Definition

The typical formula for NVT is the following:

NVT = Daily Market Cap / Daily Transaction Volume

Santiment provides an alternative formula for NVT:

NVT = Daily Market Cap / Daily Circulation

The Network Value-to-Transaction (NVT) ratio is an asset valuation metric similar to the P/E ratio traditionally used in equity markets to gauge a stock's growth potential.

The P/E or Price-to-Earnings ratio is calculated by dividing the company's current price per share with its earnings per share. A high P/E could mean a stock's price is high relative to its earnings and therefore possibly overvalued. Conversely, a low P/E might indicate that the current stock price is low relative to earnings and possibly undervalued.

As crypto assets are not companies, their earnings are not known , so Transaction Volume is often used as a proxy for the blockchain's underlying value.

Since Transaction Volume gets rather noisy and often includes duplicate transactions (sending 10 ETH to a deposit address which then sends them to the exchange hot wallet counts as 20 ETH Transaction Volume even though it's the same 10 ETH being transacted), it's not an ideal measure of a network's economic activity. That's why at Santiment we calculate NVT using Daily Trx Volume, but also by using Circulation instead, which filters out excess transactions and provides a cleaner overview of a blockchain's daily transaction throughput. You'll find both approaches plotted on the graph and can choose which one you prefer.

As with P/E, a high NVT indicates that an asset's network valuation is higher than the value being transmitted on the network. In other words, the network is expensive relative to how much value it moves, signaling a potentially overvalued asset.

Conversely, a low NVT denotes an asset that is cheaper per unit of on-chain transaction volume, signaling a potentially undervalued asset.

NVT is often used as a long-term indicator of an asset's price trends, rather than a day-to-day valuation metric.


Access

Restricted Access.


Measuring Unit

Ratio


Data Type

Timeseries Data


Frequency

Daily Intervals


Latency

On-Chain Latency


Available Assets


SanAPI

  • NVT using 1-day Circulation is availale under the nvt name.
  • NVT using Transaction volume is availale under the nvt_transaction_volume name.
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{
  getMetric(metric: "nvt") {
    timeseriesData(
      slug: "santiment"
      from: "2019-01-01T00:00:00Z"
      to: "2019-09-01T00:00:00Z"
      interval: "7d"
    ) {
      datetime
      value
    }
  }
}

Run in explorer


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{
  getMetric(metric: "nvt_transaction_volume") {
    timeseriesData(
      slug: "santiment"
      from: "2019-01-01T00:00:00Z"
      to: "2019-09-01T00:00:00Z"
      interval: "7d"
    ) {
      datetime
      value
    }
  }
}

Run in explorer

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