Token Reputation Index Report: Why do the coins you buy keep falling?

As the overall crypto market declines, the prices of some tokens fell by 80%-90% from their highest point. bitsCrunch has established an evaluation system for 2 million tokens in the market based on the different weights of 16 specific indicators through AI algorithms, as an important tool for measuring project credibility and market health.

Through the analysis of the latest data, we found that the reputation score of modern coins presents a significant pyramid structure, with the vast majority of tokens concentrated in the "Average" and "Fair" ranges, while high-rating tokens are extremely scarce. This phenomenon not only reflects the high market differentiation, but also reveals the deep differences in token quality of different public chains. This article will discuss the driving factors behind reputation scores and future market development.

Token Reputation Index: There are only 14 excellent rating tokens

Data source: bitsCrunch.com

Judging from the overall data, most of the tokens are still published on Ethereum. According to bitsCrunch data, the number of token addresses issued on Ethereum accounts for 54.56% of the total count, far exceeding Polygon (451,349, accounting for 21.88%) and the third-place Base (336,616, accounting for 16.32%). Avalanche (120,587, 5.85%) and Linea (28,264, 1.37%) were relatively short.

Data source: bitsCrunch.com

It can be seen from the token reputation score table that the overall data trend takes on a pyramid shape. From the perspective of reputation ratings, the vast majority of tokens hover in the two low- and medium-level rating segments of "Average" and "Fair". Of all tokens published on Ethereum, about 116,347 are at the average level and 573,739 are at the worse level. Among the excellent and good ratings, the number of tokens for each blockchain platform is extremely limited. Ethereum has 7 tokens that have achieved excellent ratings and 310 tokens that have achieved good ratings.

Polygon and Base ranked second and third in total tokens respectively. Taking Polygon as an example, 5 of its 450,000 tokens were rated as "Excellent", while the "Fair" and "Terrible" range tokens account for as high as 96.7%. Among the 336,000 tokens in the Base chain, the "Fair" range accounts for 75.6% (254,482), and the "Average" range has 67 tokens.

It is worth noting that although the total amount of Avalanche tokens is only 10.7% (120,587) of Ethereum, its tokens account for 4.03% in the "Average" range (4,865), significantly higher than Ethereum's 0.34% (116,347).

The Ethereum ecosystem has attracted a large number of projects to influx, but it has also led to a serious "long-tail effect" - a few high-quality projects coexist with massive low-quality tokens. In contrast, emerging chains such as Polygon and Avalanche perform well in the "Average" range.

Reputation score impact factor: common defects of low-scoring tokens

The token reputation index is composed of multiple dimensions, including 16 influencing factors such as token issuance time, liquidity pool size, and coin holders distribution. By comparing the token characteristics of high and low rating intervals, we can find that the following problems exist in low rating tokens:

1. Insufficient liquidity and low market participation

The liquidity pool size and liquidity participants' ratings of low-score tokens are generally low. For example, the median size of the token liquidity pool in the "Fair" range on the Ethereum chain is only 1/5 of the high-rated tokens, and the number of participants is low. Inadequate liquidity directly leads to severe fluctuations in token prices, further weakening market confidence.

2. The concentration of coin holders is too high

The distribution of coin holders is the core indicator to measure the degree of decentralization of tokens. Data shows that the average share of the top 10 coin holders of Ethereum's "Terrible" range tokens far exceeds that of tokens under the "Excellent" rating. A highly concentrated currency holding structure can easily cause market manipulation risks, which is also one of the main reasons why low-score tokens are avoided by investors.

3. Inadequate transaction activity and profitability

In the trading dimension, the volume ratings and profitable trader ratings of low-score tokens are significantly behind. High-rated tokens attract more long-term investors through stable trading volume and positive earnings expectations.

Market share and ecological strategy

The correlation between token number and reputation scores reveals the differences in ecological strategies of different blockchain platforms. As one of the most mature blockchains, Ethereum has ecological advantages and defects coexist. On the one hand, Ethereum has become the preferred platform for token issuance with its perfect development tools, huge user base and rich DeFi infrastructure; on the other hand, its high Gas fees and network congestion problems have forced many projects to turn to low-cost chains (such as Polygon and Base), but these chains still need to strengthen their liquidity depth and user stickiness.

In contrast, the Polygon and Base ecosystems are also expanding rapidly. Taking Base Chain as an example, its total token volume is close to three times that of Avalanche, but many projects in the ecosystem are still in their early stages. Avalanche and Linea are also attracting specific projects through technical differentiation, but they are still limited by the user base.

in conclusion

Since the last bull market, the number of tokens has increased exponentially. The current token market is showing obvious polarization. In the future, as supervision becomes stricter and investors are specialized, the token reputation index may also be the core tool for screening high-quality assets -only those projects that develop balancedly in dimensions such as liquidity, currency holders distribution, and transaction sustainability can become the "MAG-7" in the crypto field and take the lead in the next stage of market reshuffle. **
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