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Token Daily for February 26


"'Pierre Rochard, a name best left for a chocolate treat' is still by far my favorite comment of this bear market cycle."

- Satoshi Island.

In response, Pierre has dubbed Ferrero Rocher the official chocolate of bitcoin carnivores.




🔍 Bitcoin Valuation Models
     by Mohamed Fouda 

Last week, Tuur Demeester and a couple of other folks in the space published an article on two new approaches to valuing Bitcoin and measuring hodling behavior. Specifically, the article introduces the following:


Unrealized P/L ratio and
 the Hodler position change. Two new models (in a collection of models) paving the road towards Correctly Valuing Bitcoin™. Ah, the eternal question:  “How does one correctly value Bitcoin?” As Tuur points out, there have been a lot of proposals

One thing both Tuur's models and previous models (like NVT and MVRV) have in common is they utilize elements of the Bitcoin blockchain activity - daily active addresses or the aggregate value of transacted coins within a block - to identify price bubbles or infer the fair value of a single bitcoin. Yes, blockchain data is the best available source of information. No, you can't depend on blockchain data alone to derive meaningful valuation models. For a couple of reasons. Blockchain data doesn’t directly capture a lot of important activity that happens within liquidity pools (read: exchanges). Plus, many types of blockchain transactions represent activities that are irrelevant to the valuation model. Like, say, when a user moves bitcoin from one exchange to another or when coins are moved between wallets belonging to the same entity (like Coinbase does here).

It's not hard to see how blockchain-data-based valuation models are unreliable at worst and not very useful at best. Can these models actually be used to execute trades or build positions today? Dubious. Before these models can be used as reliable indicators, blockchain data hygiene and analysis need to improve.

For starters, blockchain analysis should distinguish between address clusters that belong to exchanges and remove irrelevant transaction types that affect the validity of the valuation model. Admittedly, this analysis is pretty difficult - blockchain analysis companies will eventually have a better edge at synthesizing reliable data for such uses. And, of course, companies in the space will compete to acquire these services for a more competitive advantage. As we've already seen with Coinbase’s controversial acquisition of Neutrino. Ultimately, though, expect to see all major funds - particularly hedge funds - to use similar services.




🗞For today's trending headlines head on over here


One of the most important themes from Storecoin's governance peer review has to do with when governance becomes important for a protocol to address. This week, Storecoin is sharing with the Token Daily community why governance must start to be articulated from day one. Protocols that leave governance for later can face power creep, inefficiency, loss of credibility, and community fracture. Read more here.

To view previous essays from Storecoin's governance peer review process, including the importance of checks-and-balances, reimagining property, rights 
and enforcement, and how the team's organized a separation of powers, visit For those who'd like to get more involved, sign up and join the peer review email mailing list of 70+. 


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