10 key cognitions that must be known in the currency circle

When exploring and investing in cryptocurrencies, the following ten key cognitions can help you better understand and evaluate the long-term potential and value of the project:

MEV is a key long-term value indicator: Maximum extractable value (MEV) is not only a key indicator to measure the development prospects of blockchain, but also reflects the scalability, security and attractiveness of blockchain to developers and users.

TVL is not an all-round indicator: Total locked value (TVL) is often exaggerated because it is susceptible to manipulation. TVL data can be artificially increased by increasing the price of first-layer (L1) tokens.

The importance of FDV: Fully diluted valuation (FDV) is crucial to assessing the market potential of blockchain projects. Although it is not a perfect indicator, it can provide a rough estimate of the project size.

Economic security is not enough to support: Relying solely on economic security to maintain the stability of the blockchain is unreliable, as shown in the cases of LUNA and ATOM. Other security mechanisms are also needed, such as consensus mechanisms and governance models.

The execution layer is the key value capture point: The execution layer is the core of the blockchain, responsible for processing transactions and verifying data, and is therefore the main place for value capture.

DEX data reflects ecological health: Data from decentralized exchanges (DEX) can more accurately reflect the prosperity of the blockchain ecosystem. In order to more clearly assess the ecological health, data from stablecoin trading pairs and L1 token-to-ETH trading pairs should be excluded.

Developers are key: The success of a blockchain project depends largely on the participation and contribution of developers. Therefore, project strategies should focus on attracting and supporting developers.

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