Dear Bankless Nation,

We publish token ratings on the first Friday of the month. Today’s that day.

Bankless Token Ratings are an ~ENTERTAINMENT ONLY~ analysis on whether you should buy, hold, or sell certain tokens based on our valuation models.

This month we’re covering:

• 🆕 DPX, IMX, ILV
• 🔄 ATOM, DYDX, MPL

The first token is open for everyone, the rest is exclusive for Bankless Premium subscribers.

Ben supplies the alpha today.

- Bankless Team

🚨 None of the information in this article is financial advice. All of it is for educational purposes only. Please do your own research.🚨

Token Ratings | November 2022 📊

Author: Ben Giove, Bankless Analyst

This report initiates analyst coverage on three tokens: DPX, IMX, and ILV.

It also updates coverage on ATOM, DYDX, and MPL.

Below, we’ll discuss the rationale behind each rating by delving into the driving catalysts, as well as its potential impact on the token’s price.

We are also providing a comprehensive overview of many of the tokens we cover via the Bankless Token Bible!

📓 Token Bible access at the bottom of this report. Bankless Premium only!

Intended to complement our ratings and valuation models, the Token Bible is a one-stop-shop where investors can get all the relevant information they need about each token covered, whether it be fundamentals, financials, tokenomics, and more.

Rating Scale and Fair Value Estimates:

Before we dive into the coverage and ratings, let’s take a moment to explain our rating scale and fair value estimates.

The ratings reflect how we expect each token will perform over a six-month time horizon relative to the performance of the overall crypto-market based on market capitalization. It is not indicative of our opinion on the long-run potential of each token.

The rating scale is as follows:

• ✅ Overweight: We expect this token to outperform the broader market over the next six months.
• ➖ Neutral: We expect this token to perform in line with the market over the next six months.
• ❌ Underweight: We expect this token to underperform the market over the next six months.

To help inform our ratings, we also provide valuation estimates for any of the applicable tokens using a discounted cash flow (DCF) model.

These models aim to value each protocol's core business offerings based on the revenues it generates and its future growth prospects, which are influenced by the catalysts discussed in this report. It is not applicable to all protocols covered in the report as not all of them are generating revenue.

While these models are certainly not the only factor that goes into determining a token’s rating, especially given the short-time horizon on which they are made, we view these fair value estimates as the price ceiling under which we would consider the token to be undervalued and if above, overvalued.

Now that’s out of the way, let’s dive into the report.

✅ Overweight

These are tokens we believe will perform in-line with the market over the next six-months.

⚛️ Cosmos Hub (ATOM)

• Type: Ratings Change
• Sector: L1
• Current FDV: $11.2B

ATOM is being upgraded from neutral to overweight.

Catalyst Overview

ATOM is being upgraded due to the ATOM 2.0 upgrade.

ATOM 2.0 refers to a proposed series of upgrades to the tokenomics of ATOM and role of the Cosmos Hub. The upgrade includes creating what's known as the interchain scheduler, where the Cosmos Hub will be able to generate revenue from cross-chain MEV as well as the interchain allocator, where ATOM holders can allocate funds accrued by the Hub throughout the Cosmos ecosystem.

The decision on whether to implement ATOM 2.0 is currently being voted on by Hub governance through Proposal #82. The proposal has yet to reach the required 40% quorum, though early votes are 96.4% in favor to just 3.6% opposed.

Potential Price Impact

By increasing utility as well as unlocking new sources of revenue, ATOM 2.0 should increase demand for and value accrual to its namesake token.

Although the upgrade front-loads ATOM issuance within the first 36 months of the upgrade, this increase in inflation is likely to be somewhat offset by this newfound demand, as well from new chains using the leverage the validator set (and therefore blockspace) of the Cosmos Hub via interchain security.

In addition, ATOM is likely to be used as an index token among speculators looking to get broad exposure to the Cosmos ecosystem.