Taxonomy
We designed the Vinter Taxonomy for Crypto Assets ("VTAXO") to be a tool for index creation. The purpose of the taxonomy is not to create a comprehensive taxonomy of the entire crypto universe. Given the fast pace of the crypto market, such efforts risk becoming irrelevant quickly after publication. Instead, the VTAXO applies relevant labels to constituents of Vinter's thematic indexes. Assets can have zero, one, or multiple labels. The taxonomy, which is updated monthly, provides a practical and useful approach to labeling crypto assets.
The Output Matrix shows the current labels for the top 60 assets by market capitalization. Each row represents an asset and each column represents a label. The matrix is populated with TRUE if the label applies to an asset. The Output Matrix contains supporting arguments and sources for clarity, transparency and traceability.
Vinter calculates and maintains several thematic crypto indexes including, but not limited to, Decentralized Finance, Metaverse, Layer 1, Web 3, and Smart Contract Platforms. Each of these indexes has a specific label defined in this section.
Label | Definition | Examples | # of Assets* |
Layer1 | Serves as the foundation for building decentralized applications and executing transactions securely and directly on the blockchain. | BTC, ETH, BNB, XRP, ADA | 37 |
SmartContractPlatform | Allows for the creation and execution of automated contracts without the need for intermediaries, using blockchain technology. | ETH, BNB, ADA, ETH, SOL | 34 |
Metaverse | Represents ownership or participation within a virtual reality-like world. | APE, SAND, EGLD, MANA, AXS | 6 |
Metaverse-Chain | Hosts at least one crypto asset labelled as Metaverse. | BNB, ADA, SOL, TRX, AVAX | 19 |
DeFi | Allows users to participate in various financial activities such as lending, borrowing, trading, and earning interest without the need for traditional intermediaries like banks. | UNI, LDO, SAND, AAVE, RPL | 9 |
DeFi-Chain | Hosts at least one crypto asset labelled as DeFi. | ETH, BNB, SOL, TRX, AVAX | 24 |
Web3 | Enables the emergence of the next generation of the internet, where decentralization, user control, and enhanced privacy are prioritized. | UNI, ICP, FIL, LDO, BIT | 16 |
Web3Ecosystem | Is regrouping all the assets labelled Web3, Metaverse, DeFi and SmartContractPlatform. | BNB, MATIC, SOL, TRX, LINK | 48 |
Meme | Leverages the internet culture, humor, and social media trends to gain popularity and price appreciation. | DOGE, SHIB, PEPE | 3 |
Privacy | Uses cryptographic methods to obscure or conceal transaction information such as the sender's address, recipient's address, and transaction amount. | DASH, XMR, ZEC | 3 |
*in the top 60 of the Vinter Full Universe as of May 22nd, 2023
A layer 1 asset is a blockchain that has its own consensus mechanism and can process all on-chain transactions in its native token. To validate its transactions, blockchains can use a consensus mechanism such as proof-of-work or proof-of-stake. Examples of assets with the “Layer1” label are Bitcoin (BTC), Ether (ETH), and Solana (SOL).
Privacy coins are designed to protect the privacy and anonymity of the user and their blockchain transactions. Privacy coins use cryptographic methods to obscure or conceal transaction information such as the sender's address, recipient's address, and transaction amount. Examples of assets with the “Privacy” label include Monero (XMR), Dash (DASH), and Zcash (ZEC).
Smart contracts execute computer code automatically when certain conditions are met. A smart contract platform is a blockchain-based system that enables the creation, execution, and management of self-executing contracts. Ethereum is the most well-known smart contract platform. Three examples of assets labeled with “SmartContractPlatform” are Ether (ETH), Binance Smart Chain (BNB), and Chainlink (LINK).
The internet has evolved from Web1 to Web2, and is now advancing towards Web3. During the early 2000s, Web2 allowed users to write information to the internet, which extended the read-only functionality of Web1 available in the 1990s. The next step in the evolution of the internet is Web3, which offers a read-write-own functionality. Users of Web3 platforms can buy tokens that aims to capture the value that the network creates through its services. Token can also allow users to vote on the future direction of the platform. Users own their data in Web3, as opposed to Web2 where user data is owned by large corporations like Meta Platforms, Amazon, Netflix, Alphabet, among others. Web3 is decentralized, permissionless and trustless.
Web3 replicates services provided by Web2 companies in a decentralized manner. These products and services include cloud storage, cloud gaming, file sharing, search engines, data querying, a metaverse, voting on the direction of a blockchain project, a marketplace, login credentials, networks for the Internet of Things, content sharing, social media, advertising, as well as the streaming of music, video and games. Three examples of assets labeled with “Web3” are Filecoin (FIL), The Internet Computer (ICP), and The Graph (GRT).
Decentralized finance ("DeFi”) operates similar functions as the traditional financial industry, but allow users to access these services in a decentralized way. A defining feature for DeFi is that it is permissionless. Users do not need to rely on intermediaries (such as brokerages, exchanges, or banks) to borrow, lend, trade derivatives, swap assets, or perform other financial services. Three examples of assets labeled with “DeFi” are Uniswap (UNI), Compound (COMP), and Aave (AAVE).
ETH is labeled “defi-chain”, based on the following line of reasoning.
- 1.MKR is an asset that fulfills DeFi requirements so it gets the label "DeFi".
- 2.ETH is a layer 1 asset so it gets the "Layer1" label.
- 3.MKR use the Ethereum blockchain to secure their transactions.
- 4.ETH is in the "DeFi-chain" category because MKR uses the Ethereum blockchain.
ETH is not labeled with “DeFi” because it does not fulfill the requirements. In general, it is possible for an asset to be labeled both “DeFi” and “DeFi-chain”. Do note that only Layer 1 assets can be labeled “DeFi-chain”.
Asset | Chain | Label |
MKR | ETH | DeFi |
APE | ETH | Metaverse |
ETH | ETH | DeFi-chain
Metaverse-chain SmartContractPlatform Layer1 |
In the table, we use the column “Chain” to indicate which blockchain secure transactions.
Examples of assets labeled with DeFi-chain are ETH, ADA, BNB, and ALGO - due to MKR, MIN, CAKE, and GARD, respectively.
A metaverse is a shared, immersive virtual world in which users (usually represented by avatars) can interact with each other, construct experiences, and create in-world objects and landscapes. Metaverses typically have their own intrinsic economies and currencies. Users can adopt these currencies to buy, sell, and trade digital real estate, items, avatar accessories, and more. A metaverse is a massively scaled-up series of networks that render real-time 3D worlds that can be experienced synchronously and persistently by a massive amount of users. A crypto metaverse is a decentralized immersive virtual world that incorporates crypto assets. In the metaverse, users can create digital assets with distinctive qualities and values, such as non-fungible tokens which can be purchased, sold, and traded in an online environment. Three examples of assets labeled with Metaverse are Decentraland (MANA), Enjin Coin (ENJ), and Sandbox (SAND).
ETH is labeled “Metaverse-chain”, based on the following line of reasoning.
- 1.APE is an asset that fulfills Metaverse requirements so it gets the label "Metaverse".
- 2.ETH is a layer 1 asset so it gets the "Layer1" label.
- 3.APE use the Ethereum blockchain to secure their transactions.
- 4.ETH is in the "Metaverse-chain" category because APE uses the Ethereum blockchain.
ETH is not labeled with “Metaverse” because it does not fulfill the requirements. In general, it is possible for an asset to be labeled both “Metaverse” and “Metaverse-chain”. Notice that only Layer 1 assets can get the label “Metaverse-chain”. Examples of assets labeled with Metaverse-chain are ETH, ADA, BNB, and ALGO - due to APE, COPI, LIVE, and SHSA, respectively.
Web3 is a subset of the ecosystem around it. It includes assets that have any of the following labels: Web3, Metaverse, DeFi, SmartContractPlatform. In the ecosystem of Web 3.0, there is a natural interaction between
- the self-governing data of Web 3.0,
- the permissionless trading in decentralized finance,
- the immersive virtual worlds in a metaverse, and
- the smart contract platforms that offer automatically executed agreements.
The Web3Ecosystem label encapsulates the broader ecosystem of Web3. The “Web3Ecosystem” label is programmatically generated by selecting any asset that is “Web3 or Metaverse or SmartContractPlatform or DeFi”. Example of assets labeled with "Web3Ecosystem" are Filecoin (FIL), Decentraland (MANA) and Uniswap (UNI).
A meme can be an image, a video, or a piece of text – typically humorous in nature – that is copied and spread rapidly online by users. Meme coins are crypto assets that are based on, or inspired by, memes and internet jokes. Examples of assets labeled with “Meme” are Doge (DOGE) and Shiba Inu (SHIB).
Every month, Vinter creates and applies labels to relevant crypto assets by following the below series of sequential steps:
- 1.Extract the top 100 assets by market capitalization.
- 2.
- 3.Select the top 60 assets by market capitalization.
- 4.Apply the relevant labels for any new asset entering the top 60 assets for the first time.
- 5.Update the relevant labels for any asset re-entering the top 60 assets, if necessary.
- 6.Review the complaints that were filled in if any (and update the labels if necessary).
- 7.Date and publish the updated Output Matrix.
Labeling assets is an art more than a science. Vinter has established an adequate and appropriate complaints handling mechanism and process that enables stakeholders to notify Vinter of complaints and ensures that complaints are objectively handled and evaluated. Within the scope of this taxonomy, stakeholders to a benchmark affected by this taxonomy that have a proposed change to the benchmark determination process (labeling) may express it following the process in the Complaints Handling Policy available on policy.vinter.co Neither general opinions nor general expressions of dissatisfaction, nor dissatisfaction that must be considered insignificant to the stakeholder are regarded as complaints. To submit a complaint, you are invited to fill in this form.
Vinter builds all indexes on a unified taxonomy. This ensures a harmonious, coherent, and robust system. A unified taxonomy gathers expertise from the entire market instead of relying on a few individuals. Some index users nevertheless require bespoke asset classifications that align with their unique requirements. When creating a classification, it is crucial to adhere to regulatory standards to prevent the classification from being considered discretionary asset selection. A financial instrument built on a non-compliant taxonomy introduces the risk of being de-listed or not listed. Vinter can write taxonomies and asset classifications that comply with regulatory and financial benchmarking standards. Contact Vinter at [email protected] if you are interested in a customized taxonomy.
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