According to U.Today, GSR has introduced its ETF Possibility Score, a tool designed to assess the potential for ETFs on various cryptocurrencies. The evaluation is based on metrics of decentralization and demand. The process involves calculating decentralization and demand scores by converting various category metrics into z-scores, combining them, and then averaging each category's z-score.
Decentralization, a multifaceted concept, takes into account factors such as permissionless participation, development control, token distribution, and hardware diversity. Key metrics for decentralization include the Nakamoto Coefficient, which measures the smallest number of entities that could potentially collude to attack a network, and staking requirements, which assess the ease of participation as a node operator or validator.
GSR's analysis reveals that XRP and Cardano have decentralization scores of -0.9 and -0.1, placing them last and fifth, respectively. It's important to note that Nakaflow does not provide a rate for Cardano and XRP, so GSR used estimates based on other sources.
Demand potential is another crucial factor, considering metrics such as market cap, trading volume, and community activity levels. Higher scores in these metrics generally indicate stronger future demand. XRP and Cardano have demand scores of -0.2 and -0.5, ranking them fourth and sixth, respectively.
In the ETF Possibility Score, GSR assigns a weight of 33% to decentralization and 67% to demand. Ethereum emerged as the leader in this evaluation, with Solana and NEAR also performing well. Conversely, the lower scores of XRP and Cardano suggest a lower likelihood of ETFs for these assets in the near future.