💸 Public Goods Token Performance Analysis

Using historical price data, the BCRG analyzed the performance of several public goods tokens

In addition to modeling parameter sets, historical analysis of the economic performance of various tokens and their financial performance can also inform design choices. In an initial study, the BCRG analyzed price movements of several public goods tokens by pulling their historical price data, normalizing the data to the price of Ethereum, and looking at the relative change in price over time, using a common financial metric known as the Sharpe Ratio, which measures risk-adjusted relative returns.

The tokens analyzed included Ethereum, Bright, Gitcoin, Giveth, Metagame, Honey, Radworks, and TEC of the Token Engineering Commons (the only bonding curve token in the analysis) over the period of May 2022 to January 2024. Note that our TEC data goes only until July 2023 at which point the TEC DAO migrated from Gnosis chain to Optimism chain, and our experiments only included TEC data from Gnosis chain.

A historical price chart of Ethereum ecosystem public goods tokens showing relative change in price over time from a BCRG analysis. You can see the $TEC token of the Token Engineering Commons in purple, which outperformed the other tokens and even Ethereum itself for a period of time.

The results showed that the TEC token, issued via an Augmented Bonding Curve (ABC), exhibited the best price preservation performance compared to the other tokens. It even outperformed Ethereum for a significant period during the 2022 bear market, and was the best performing token in maintaining value against Ethereum even in the ensuing bull market. This consistent performance is further supported by the calculation of the Sharpe ratio, showing the TEC token compared favorably to other public goods tokens in terms of risk-adjusted returns.

Output of financial analysis on public goods tokens, demonstrating that $TEC has the highest risk-adjusted return (Sharpe Ratio). (Source: Image and analysis by Shawn Anderson).

This analysis presents further evidence that Primary Issuance Markets offer more market resilience and can enable better financial performance over time. However, the data set in this case only examined a small set of public goods tokens in the Ethereum ecosystem. To draw more rigorous conclusions, this analysis could be expanded to a wider data set of more tokens on various blockchains, examine performance over longer time periods, or blend historical and simulated data to compare parameter sets and performance. Discover more in the BCRG’s Public Goods Token Comparison walk through video:

BCRG researcher Jessica Zartler interviews lead modeling researcher Shawn "YGG" Anderson who discusses the motivation behind the analysis and walks through the Python data science model he has developed and the key findings. The video highlights the emerging field of token engineering and the Bonding Curve Research Group's mission to rigorously model and validate token economic mechanisms.