Most crypto investors not concerned with tokenomics or network performance, study finds

A majority of investors don’t prioritize the metrics experienced crypto traders tout when assessing the viability and attractiveness of crypto assets, according to a Broadridge study.

The report surveyed 2,000 crypto market participants in the United States, UK, and Canada and polled respondents on what performance metrics they look at when making an investment decision and where they find that information.

The report found that over 65% of respondents said their holdings represented a long-term investment, suggesting that, contrary to popular perception, most participants may not be speculators.

Additionally, 47% of respondents answered that their investments in the space were being used to educate themselves, suggesting a “learning by doing” approach by investors.

Do investors fully appreciate the importance of crypto-native factors?

Broadridge’s Digital Disclosure Survey, conducted in conjunction with Dr. Chris Brummer, the Agnes Williams Sesquicentennial Professor of Financial Technology at Georgetown Law, found that critical crypto-specific metrics such as tokenomics (16%) and network performance (28%) did not even make it to the top five of their concerns.

Instead, investors and prospective investors of crypto assets typically prioritize conventional metrics such as risk factors and security (54%), financial overview (e.g., cash flows) (52%), and holdings of the management team (43%) when making decisions.

”The survey data reveal that many investors prefer traditional finance metrics, and emphasize them over other factors that impact crypto specifically,” said Dr. Brummer as the report raises questions as to whether investors fully appreciate the importance of crypto-native factors that can be essential to understanding crypto assets:

• Network performance can provide a real-time view of how the platform behind the crypto asset is performing, how holders are engaging with the platform, as well as the number of active projects – data any investor needs to know;
• The tokenomics of a coin reflect and can determine the current and future supply of a particular asset.

“Metrics that track crypto asset performance should be standardized”

Rob Krugman, Chief Digital Officer, Broadridge, said: “To help better inform and educate investors, metrics that track crypto asset performance should be standardized, better disclosed, and made more easily accessible, especially for retail investors needing the most relevant information and support possible to make informed decisions. For any market to survive and grow, you need trust, and trust isn’t possible without transparency.”

German Soto Sanchez, Head of Corporate Strategy, Broadridge, said: “This is the first ever study to survey the disclosure preferences of crypto holders and investors, and a project we are proud to have led during this time of intense regulatory discussion.”

The native website of the crypto provider (39%), a broker (35%), a crypto exchange (34%), and crypto press (32%), are the most sought out sources of information for investors.

According to answers from respondents, more experienced crypto investors tend to look for where the off-chain data is located, usually either on the asset provider’s own website or a third-party data provider, whereas prospective investors are still following the traditional finance approach and expect that data to be within their exchange app or brokerage.

Just under half of all respondents would prefer to receive updates on at least a quarterly or monthly basis, with 27% of respondents preferring to receive updates as information changes. Given the rapid pace of the market, information needs to be provided to holders not only to ensure they are receiving timely updates on their holdings, but to also ensure they have a proper understanding of what that information means and what updates entail.