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The Tokenomics Due Diligence Framework: What Institutional Investors Actually Analyze
- Token investing success lies in identifying tokens with sustainable value accrual mechanisms before market recognition.
- Institutional investors focus on economic machinery beneath each protocol to understand token value.
- Token value is evaluated through mechanisms like cash flow rights, governance rights, utility rights, and monetary premium.
- A scoring system from 1-10 helps determine the potential returns of tokens based on various factors.
- Institutional investors analyze dynamic supply, revenue qualities, competitive advantages, and cycle patterns.
- Understanding effective circulating supply growth rates and revenue stream qualities is crucial for institutional investments.
- Different moat types like network effects moat and regulatory moat impact sustained token value capture.
- Token markets exhibit distinct cycle patterns necessitating strategic portfolio allocation adjustments.
- Institutional investors should beware of red flags that disqualify tokens from consideration.
- Conducting correlation management, liquidity management, risk management, and research process are vital in token analysis.
- Balancing traditional finance rigor with crypto-native understanding is critical for success in the evolving crypto market.
- Institutions mastering analytical discipline will lead in capturing future crypto opportunities.
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