If you are participating in or about to enter the Web3 world, you will likely be dazzled by various 'Tokens': some can be traded, some can be voted on, some represent NFT collectibles, and some claim to offer 'annual returns of 15%'... So the question arises: what exactly are these virtual assets? Are they stocks, points, data, or currency?
In this article, Portal Labs aims to provide you with a practical classification logic for virtual assets, helping you clarify what functions, risks, and suitable participation paths are associated with the most common types of assets.
Five Major Attributes
When people talk about virtual assets, they often first think of common cryptocurrencies like Bitcoin and Ethereum, or even some seemingly inexplicable but skyrocketing Meme coins. However, if you observe carefully, you will find that the Web3 era brings far more than this.
In the real world, you would invest in stocks, bonds, real estate, art, or patents. Similarly, in the Web3 world, you can invest in similar, or even more diversified, virtual assets.
Below are several typical functional categories of virtual assets summarized by Portal Labs:
Trading Assets
When it comes to virtual assets, most people's first reaction is Bitcoin #BTC . Indeed, BTC is the best representative of trading-type assets, with its value derived from people's recognition of 'digital gold' and strong market liquidity.
The core of trading-type assets lies in their high liquidity, with buyers and sellers available at any time in the market. However, the problem lies precisely here: while huge volatility can bring considerable profits, it also means you might fall into the trap of 'buy high and sell low', such as #MEME coins that initially have massive liquidity but rely solely on FOMO, or the fear of missing out.
Thus, trading-type assets often exhibit significant volatility and are not suitable for everyone. The premise of choosing to invest in such assets is that you must be able to withstand large price fluctuations in the short term, or hold for the long term and understand that high returns are always accompanied by high risks. If you feel that you are not suited to monitor the market frequently or cannot endure the psychological pressure from severe asset fluctuations, you may need to treat this type of asset with caution.
Equity-type Assets
If you are accustomed to the voting and dividend models of shareholder meetings in the real world, then equity-type virtual assets are not unfamiliar to you.
Taking Uniswap #UNI and Curve #crv as examples, these assets are not just a string of codes or a price symbol, but your voting certificate for the project's development trajectory. Owning these assets is equivalent to owning shares in an internet company, and each of your votes could potentially influence the future direction of the protocol.
At the same time, many NFT membership credentials or community identity assets (such as the famous Bored Ape Yacht Club BAYC NFT) also belong to equity-type assets. Holding these NFTs means you have exclusive access to the community and potentially various commercial rights in the future ecosystem.
Therefore, these types of assets are suitable for investors who are optimistic about and deeply involved in the development of a certain protocol or brand ecosystem in the long term. Your returns may not necessarily come from short-term price changes, but rather from the accumulation of long-term value.
Functional Assets
The most representative asset of this type is Ethereum #ETH . Many people initially purchase ETH to pay for transaction fees (Gas), but as the Ethereum ecosystem continues to expand, ETH has long since become more than just a medium of exchange; it has become an indispensable asset in the Web3 infrastructure.
In addition to tokens from public chains, similar functional assets also include digital identity certificates (DID), such as ENS domain names or Lens personal Profile NFTs. These digital identity assets are not simple 'trading goods', but rather the core identity identifiers that make up the Web3 ecosystem. Imagine this: in the future, everyone will need a unique digital ID to enter the digital world. As the number of users increases, these IDs will reflect significant investment value.
The characteristic of functional assets is that their value highly depends on the growth potential of the ecosystem and users. Investing in these assets means you recognize the long-term prospects of a certain ecosystem and are willing to hold for the long term, patiently waiting for the dividends after the ecosystem grows.
Financing Assets
When many people hear 'financing assets', they might first think of the extremely high-risk coin assets obtained through IDOs. However, in fact, financing assets also include a more stable form of the digitalization of real-world assets (RWA).
On-chain US Treasuries, gold, and even tokenized real estate assets are typical financing assets. They are essentially digital versions of traditional world bonds or equities, more transparent, more flexible, and often have clear cash flow and yield structures.
Of course, risk and return go hand in hand. Early project tokens like IDO can indeed skyrocket in the short term, but the risk of going to zero is extremely high. On-chain real-world assets (RWA) are relatively more stable and are more suitable for high-net-worth investors for long-term positioning. When investing in financing-type assets, you must be clear about your risk tolerance and choose compliant overseas investment paths.
Yield-type Assets
If you seek stable cash flow returns, there are also asset categories in Web3 that suit you.
For example, if you purchase virtual land on metaverse platforms like Sandbox or Decentraland, in the future, you can rent this land to brands or companies for virtual launches, concerts, or other commercial activities, earning stable rental income.
For example, if you hold Ethereum (ETH), you can choose to stake it and convert it to stETH, obtaining a stable yield of around 5%-10% per year. This model is similar to traditional bank fixed deposits or bonds, with relatively stable and clear returns.
Likewise, on-chain US Treasuries and real estate assets also have long-term stable yield characteristics. If you are a high-net-worth individual inclined towards stable investments, these assets are worth your special attention.
How to allocate?
Once you establish a clear classification understanding of virtual assets, the next key question is how to allocate these assets reasonably.
Portal Labs recommends: what you truly need is not to constantly chase market hotspots, but to find a steady balance point suitable for yourself between risks, returns, and compliance.
If you prefer to pursue long-term stability and relatively controllable risk investment models, then on-chain bonds, tokenized real estate, and virtual land as yield-type assets are good choices. These assets typically have clear yield logic behind them, capable of providing you with stable cash flow. However, you need to pay attention to the qualifications and compliance of the issuing institutions for these assets, especially in the investment of on-chain real-world assets (RWA), where you need to pay special attention to relevant regulatory policies to ensure that your funds and returns are not affected by compliance risks.
If you hope to participate slightly in the long-term growth space of the Web3 world beyond stability, then functional assets like Ethereum and governance equity assets from well-known projects (such as some mature governance NFTs or DAO tokens) are very suitable for you. The core logic of these assets is: the more prosperous the ecosystem, the higher the asset value. However, since many governance and equity assets involve overseas investments, it is best to conduct your asset allocation through compliant overseas channels to ensure fund safety and avoid potential regulatory risks.
Of course, if you are more sensitive to market opportunities and have a higher risk tolerance, you can appropriately allocate trading-type assets or early financing-type assets, such as trading assets with significant short-term fluctuations, or some early investment opportunities on Launchpad. However, it is especially important to emphasize here: these high-risk assets are often accompanied by compliance risks. Therefore, the proportion of funds you invest in such assets should not be too high, and you must choose compliant overseas platforms for investment to avoid placing your funds in a regulatory gray area.
*Note: Investment carries risks, please participate in Web3 under legal compliance.