Marketing Communication

Sorting Out the Crypto World

28 September 2023

Kyle DaCruz

Moderator

In the crypto world, with over 22,000 coins, there is an increasing need for a rigorous classification system to help structure investment decisions.

Please note that VanEck may have a position(s) in the digital asset(s) described below.

Detecting patterns is an ability we develop early in infancy and refine by experience throughout human life. Categorization is an important part of how humans learn and make optimized decisions when faced with multiple data points. In the crypto world, with over 22,000 coins, there is an increasing need for a rigorous classification system to structure investment decisions.

MarketVector, a VanEck subsidiary, develops, monitors and markets the MarketVector Indexes, a focused selection of pure-play and investable indices. In 2017, MarketVector in partnership with CryptoCompare—an established London-based digital assets data provider—became the first regulated index provider to launch a series of digital assets indices designed to most accurately track the performance of the otherwise fragmented global digital assets markets. These indices were the first to meet investment industry benchmarking standards by providing a public rulebook, industry-wide data distribution, proper identifiers and further standard index governance requirements. Today, MarketVector is regulated under the EU Benchmark regulation directive and is the first index provider with such regulatory status to offer transparent and industry standard digital asset indices.

MarketVector introduces a categorization of digital asset coins into distinct, non-overlapping categories that form the building blocks for a new crypto classification scheme. Categories capture the value and use case related to a coin. Using a qualitative process, each coin is categorized into one category. Coins may change categories over time and new categories may emerge. The MarketVector"Leaders" investable category indices capture the largest and most liquid coins within a category which are also supported by major US crypto exchanges and custodians.

Categories allow investors to group similar digital assets into groups to analyze and proxy targeted exposures. They enable deeper analysis into peers and aggregated performance review. As the basis for investable indices, they provide the underlying components to build an investment solution aimed at capturing the performance of the coins within the category. They allow users to measure, benchmark and capture the performance and characteristics of targeted categories. MarketVector categories will help make digital assets digestible to traditional finance investors while giving crypto native funds additional benchmarking capabilities.

MarketVector Digital Asset Categories
Category	Definition	Examples
DeFi	Financial services built on top of distributed networks with no central intermediaries	Uniswap, Aave, dYdX
Exchange	Tokens owned and operated by a centralized cryptocurrency exchange	Binance Coin, Huobi Token, KuCoin Token
Infrastructure Applications	A decentralized computer program designed to perform specific tasks	Helium, Chainlink, Render
Media & Entertainment	Used to reward users for content, games, gambling or social media	Axie Infinity, Basic Attention Token, Audius
Payments	Digital, non-stable money for use in distributed network	Stellar, XRP, Litecoin
Smart Contract Platforms	Blockchain protocol designed to host variety of self-developed and 3rd party applications	Ethereum, Optimism, Solana
Stablecoins	Designed to minimize volatility by pegging to a more stable asset	Tether, US Dollar Coin, Dai
Store of Value	Designed to hold or increase purchasing power over time	Bitcoin

Source: MarketVector Indexes. Data as of 9/18/2023.

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Important Information

This is not financial research but the opinion of the author of the article. We publish this information to inform and educate about recent market developments and technological updates, not to give any recommendation for certain products or projects. The selection of articles should therefore not be understood as financial advice or recommendation for any specific product and/or digital asset. We may occasionally include analysis of past market, network performance expectations and/or on-chain performance. Historical performance is not indicative for future returns.

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This information originates from VanEck (Europe) GmbH, Kreuznacher Straße 30, 60486 Frankfurt am Main. It is intended only to provide general and preliminary information to investors and shall not be construed as investment, legal or tax advice. VanEck (Europe) GmbH and its associated and affiliated companies (together “VanEck”) assume no liability with regards to any investment, divestment or retention decision taken by the investor on the basis of this information. Views and opinions expressed are current as of the date of this information and are subject to change with market conditions. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results. VanEck makes no representation or warranty, express or implied regarding the advisability of investing in securities or digital assets generally or in the product mentioned in this information (the “Product”) or the ability of the underlying Index to track the performance of the relevant digital assets market.

The underlying Index is the exclusive property of MarketVector Indexes GmbH, which has contracted with CryptoCompare Data Limited to maintain and calculate the Index. CryptoCompare Data Limited uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards the MarketVector Indexes GmbH, CryptoCompare Data Limited has no obligation to point out errors in the Index to third parties.

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