The Ultimate Guide to Global Crypto Classification Standard

Introduction

Welcome to a groundbreaking exploration of the crypto industry through the lens of the Global Crypto Classification Standard.

Developed by 21Shares and CoinGecko, this report serves as a beacon of clarity in the often complex and rapidly evolving world of cryptocurrencies and blockchain technology.

Join us on a journey through the key elements of this report as we unravel the intricacies of the crypto landscape.

The Methodology

The methodology employed is a robust framework designed to provide a standardized classification system for the diverse array of cryptoassets and protocols within the industry.

1. Three Levels of Categorization: The classification system is structured around three distinct levels to offer a comprehensive view of the crypto landscape:

• Level 1: The Crypto Stack
• Level 2: Market Mapping by Sectors and Industries
• Level 3: Taxonomy of Cryptoassets

2. Focus on Protocols and Networks: The classification primarily focuses on networks and protocols rather than individual cryptoassets or tokens. By categorizing at the protocol level, the system aims to provide a broader understanding of the underlying technologies driving the crypto ecosystem.

3. Industry and Sector Mapping: At Level 2, the classification system maps protocols based on sectors and industries, drawing parallels to traditional financial categorization methods. This approach helps in identifying specific groups of protocols within larger segments of the crypto-economy.

4. Taxonomy of Cryptoassets: Level 3 of the classification system delves into the taxonomy of cryptoassets, categorizing tokens based on their asset superclass. This level aims to provide clarity on the nature and function of individual tokens within the broader crypto landscape.

5. Application and Limitations: The methodology acknowledges the dynamic nature of the crypto industry and the evolving nature of cryptoassets. It emphasizes the non-exhaustive nature of the classification list and the need for continuous updates to reflect the changing landscape of the crypto market.

Level 1: The Crypto Stack

At Level 1 of the Global Crypto Classification Standard, the focus is on the foundational layers that constitute the Crypto Stack. This level provides a comprehensive overview of the key technologies and components that form the infrastructure of the crypto industry.

Some of the essential elements included in the Crypto Stack are:

1. Blockchain Technology: The backbone of the crypto ecosystem, blockchain technology enables secure, decentralized, and transparent transactions through a distributed ledger system.
2. Smart Contract Platforms: Platforms like Ethereum and Cardano facilitate the creation and execution of self-executing contracts, enabling automated and trustless transactions.
3. Cryptocurrencies: Digital assets like Bitcoin, Litecoin, and Monero serve as mediums of exchange within the crypto economy, offering alternatives to traditional fiat currencies.
4. Decentralized Applications (dApps): These applications run on blockchain networks and operate without a central authority, providing various services and functionalities to users.
5. Interoperability Protocols: Technologies such as Polkadot and Cosmos enable different blockchain networks to communicate and interact with each other, fostering interoperability in the decentralized ecosystem.
6. Oracles: These systems provide external data to smart contracts on the blockchain, bridging the gap between on-chain and off-chain information sources.

Level 2: Market Mapping by Sectors and Industries

At Level 2 of the Global Crypto Classification Standard, the focus shifts towards categorizing protocols based on sectors and industries within the crypto-economy. This level provides a more detailed classification of protocols by grouping them into specific segments and industries, drawing parallels to traditional financial categorization methods. Here are the key aspects of Level 2:

1. Sector Classification: Sectors represent broad segments of the crypto-economy, encompassing a range of protocols and networks that share common characteristics or functionalities. Examples of sectors in the crypto industry include Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and Internet of Things (IoT).
2. Industry Classification: Industries refer to more specific groups of protocols or networks within a particular sector. Each industry focuses on a distinct set of functionalities or services offered by protocols. For instance, within the DeFi sector, industries could include Decentralized Exchanges (DEXs), Lending Platforms, and Yield Aggregators.
3. Cross-Sector Protocols: Some protocols may span multiple sectors or industries, offering diverse functionalities that cater to different aspects of the crypto-economy. In such cases, the classification system aims to place these protocols in the most relevant category based on their primary use case.

By mapping protocols based on sectors and industries at Level 2, the classification standard provides a structured framework for understanding the diverse landscape of the crypto industry. This approach enables stakeholders to identify and analyze protocols within specific segments, facilitating a deeper insight into the functionalities and applications of various crypto projects.

Level 3: Taxonomy of Cryptoassets

Level 3 of the Global Crypto Classification Standard focuses on the taxonomy of cryptoassets, providing a detailed classification of tokens based on their asset superclass. This level aims to categorize individual tokens according to their nature, function, and role within the broader crypto ecosystem.

Here are the key aspects of Level 3:

1. Asset Superclass Classification: Tokens are categorized into different asset superclasses based on their primary function and characteristics. Common asset superclasses in the crypto industry include cryptocurrencies, utility tokens, security tokens, governance tokens, and stablecoins.
2. Cryptocurrencies: These tokens serve as digital currencies or mediums of exchange within the crypto ecosystem. Examples of cryptocurrencies include Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC).
3. Utility Tokens: Utility tokens are used to access or pay for services within a specific blockchain network or dApp. They provide users with access to platform functionalities or services.
4. Security Tokens: Security tokens represent ownership of an underlying asset, such as equity in a company or rights to dividends. These tokens are subject to securities regulations and offer investors ownership rights.
5. Governance Tokens: Governance tokens grant holders the right to participate in the decision-making processes of a decentralized protocol or network. Holders can vote on proposals, changes, or upgrades within the ecosystem.
6. Stablecoins: Stablecoins are pegged to stable assets like fiat currencies or commodities to maintain a stable value. They are used for hedging against market volatility or as a medium of exchange with reduced price fluctuations.

Conclusion

In conclusion, the Global Crypto Classification Standard serves as a valuable tool for investors, developers, and enthusiasts seeking to navigate the complexities of the crypto industry.

By providing a standardized framework for categorization and analysis, this report empowers stakeholders to make informed decisions and drive innovation in the ever-evolving world of cryptocurrencies and blockchain technology.