Cryptocurrency Rankings, a Guide
With the increase in popularity and the rate at which cryptocurrency is now viewed as an asset class, many people believe that cryptocurrency is capable of being a safe haven in this time where the economy of many nations are in serious recession.
According to Coinmarketcap, there are over 5000 crypto-assets in existence. As the crypto industry evolves at a rapid pace, some cryptocurrency assets stand out from the many other crypto assets.
This article will leverage on Coinmarketcap and DeFi-Pulse indexes to categorise these crypto assets at the time of publishing, and give some insight as to how you can use both platforms to see which assets are performing well.
First, let’s take a brief introduction of these two platforms.
CoinMarketCap is an extremely popular price-tracking website for crypto assets. It empowers crypto assets retail users by providing high quality, accurate and impartial information.
Since it’s launch in May, 2017 by Brandon Chez, CoinMarketCap has grown to be one of the most trusted crypto assets price-tracking site recommended by individual users, institutions, and even government agencies for price comparisons across the thousands of available cryptocurrencies.
Binance acquired CoinMarketCap in April 2020. This acquisition hasn’t changed Coinmarketcap policies but rather, the price tracking site remains independent of it’s mother company but taps into its parent company’s extensive resources to acquire more in-depth data of projects.
DeFi Pulse is the world’s leading resource for decentralized Finance (DeFi) related data. It is a site where the latest analysis and rankings of decentralized finance protocols are readily available.
DeFi Pulse is to DeFi what CoinMarketCap is to crypto assets in terms of rankings and other important information.
DeFi Pulse was an idea nurtured by Concourse in December 2018 but was turned into a reality in February 2019.
Concourse is an open community of builders, enthusiasts and researchers working towards a decentralized future. This community was founded by Scott Lewis and Roni Davelman.
How Crypto assets are Ranked on Coinmarketcap
The major metric CoinMarketCap uses to classify crypto assets is market capitalization (Market Cap).
These indices help CoinMarketCap to ascertain a standard value of a crypto asset. On this platform, cryptocurrencies are ranked according to their market capitalization in a descending order.
CoinMarketCap also uses metrics like top gainers and top losers to place these crypto assets into different classes. We will explore both.
How to calculate Market Capitlization for an asset
The market capitalization of a crypto asset is a product of its circulating supply and the unit price of that crypto asset.
Mathematically, we can define Market Capitalization as follows:
Market Capitalization = circulating supply of a coin x unit price of that coin.
For example, assuming a coin named A has a circulating supply of 5,000,000 and the unit price if that coin is $1.5, the market capitalization can be calculated by using our formula above.
Market Cap = circulating supply x unit price.
Therefore, Market Capitalization of coin A = 5,000,000 x 1.5. This means that coin A has a market capitalization of $7,500,000.
Large Cap vs. Small Cap
Based on market capitalization, cryptocurrencies are classified into three groups known as large cap, mid cap and small cap.
Large cap crypto assets are those assets with huge market capitalization. Assets under this category do not suffer liquidity problem unlike what can happen with small cap crypto assets.
What’s the big deal about Market Capitalization?
Market capitalization helps an investor to consider how much risk is involved in investing in a particular crypto asset. Coins with large market capitalization can be seen as less risky than those with low market cap.
Also, market capitalization gives a clearer picture about the growth potential of a crypto asset. Cryptocurrencies with low market cap have more tendency to grow than those with large market cap.
CoinMarketCap Ranking based on Top Gainers and Top Losers
Another measurement system CoinMarketCap uses to classify cryptocurrencies are top gainers and top losers.
These metrics are used to rank cryptocurrencies according to their unit price performances within a particular time interval - hourly, daily or weekly. The top gainers are those that appreciated in unit price within a specified time while the top losers are those where the unit price dropped within a specified time interval.
How DeFi Pulse Ranks DeFi Assets
DeFi Pulse uses a metric know as Total Value Locked (TVL) to determine which asset and platforms are leaders in decentralized finance ecosystem.
Total Value Locked (TVL) stands for the dollar value of the tokens locked in the smart contract of a given decentralized lending project.
DeFi Pulse multiplies all the actual assets locked in smart contracts by the dollar value that asset could sell for in the spot market.
On the platform, they have different categories of DeFi assets such as top lending projects, top decentralized exchanges, top derivatives platform, top payment platform and top assets.
Top DeFi Lending Platforms
DeFi lending platform offers investors and lenders the platform to issue a loan or deposit fiat for an interest through distributed systems and the kind of decentralized applications you can access with your Trust Wallet.
Below are the top lending platforms recognized by DeFi Pulse.
Top Decentralized Exchanges (DEXes)
Decentralized exchanges offer all the services available on centralized exchanges but without a central controlling organization. Often times DEXes are running on a blockchain protocol that is then accessed by specific DApps and front end platforms.
There are many DEXes available so far but some of them stand out. Below are the top DEXes according to DeFi Pulse.
Top Derivatives Platform
Derivatives platforms allow users to trade assets whose value is derived from a different underlying asset. The top Derivatives platforms according to DeFi Pulse are listed below.
Top Payment Platforms
DeFi **Payment Platforms and protocols create open financial ecosystem that serve the financial needs of institutions, the underbanked and unbanked populations.
Top DeFi Assets
DeFi assets have gained much attention this year and there are a lot of these assets available. Below are the top DeFi assets by DeFi Pulse.