Methodology

An overview of the methods and sources Smith + Crown uses in producing the research content offered through this website.

Smith + Crown’s Methodology

Smith + Crown regularly conducts independent research on many facets of distributed ledger technology, the challenges of its integration, and the technology’s likely implications for society. Products of such research include the various content offered on this website, such as reports on industry projects, analysis of market trends, market graphs, cryptoeconomic system diagrams, as well as curated news. How research is conducted critically shapes the character of its products, hence readers are encouraged to review the following summary of the methods and sourcing used in producing the above content types.

Methods and Sourcing Overview

Blockchain Funding Data

Smith + Crown maintains a comprehensive database of blockchain fundraising. For token sales, data is gathered from a variety of sources, including official project statements, on-chain smart contracts, and third-party websites. Where possible, all claims are corroborated with multiple sources. For SAFT-based raises, claims are cross-checked with EDGAR and other databases of security offerings. Raise amounts denominated in crypto are converted to USD using the average daily price on the day the sale closed. EOS’s year-long ETH-based token sale was valued at the end of each month of the auction. For equity fundraising, data are sourced through Crunchbase and EDGAR; raise events are checked for erroneous association with blockchain technology or erroneous categorization of a token sale as an equity raise or vice versa. 

Market Data 

Unless otherwise stated, market data on cryptoasset prices, market capitalization, and volumes are sourced from Nomics. Spot volumes are limited to the group of ten exchanges identified by Bitwise as having transparent volume reporting, as well as a group of leading decentralized exchanges.  

News and Briefings

Smith + Crown maintains a curated daily feed of industry news. These ‘briefings’ are sourced from across the industry, from mainstream news publications like Bloomberg and the WSJ to crypto-focused publications like The Block and Coindesk and announcements from projects and organizations themselves. Analysts identify stories that are well sourced, typically confirmed through multiple sources, and with major implications for the industry’s overall trajectory. 

“Signal” Project Selection

As a research organization covering the breadth of the blockchain industry, Smith + Crown produces a curated list of notable “Signal” projects to focus our understanding and track key trends. Inclusion in the Signal set is dynamic according to new developments in projects and the broader industry. 

Signal projects are evaluated across a wide array of characteristics, and have demonstrated significant industry relevance, evidence of product traction and adoption, team capability, and/or notable cryptoeconomic design. These features are evaluated by Smith + Crown’s team of professional blockchain researchers.

Table 1. What is Signal?

Signals are…Signals are not…
Projects that aim to utilize blockchain technology in any feasible, impactful manner—a potential to innovate in cryptology, cryptoeconomics, industry, or regulations.

Typically, projects with clearly articulated goals, token models, protocols, evidence of leadership experience, industry knowledge, or developer capability. These factors are always considered in industry and project context—these areas are weighted differently according to circumstances.
Investment advice: Signals and related project information are general in nature, not taking into account readers’ personal financial positions or objectives. Readers should consult a licensed adviser or tax agent before proceeding.

A permanent designation: A project’s Signal status is subject to revision based on the best available evidence of the project performance, adoption,  and general industry trends.

The only projects S+C regards as quality: projects without a cryptoasset are not considered for Signals inclusion.

Smith + Crown uses the concept of Signal to orient, curate, and prioritize ongoing developments in the industry; broadly, Signal projects represent the nexus and core of the industry. 

While Smith + Crown previously made public its index of Signals projects and updated quarterly, the team no longer updates Signal status as of Q2 2020. As such, references to projects as Signal merely indicate Smith + Crown’s previous assessment, typically relative to the date of publication, and may not reflect the team’s current outlook on the project.

How Projects are Selected and Vetted for Cryptoasset Reports and Deep Dives

Smith + Crown’s methods for selecting and vetting candidates for cryptoasset reports and deep dives contribute significantly to distinguishing our project-specific content from other venues. Smith + Crown’s conception of ‘good inquiry’ informs these methods, which, in particular, are designed to:

  • Minimize personal bias
  • Reflect experts’ collective understanding of the industry’s current state
  • Be responsive to reasons and evidence
  • Remain open to oversight, correction, and rational revision
  • Make transparent grounds for a project’s inclusion
  • Hold findings accountable to impacted parties: analysts, projects, and the general public can exercise oversight on published reports to varying degrees

These values shape processes touching on project selection and final editing decisions and, along with practical considerations, inform decisions on changes to workflow. 

The processes touching on project selection, evaluation, and review are discussed below, with Table 1 highlighting major factors considered. As Smith + Crown strives to produce world-class research, critical yet civil questions, comments, and discussion are always welcome. 

Table 2. Project Evaluation Overview

Criteria for CandidacyKey Areas of EvaluationRed Flags
Top projects by marketcap

Top projects by funds raised

Projects with demonstrable adoption

Projects innovating in technological design, cryptoeconomic design, or regulatory approach

Projects recommended by the community

Projects, and concepts therein, with the potential to impact the overall industry in some manner
Documented articulation of project goals, problem space, use of technology, competition, and token model

Project development, adoption, milestones

Demonstrated general and industry specific leadership ability

Evidence of the developer team’s capability
Evidence of fraud

Misrepresentation of work history, credentials, experience or team capability

S+C’s tech experts have serious doubts about whether a feature is technologically possible

Project business plan or road map is wildly unrealistic

Lack of adoption given current stage of project

How Candidates for Reports are Determined

Smith + Crown evaluate projects across the breadth of the cryptocurrency and digital asset space on the basis of meaningful engagement from the community, end users and prospects of driving the industry forward. Projects that successfully incentivise users, sufficiently so as to motivate their onboarding, are usually a driving force for the industry in their relatively early days. Smith + Crown considers projects that come across our radar organically, in addition to persistent systematic surveying of the industry, and evaluates their capacity to impact the community broadly. If a project has an established, liquid market for its token, then analysts might well evaluate this project to see if there is adoption and traction—ideally beyond secondary market trading. Other factors sometimes considered include:

Market Cap or Funds Raised. Large raises or implied valuation sometimes indicate that a project’s value proposition has mass appeal or is one key investors are optimistic about. While actual project quality does not always match perceptions, market cap or funds raised are typically sufficient reason to investigate a project further.

Adoption. High adoption may also indicate that a project is doing something worth looking into more. Some projects sustain the development of meaningful technological innovations independent of a token sale or private investors—open source projects with passionate volunteer developers releasing protocols with meaningful adoption are on Smith + Crown’s radar too.

Innovation. Smith + Crown reviews multiple projects as part of our advisory, advocacy and research routines. As such, the team develops well-supported views on when a project represents a unique approach to cryptoeconomic design, novel industry solution, or meaningful technical innovation.

Team. Projects whose founding team have notable prior executive or entrepreneurial experience in a related field, or stem from a leader’s academic research typically receive further review.

Community Suggestions. In such a broad industry, even a committed team of researchers can have its blindspots. Smith + Crown values its community and takes feedback seriously, making a point to review or reconsider projects the community at large feels are overlooked.

Being selected as a candidate for a report does not guarantee that a report will be produced. Before any drafting begins, projects nominated are subject to subsequent internal review by Smith + Crown analysts.

How Candidates for Reports are Vetted

All report candidates receive formal evaluations as part of Smith + Crown’s internal review. Analysts consider the following project aspects as part of reaching their overall conclusion:

Solution: Does the project clearly articulate its motivation and goals, making explicit what would constitute the project achieving its goals and what features constitute the project’s primary offering?

Documentation Quality: Are the project’s documents professional? Are they focused more on describing the project’s goals and technological innovations or on marketing the project through unsubstantiated claims?

Token Model: Is the token’s function clearly articulated? Does the project include details on token economy and issuance policies?

Competition: Does the project distinguish itself from competitors, both decentralized and centralized?

Team Experience: To what extent does the founding team/chief officers have prior executive or entrepreneurial experience?

Team Industry Experience: To what extent does the team have prior experience in the project’s industry?

Dev Team: Does the dev team have blockchain experience and/or technical advisors? Is the dev team sufficiently capable of achieving the project’s vision?

Social Activity: What is the quality of the project’s social media and community engagement?

Project Status and Adoption: How long has the project been working towards its intended feature set, and what is its current functionality? Does the project garner adoption relevant to its development state and goals?

No one factor is typically independently sufficient for a project’s overall assessment. A project’s ambitions, the broader industry trends, competitor status, and regulatory direction are all considered context that can add weight to particular factors shaping analysts’ final judgments on the project at this stage of evaluation. Regardless of judgment, all comments are documented and recorded in Smith + Crown’s proprietary database.

To progress to the drafting stage, a cryptoasset report candidate must have support for further published research from the majority of the research team. 

Smith + Crown’s Disclosure Policy

Smith + Crown’s disclosure policy is designed to reflect the reality that crypto assets and distributed networks today have target users beyond speculators and uses other than speculation. This introduces meaningful distinctions with some equities, and important aspects of the world of traditional finance, and therefore means that any research concerning crypto assets should not be seen as directly analogous to research discussing established financial markets. This implies a more nuanced approach to disclosures by crypto research firms. 

While Smith and Crown does maintain investments in the crypto asset space, for a wide variety of assets we often test and evaluate primary and secondary markets, including exchanges, wallets, staking and delegation functions, governance systems, and a variety of other relevant mechanisms, from a range of perspectives. The result is that while we may be active on a limited scale in a variety of markets, our activities are generally shaped by our incessant desire to better understand the cryptoasset space and the protocols and mechanisms animating it, as opposed to speculations on future assets or tokens. A blanket disclosure policy on all assets would likely summon in the reader’s mind the same skepticism one adopts when reading research from VC firms, hedge funds, and banks with deep financial exposure to the assets about which they write. While we encourage all readers to consume information critically, this particular kind of skepticism in the case of our research would generally be misplaced.

With this in mind, we have adopted the following disclosure policy. Relative to our larger, longer-term investment holdings, we disclose our specific holdings when they are above a certain threshold, currently set at a $25,000 USD-equivalent position. Such holdings generally come from our client engagements, which we disclose when they are public or if we publish research related to them. In addition, we disclose any networks for which we run core consensus infrastructure or play a meaningful role in voting or governance. Finally, we do not change market positions within three days of writing about specific crypto assets.