When most people think of the cryptocurrency market they think of the bigger blockchains like Bitcoin, Ethereum, and Litecoin. Naturally, the most well known blockchains receive the most attention due to their huge marketcaps and trading volumes. However, there are many other blockchains in this space that people tend to oversee. Something to keep in mind about the cryptocurrency market is how dynamic it is and how new projects or blockchains can quickly rise to prominence.
This article will look at the financial performance of the underlying cryptocurrencies of two different blockchains and compare their historic performance. The two blockchains and their respective tokens under the spotlight are EOS (EOS), and Chromia (CHR). Both are platforms for developing and powering decentralized applications (DApps), in a similar way to Ethereum.
EOS is an older and more well known blockchain, whereas Chromia is slightly newer but it has been gradually gaining more traction. Even though EOS is an alternative blockchain it still has an impressive market cap of 2.714 billion USD, at the time of writing this. In comparison Chromia only sits at a market cap of 11.89 million USD.
The aim behind comparing the recent financial performance of these two alternative blockchains is to understand some of the nuances in the market. The fact that the two alternative, yet similar, blockchains have such a significant difference between their market caps can further provide insights into the cryptocurrency market. The comparison of these blockchains is not meant to be financial advice, it is merely to analyze how they have both performed in the last year.
The financial data collected for both blockchains’ cryptocurrencies is from the past year, between Dec 6, 2019 and December 6, 2020. All data was collected from CoinGecko, and you can find it there. The comparison of these blockchains is not meant to be financial advice, please remember to do your own research.
The Methods of Analysis
For the sake of this article two different methods will be used to evaluate the financial performance of the two blockchains and their underlying cryptocurrencies during the last year. The two methods are average daily return and historic volatility. Note, this is a historic financial performance analysis and not an implied or expected financial performance analysis.
The historic average daily return is simply meant to provide an overview of how a certain asset has performed in a certain time range based on its price fluctuations. The method of finding the average daily return is very simple; it just involves finding the daily returns of a certain asset based on its day-to-day price movements, and taking an aggregate average of all those returns. Even though the average daily return is a relatively simple measurement metric, it still provides valuable information about the financial performance of the underlying asset(s).
Historic volatility is the second method that will be utilized to evaluate the financial performance of the two platforms’ underlying tokens. Volatility essentially shows how predictable or unpredictable the price of a certain asset is. Higher volatility means an asset’s price is very unpredictable, whereas lower volatility just means that an asset’s price is much more predictable.
Volatility can also show by how much, or to what extent the price of a certain asset tends to fluctuate. Historic volatility can be very advantageous because it shows the risk-reward dynamic of an asset; higher volatility shows high risk and high reward, whilst low volatility shows low risk and low reward.
The price of EOS’s native token, EOS, appreciated at an average rate of 0.153% every day during the period between Dec 6, 2019 to Dec 6, 2020. A 0.153% average daily increase in token price might seem impressive, especially to those that are new to the cryptocurrency markets, but it is actually a very conservative rate of growth in this market.
EOS had an end of year net increase in the value of its token by the amount of 9.52%. This means that if you had bought EOS back on Dec 6, 2019 a year later on Dec 6, 2020, your EOS holdings would have appreciated by a net amount of 9.52% relative to the US dollar.
In the last year EOS scored 4.93% in regard to its daily volatility, and 78.3% annual volatility. When compared with traditional markets an annual volatility of 78.3% might seem high. However, such volatilities are not rare in crypto; in fact, with an annual average volatility of just 78.3%, EOS is one of the lesser volatile cryptocurrency in the market.
Chromia’s native CHR token managed to outperform EOS significantly in the past year. CHR token earned an average daily return of 0.67% in the period between Dec 6, 2019 and Dec 6, 2020. By earning an average daily return of 0.67%, CHR tokens appreciated at a 4.37x faster rate than EOS tokens.
Chromia’s CHR token managed to finish the one year period with a net value increase of 77.8%. This means even after all the price fluctuations are taken into account, if you had bought CHR on Dec 6th, 2019, by Dec 6th, 2020, your CHR holdings would have appreciated by a total amount of 77.8% relative to the US dollar.
Chromia tokens were more volatile in comparison to EOS tokens in the last year. The daily historic volatility for CHR tokens sits at 10%, and the annual historic volatility was 164.91%. It makes sense that CHR tokens would be more volatile than EOS tokens, when considering the market cap of CHR tokens is significantly lower than that of EOS tokens.