DAO Community Metrics - Growing the Community
At this point in the crypto adoption cycle, growing the size of the DAO Contributor community as soon as possible is a very important metric. Index Coop claims to have a Community numbering 5,000. Larger communities have more skills, time and insight to bring to bear on their Value Proposition.
PowerPool should establish regular tracking of key metrics of community engagement:
Social Media Followers:
Twitter: https://twitter.com/powerpoolcvp Followers: up from 13,193 to 30,100 (Jan 2022)
Telegram PowerPool Announcements: t.me/powerpoolcvp Followers: up from 3,602 to 4,700 (Jan 2022)
Telegram PowerPool Lounge (price talk): t.me/powerpooltrading Followers 1,020 (Jan 2022)
Medium Followers: Up from 903 to 1,100
PowerPool - Medium
This article is devoted to PowerPool recent developments, results, and future plans for 2021 After the first five months of 2021, we want to take a moment to summarize and reflect on a number of the achievements that we've had thus far.
Notion Wiki Contributors: (need better analytics on viewing, comments & edits)
Forum: #Visits, #Comments, flash polling/voting patterns
Governance: Proposals, Voting participation (xCVP > 1,000)
Website: http://powerpool.finance visits, gated visits, etc.
Product Metrics - Evaluating Product/Market Fit
Understanding the Sharpe Ratio for portfolios
Cryptocurrencies & The Sharpe Ratio
FOMOing in (Fear Of Missing Out) at the top, FUD (Fear Uncertainty Doubt) leading to weak hand selling at the bottom, these are decision driven by our emotions. The Sharpe Ratio looks at the data and tells us what our emotions can't. Risk and return, these two features are found in every market.
Treasury Metrics - DAO Financial Performance
Token Metrics - Fundamentals Tracking
Below is an (optimistic) first cut at how the DAO might source and process metrics for existing and proposed new tokens of interest. It is important to realise that at this stage of the evolution of crypto finance, many existing and newly-launched DeFi sites proliferating on multiple chains and multiple layers will evolve according to a relatively predictable life cycle, especially the cut-paste-copycat DEXes, lending sites, synthetics platforms and derivatives markets. They will (non-fair) launch in a blizzard of shilling and memes, paying unsustainable dilutive rewards and attract only the hottest of hot money as liquidity. They will grow initially, perhaps for a year, but as they throttle back on rewards, or are eclipsed/vampire-forked by yet more startups offering better technology and higher rewards, growth in their token value/market cap will stall, the rewards APY calculation will stagnate and their liquidity providers and market makers will start to drain away. New multi-chain bridges will make this process exceptionally brutal.
There will be gains to be made as listings drive liquidity and token value up, supporting rewards for LPs & Lenders, but even more gains from hedging/shorting when the token price starts to dive, and selling snowballs. The advent of a broad bear market will drive prices of these marginal tokens down disproportionately, making gains on short positions that much bigger, offsetting the effect of broader crypto market falls on the PowerPool DAO Treasury NAV, thereby strengthening the perception of CVP/xCVP as defensive holdings, just like the Swiss Franc.
It shows which protocols are widely used (generate the most fees) relative to their market cap. The natural next step is to look at the revenue share between LPs/supply-side & the protocol.
Of course there will be unicorn exceptions to this pattern, like Sushiswap, the first example of aggressive or ‘vampire’ forking, but the key point to act on is that 80% of these forked copycat protocols will definitely be forked/vampire-attacked by a more engaged community and end up as bloodless zombie sites with little real liquidity/activity - the rewards they offered just a mirage with now minimal token values sustained only by wash trading.
Below is a draft listing of metrics the PowerPool DAO should (eventually) be able to track over the target token/protocol life-cycle by shortlists:
Metrics for Tracking Proposed Additions to Baskets
Tokens proposed and accepted by the DAO for the opportunities shortlist should be tracked with an opportunistic viewpoint, focussing on how broadly-listed and deeply-traded the token is, and how PowerPool might influence listings/liquidity in the token via meta-governance initiatives. For opportunity/red-listed tokens:
- Listings breadth: how are listings/liquidity spreading across all types of Defi?
- No./depth of DEX listings/aggregator feeds
- No./depth of Lending sites by collateral type
- No./depth of Synthetics listings, inverses and long/short limits
- No./depth of Derivatives listings, open interest, upper/lower strikes, etc.
- Evolution of delta trading volumes, holders, price/sales
- MVRV scores
- Percentage locked
Combining all of the above measures, and others TBD, the DAO community can track the progress of opportunistic red-listed tokens and assign weighted scores and continue to track progress over time. Timing is everything. PowerPool should seek to develop a forward-looking predictive analytics approach to detect either acceleration or deceleration in the (projected) rate at which red-listed tokens’ fees/liquidity/real usage are changing versus various dilutions of outstanding and authorised market cap. I'd love to see the linear correlation with "growth" in total revenue, as well as the "margin" of protocol revenue to total revenue. A best-fit P/S formula based on these two simple factors would be super helpful in valuing new projects.
Metrics for Whitelisted tokens in Approved Baskets
Tokens on the whitelist are generally held either within tracking products, where the weights are controlled by a third party, or dynamic-weighted vehicles (including the DAO Treasury) where the DAO is frequently providing ‘nudges’ that influence the fundamentals-driven weights on non-tracking pools. Acceleration/deepening of fees/liquidity/real usage relative to relevant rivals of whitelisted tokens also being tracked can lead to up-weighting by the protocol, together with a xCVP stake-weighted attenuating multiplier (+1 ranging to -1) derived from DAO sentiment flash voting. Deceleration relative to rivals leads to gradual down-weighting and, if continued long enough, as a token weighting approaches zero, a proposal to remove the token from the whitelist (and potentially add it to the greylist) will be tabled to the DAO.
Metrics for Grey-listed hedged/defensive tokens
Tokens on the grey list are managed centrally by the DAO Treasury, using sentiment weighting and the fundamentals-tracking protocol with a defensive and generally pessimistic outlook. With the exception of CVP itself (which is periodically hedged to maintain its defensive ‘Swiss Franc’ positioning, and other defensive but asset-backed plays like wNXM) the xCVP stake-weighted DAO consensus is that grey-listed tokens are likely losers who will struggle to sustain themselves in future, and will be disproportionately punished in market downturns.
Analytics tracking for these tokens includes seeking opportunities to borrow them against authorized native chain collateral (Ethereum/ETH; BSC/BNB; etc.), taking inverse positions on synthetics sites, and pessimistic derivatives positions. Periodic weighting involves re-calibrating not weights but size position limits, up or down subject to DAO sentiment flash voting. Obviously for tokens authorised for borrowing, both fixed rate vs variable rate options need to be evaluated. Variable lending is great for trading and yield farming but when you introduce the ability to borrow and lend at fixed rates for long periods of time, all of a sudden you can do so much more than just trade and speculate, you can short! Fixed rate lender Notional estimates that half of their lending volume are “active DeFi users” pursuing yield farming...and soon shorting!
There will be extensive on-going discussion in the Forums on how to source and analyse more information from derivatives and synthetics sites relevant to hedging/shorting grey-listed tokens. Some metrics potentially of interest for selected tokens would include:
- Open interest - changes in this metric indicate changing sentiment and are useful for timing re-weighting and adjustments of risk limits
- Liquidations - for tokens of interest,
- Addresses holding - this number rising suggests reducing position limits, whereas when number of addresses holding is falling fast borrowing limits might be increased.
- Perpetual funding rates - incentives paid when perpetuals futures (and soon options) prices are above spot, e.g. long holders pay short holders the funding rate).