efficient and secure are the specific technologies in use.

Market Sentiments (MS): In an era when hype has had far too much influence on pricing, RDA Index is keen to ensure sentiment is viewed with the appropriate lenses as another important factor alongside the core RDA attributes above. The role of sentiment on price cannot be downplayed particularly in smaller marketcap coins. The credibility of influencers varies considerably in terms of their long-term predictive relevance, and our algorithms distinguish between their speculative impact on asset value vs. their endorsement of asset's intrinsic worth. Hence, RDAi tracks the market sentiments related to Business Ecosystem Stability, Digital Utility, and Technology Efficiency of each asset in scope.


Modelling Crypto-assets Intrinsic Value

Intrinsic Value is a complex concept, wherein the worth of an object is derived independent of extraneous economic factors. Intrinsic value can be assigned to a crypto-asset if it is reliable in and of itself as a store of value. To model the intrinsic value of an extant crypto-asset, A, we specify a mapping (ES, DU, TE, MS) → ℝ that quantifies the intrinsic value of the asset as a function of its attributes. For our purpose ℝ is restricted to a range between 0 to 1.

A measure of the intrinsic value of crypto-asset, A, is hence defined by the RDA score function r( ), where

| r'( ) is a scoring function for the RDA Attributes (ES, DU, TE, MS) constituted within A.


RDA Index, So what?

The RDAi is a next generation cryptocurrency analytical tool that enables reliable ranking of cryptocurrency in intrinsic value order.
Simplification: RDAi organises complex and unstructured data into a reliable, investible and easy-to use-data set.
Knowledge: Fast and reliable identification of cryptocurrencies with intrinsic value. Check RDAi before you accept a crypto payment!
Objective Asset Price: Beat market-hype and speculation, RDAi derives the objective price of every cryptocurrency.
Risk Management: RDAi limits investor exposure to macro-economic risks such as inflation, regulatory uncertainty and interest rates.
RDA Exchange Rates: The first non-fiat cryptocurrency intrinsic value exchange system: Know how much a cryptocurrency intrinsically exchanges for another cryptocurrency.
Regulatory Certainty: RDAi is the future go-to reference for cryptocurrency regulators.

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