The accelerated growth and Bullish trends in Crypto along with the introduction of Defi protocols, has highlighted an urgent need for investors to seek out reliable ratings of the securities they are investing in.
Savvy crypto traders and investors recognise their success in financial markets is highly dependent on accurate sources of information that remain impartial to hype and detached from inherent bias.
Since the 2008 Great Recession which was caused by a failure of financial ratings, the system has been held to account and forced to evolve.
As Bitcoin and 6,000+ cryptocurrencies continue to evolve at speed a decentralized and unbiased ratings system is needed to help cryptocurrency investors reliably navigate the $300+ billion market. This is where UK based company Evai.io has identified an opportunity to ensure the crypto market avoids the same trap as the traditional financial sector.
CRYPTO INVESTMENT RATING – THE 2008 FINANCIAL CRISIS
Much like how the coronavirus-led economic struggles of 2020 have shone a light on cryptocurrency utility, the subprime mortgage crisis of 2008, highlighted the need for appropriate rating systems.
One of the central catalysts for the crisis arose within rating agencies who dolled up risky assets, such as debt obligations (CDOs) as AAA-rated securities without looking at the constituent assets. The Big Short—a book-turned blockbuster movie cataloguing the events of the subprime mortgage crisis describes the models underpinning the rating agencies as “ripe for exploitation,” and exploited they were.
The lack of investor knowledge, coupled with blind faith for an inaccurate and biased rating system, practically brought the financial system to its knees. Arguably, the crisis could have been mitigated if an accurate, trustworthy rating system had been in place.
Nevertheless, not much has changed. While the rating agencies attempt to win back favour and repute, the world remains in need of a rating methodology that is fit for purpose, unbiased and decentralized.
WHY RELIABLE CRYPTO RATINGS ARE NEEDED
Until now, the cryptocurrency industry had not matured and investors were left to their own judgments when it came to deciding whether to make an investment in a particular crypto security. This often led to a “herd mentality” where investors flocked into a particular investment just because other investors were there. Little or no caution was paid on whether an investment was viable or not. FOMO dominated the game.
Also, investors would try to identify where notable “big money” firms had invested in certain tokens before putting their money down and this could be forgiven in the early days. The industry has now matured and there is a need for credible crypto investment rating platforms that can give unbiased opinion and ratings on the various tokens in the marketplace.
TOP FIVE CHALLENGES INVESTORS FACE IN THE MARKET
FOMO
FOMO, or Fear Of Missing Out, has become the bane of many crypto investors’ existence and is one we can all relate to scrolling through our social media feeds.
Cryptocurrency FOMO is a serious issue in the community, and if you suffer from it, it can lead to bad investments or trades. Investing should never really be an emotional act and that’s where AI and machine learning backed systems really come into their own.
DIVERSIFICATION OF CRYPTO ASSETS
The success or downfall of your cryptocurrency portfolio may be hinged on your diversification strategy. But the question is what assets should you hold along with BTC and ETH.
With over 6,000 different options in the space; a problem most investors have is how to choose the best assets and which categories to include from Passive income earners, mid-cap coins and possibly stable assets. So, depending on your Risk tolerance level using Evai’s rating platform you will soon be able to assess quickly which projects fit your profile and perform further analysis in order to make informed decisions.
WHEN TO TAKE CRYPTO PROFITS
It’s so easy to get over excited about a cryptocurrency you invested in.
There is a very familiar feeling for many investors in the space when the price of a particular crypto pumps high and the greed feeling takes over while your dream of paying off the mortgage seems to be in reach, so you hold longer than your gut feeling tells you too then the next morning the price has dumped to lower lows.
Being able to analyse the liquidity of a coin can help in determining if the asset is currently still being bought and can help investors understand when to buy and sell assets.
SUSTAINABILITY
One of the biggest problems in the crypto space is projects that seemingly have a major following that look like they are developing and building a great business until it suddenly disappears and is never heard of again leaving investors with tokens or coins which are not worthless.
Evai’s rating system will analyse the long term suitability of projects and highlight to investors the potential risk level from AAA to C. These metrics can be used by investors to make informed decisions on whether or not they add particular cryptos into their portfolio.
CRYPTO SCAMS
Whether you are a long term crypto believer or just a crypto investor I think everyone can agree that when there is an investment frenzy or an exploding industry it can attract unscrupulous individuals to prey on investor greed. Avoiding some of these very intricate and elaborate scams can be very difficult but with reliable ratings it’s possible to reduce this risk substantially.
DISRUPTING THE CRYPTO RATINGS SECTOR
Established in May 2019, UK based company Evai.io has been pioneering its innovative digital currency ratings system called ‘The Bridge’ and building an experienced team of academic and financial services experts. The new platform revolves around the breakthrough academic theory of Professor Andros Gregoriou from the University of Brighton, which takes into account his 6-factor rating mechanism and combines it with AI and machine learning to generate unbiased and accurate crypto investment ratings
Founded by Matthew Dixon, Evai.io came into existence after he witnessed as well as lived through several major financial crises. In particular, Dixon looked back at the crisis of 2008 and realized that one of the major reasons behind the crisis was the massive failure of the ratings system. The prime example being Lehman Brothers who were rated AAA and ended up going bust. As a result, he became deeply interested in financial rating systems and how fundamental they are to the success of the financial sector. Following this, Dixon began expanding his knowledge of cryptocurrency and realized how dependent investors in the cryptocurrency sector are on sentiment and emotions fuelled by market hype and bias.
The inspiration to learn from the financial sector’s past mistakes and utilise latest academic research led to the creation of the Evai platform, where investors will shortly be able to seek clarity on crypto investment ratings. Currently, the market lacks an independent and decentralized rating system, which means there is a huge market ahead for the Evai platform and ERC20 token.
CRYPTO INVESTMENT RATING – HOW DOES EVAI DIFFERENTIATE ITSELF?
As far as Evai is concerned, the platform looks to combine a governance method with a self-rectifying protocol for managing ratings modifications and functions on the Turing smart contracts. There’s no denying the fact that most of the issues related to ratings in the past were a direct result of the centralized rating structures that led to bias. But, Evai aims to decentralize this rating system by using a unique consensus protocol that further helps to upgrade, as well as modify the rating procedure. Following its launch on the ZBX crypto exchange on July 15, the ERC20 token has already received an overwhelming response from the market.
Evai’s presale response was impressive as the company sold its first tranche much earlier than anticipated. The second tranche, valued at $0.07 was sold out within three days and there have been two subsequent sellout rounds that saw the token value rise to $0.21 with room to grow further before its listing(s).
Investors who came in early saw a jump from just $0.0025 recorded in November (2019), and have been rewarded accordingly. The company is now looking to list Evai on several exchanges from early December 2020 and into 2021 as their development team fine tunes the ratings platform.
One of the reasons why Evai decided to associate with the ZBX exchange was due to its reach and presence in the Chinese market. Evai’s registrations on ZBX are up nearly 300% since the announcement of its pre-sale of tokens on the exchange. Thus, the company has already managed to create ripples in the market, as people are realizing that Evai’s platform is much needed for making sound investments.
HOW WILL EVAI RATINGS EVALUATE CRYPTOCURRENCIES?
If you are truly interested in investing in the Evai (ERC20) token, then you must understand how the company plans to be a genuine disruptor in the global ratings market. The Evai.io platform will offer unbiased crypto investment ratings via its platform dubbed the ‘The Bridge’. This system generates ratings on the basis of 6 major criteria, which are further underpinned by AI and machine learning to evolve and optimise the crypto investment ratings platform.
LIQUIDITY
One of the most important criteria for investing in any financial asset is liquidity. In fact, liquidity is always taken into consideration for financial assets that are being actively traded in the market. In simple terms, liquidity refers to the ability to convert assets to cash or price that you specifically require. Since the financial crisis of 2008, more and more investors are looking to invest in assets based on their liquidity to avoid any risks or financial mishaps in the future. With the Evai rating system, investors will be able to easily identify cryptos that score highly in relation to liquidity measures.
SYSTEMATIC RISK
This refers to the risks within the market or the entire market segment, and not any specific industry or asset. This kind of risk can be both predicted as well as impossible to avoid completely but is a crucial metric that needs to be taken into consideration, concerning the overall risk.
PROFITABILITY INDEX
As far as the profitability index is concerned, it is considered to be the ratio between payoff and investment of the proposed project. It is used for ranking of the projects since it helps you to quantify the value generated for every single investment unit
MOMENTUM
This indicates the acceleration rate of the volume or price of the security, i.e. the speed with which the pricing keeps changing. In simple terms, it measures the rate at which the price movements keep changing for a specific asset, and is essentially described as the rate.
PEAK TO LAST VALUE DEMAND
Aggregate demand includes two constituents, including consumer demand as well as investment demand. Given that the consumption function is usually stable within a short period, investment demand becomes highly important in determining the value. Thus, investors are only concerned regarding the end value as well as the highest value of a financial asset over a specific period.
INVESTMENT
Investment is all about the allocation of funds in a manner that it reaps profits in the long run. To be able to make a relevant comparison, all the metrics mentioned above must be taken into consideration and combined optimally to maximize profits. This process is ever-evolving and can be best managed with the help of intelligent algorithms.
HOW EVAI REWARDS INNOVATION?
Evai encourages token holders as well as developers to engage with the ratings platform. The Evai platform token “EVAI,” is an ethereum-based ERC-20 standard token. It acts as an incentive for users who wish to contribute to the development of the Evai rating system. Based on the development of a pending proof of stake (PoS) consensus mechanism, the token will encourage users to vote on protocol upgrades and thus the direction and development of the Evai platform. Holders of EVAI are also incentivized to contribute ideas and market intelligence—aiding the continuous and progressive evolution of the Evai rating system.
CRYPTO INVESTMENT RATING – CONCLUSION
The cryptocurrency market has turned into one of the most lucrative investment spaces in modern times. Deciding between thousands of assets on the market, however, can be a precarious and time-consuming endeavor. The task is made even more complicated, given that out of nearly 6000 projects on the market, only 13% have a live use case. And then there’s the issue of bias. Not just from project tokens but fellow investors and even supposedly impartial cryptocurrency ranking sites. All too often, the crypto market is beset by stories of project scams, faked exchange volumes, and unscrupulous brokers, making it incredibly difficult to separate the good from the bad. Evai, a decentralized cryptocurrency rating platform, is attempting to do just that.
The independent platform is underpinned with AI and machine learning, which will attract a great deal of attention across the cryptocurrency, blockchain and fintech sector. In addition to this Evai’s foundational roots are strong, and the founding team understand the historical trends of the financial markets and are pioneering innovative ratings to help investors make sound decisions concerning profitable cryptos and in the future other major asset classes.
Hopefully, you have enjoyed today’s article. Thanks for reading! Have a fantastic day! Live from the Platinum Crypto Trading Floor.
Earnings Disclaimer: The information you’ll find in this article is for educational purpose only. We make no promise or guarantee of income or earnings. You have to do some work, use your best judgement and perform due diligence before using the information in this article. Your success is still up to you. Nothing in this article is intended to be professional, legal, financial and/or accounting advice. Always seek competent advice from professionals in these matters. If you break the city or other local laws, we will not be held liable for any damages you incur.
