The Yardstick makes the effort spent guarding the network the fixed point and puts price in the dock. Ordinarily it is the other way round, with price taken as given and everything else measured off it.

It belongs among the valuation views rather than the mining ones, despite drawing on mining data. What it produces is a verdict on price, arrived at from an unusual direction.

What it actually measures

The anchor is machinery already bought and electricity already burned, neither of which can be taken back. That makes it a slower and considerably more stubborn thing to lean on than most figures drawn off the chain.

Growth drags the underlying relationship along with it, leaving an old figure and a current one measuring different things. Scoring against its own past strips that drift out and lets separate eras be laid alongside each other.

It falls out with measures built on what owners handed over, and the falling out is where it earns its keep. Two ways of judging value reaching opposite conclusions tells a reader more than either one nodding along.

Sunk cost makes an unusually honest anchor

Most fundamentals in this market can be manufactured. Addresses can be created, transactions can be generated, and activity can be simulated by anybody willing to pay the modest cost of doing so.

Committed hardware and consumed electricity cannot be conjured. Somebody bought the machines and somebody is paying the bill, which makes this one of very few anchors where the expense of faking it exceeds any plausible benefit.

What it does not tell you

Security spend follows price with a lag, because capacity gets built after the money arrives to fund it. Part of what looks like an independent anchor is price arriving late through a different door.

The relationship also drifts as hardware improves. The same protection costs less over time, which flatters recent readings unless the historical ranking corrects for it.

It says nothing whatever about demand. A network can be heavily protected and barely used at the same time, and nothing in this frame is capable of noticing that or objecting to it.

How to read it

Overheated. Price has climbed a long way clear of the effort guarding the network beneath it.

Fair Value. Price and the work protecting the network are broadly in proportion.

Undervalued. Price is trading at a marked discount to the work being done to guard the network.

The Mining & Network dashboard puts Yardstick next to Hashrate, NVT Ratio and Security Glacier.

Common questions

How does this differ from holder-cost measures?

They judge the market by what owners handed over for their coins. This judges it by the machinery and electricity poured into guarding it, so the pair can fall out, and their falling out is what makes both worth reading.

Why treat guarding effort as a fundamental?

Because somebody has already bought the machinery and somebody is paying to run it, and neither can be faked into existence. That makes it a slower and considerably more stubborn anchor than most chain-derived figures.

Why score it instead of reading the level?

Because growth drags the underlying relationship along, leaving an old figure and a current one measuring different things. Scoring against its own past strips that out.

Is the anchor truly independent of price?

Not entirely. Capacity gets built after the money arrives to fund it, so part of what looks independent is price arriving late through a different door.

Does it account for usage?

Not at all. A network can be heavily protected and lightly used, and this frame has no way of noticing.