4th Quarter Market Outlook: The CoinDesk Digitization Index (DTZ)

Digitization protocols making up the DTZ lost a combined 24% over the period.

AccessTimeIconDec 20, 2022 at 7:11 p.m. UTC
Updated Dec 20, 2022 at 9:21 p.m. UTC

The CoinDesk Digitization Index (DTZ) is designed to measure the market capitalization weighted performance of digitization protocols that are included in Digital Asset Classification Standard (DACS). Inclusion of a digital asset in DTZ is subject to minimum trading and exchange eligibility requirements. DTZ reflects the DACS as of the prior month, so Digitization refers to the process by which real world documents, contracts, public names, etc. are uploaded to a blockchain for the purpose of transparency, publicly verifiable ownership, and immutability. Proof of ownership, identity and authenticity are both valuable traits that are made possible by blockchain technology.

As of Dec 15, 2022, DTZ lost 23.5% for the quarter to date (QTD), and included four digital assets, all in the Digitization Industry and Industry Group according to the CoinDesk Digital Asset Classification Standard (DACS). Three constituents remained in DTZ the entire fourth quarter and they all lost.

  • Best performer: Civic lost 19.7%. Civic Key has been around for years, and development continues with a focus on Web3 profiles.
  • Worst performer: Galxe lost 46.9%. It dropped over 40% in the days after the FTX collapse and hasn’t been able to recover since. Civic is roughly twice as big a Galxe by market cap, and together they make up over 28% of the sector.
  • Biggest asset: Ethereum Name Service, comprising 49.3% of the sector. ENS lost 19.7% but continues to grow, with new addresses constantly being registered. That tally is currently approaching 3 million names and 600,000 owners.

Commentary and outlook

The digitization sector – including decentralized web infrastructure, along with proof of ownership and authentication via blockchain technology – wasn’t spared from the broad crypto market malaise.

“You just can't trust centralized intermediaries,” says Harrison Hines, co-founder and CEO of Web3 developer platform Fleek.

There’s more demand for naming services, according to Hines. The big opportunity is looking to build supporting projects like “blockchain name service aggregator” so that browsers know how to resolve the registry issue across various domains because “they're all part of this one registry.”

“I think there'll be multiple winners in the blockchain domain space,” he told CoinDesk in an interview.

Ethereum Name Service is one of the early adopters among the domain name system (DNS) players.

Despite the platform’s native ENS token trading down for the quarter amid the general market downturn, Hines said he is very bullish on the project and the outlook on the sector in 2023.

“We get to the point of, like, we don’t deal with someone's phone number anymore,” he said. “It's so hidden in the user experience. So I think ENS is a great answer to that.”

More from this report

(Fourth quarter performance as of Dec 15, 2022.)


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Jocelyn Yang

Jocelyn Yang is a markets reporter at CoinDesk. She is a recent graduate of Emerson College's journalism program.

Jodie Gunzberg

Jodie Gunzberg, CFA, is the Managing Director of CoinDesk Indices.

Max Good

Max Good is the Senior Index Research Analyst at CoinDesk Indices, based in Miami. Before covering crypto, he was a structural engineer with a BS in Architectural Engineering from University of Colorado - Boulder, and a MS in Civil Engineering from the University of Illinois - Chicago.