Research Analysts. Hans Olav Hilsen Attribution Manager. Aurelie Barthere Principal Research Analyst. Paul Harwood Product Manager. Darren Lim Research Analyst. Javier Gonzalez Research Engineer. Greg Piekosz Community Manager. Louisa Choe Research Analyst. Martin Lee Data Journalist. Ed K Product Manager. Minh Phan Growth Team. Dave Liew Growth Team. Daniel Magowan Growth Team Lead. Sandra Leow Research Analyst. Yong Li Khoo Research Analyst. Beili Baraki Research Analyst.
Seth Zhuo Research Analyst. Daniel Khoo Research Analyst. Niklas Polk Resesarch Analyst. Jake Kennis Research Analyst. Join our Discord and get exclusive strategies I'm in. I look for real world usage in the form of adding value, fee generation or revenues for token holders. You could literally watch them building and growing the exchange to decide when is the right time to invest.
DeFi protocols can be valued based on a percentage of the total value locked, TVL. This is always transparent and relatively easy to find. Here are some sites that I use to monitor fee generation and TVL. There are a number of free and freemium websites that you can use to screen cryptocurrencies. The most widely used is CoinMarketCap which has some basic filters and sorting tools. Investing in anonymous teams and daos decentralised autonomous organisations is higher risk than investing in a project that has their teams Linkedin and Twitter profiles listed on their website.
One of the factors that needs to be taken into consideration with micro-cap projects is the chance of a rug pull. This is when the developers simply liquidate their holdings and disappear with any funds in the vault or liquidity pool sending the token price to zero. For investors there is a benefit to having a transparent team. LinkedIn is the obvious place to see a team members past work history.
You can also you Twitter to get a feel for how the person interacts with the community and what they have been thinking about. If you gain one bit of alpha from this article this is it. Go to the Github code repository for a project and click insights , then from the menu on the left click contributors.
This shows how much code has been committed and by who over the lifetime of a project. You can also then go on to each developers profile and see what code they are working on, previous projects and profile information.
How the team reacts to negative news is more important than the news itself in my opinion. Usually when something major and negative happens there will be an initial plunge or liquidation cascade followed by a bounce and then a slow decline as investors slowly sell off. Positive news can include partnerships, milestones and new exchange listings.
Most projects will publish a timeline which will include anticipated development and business events. The blockchain sector is probably the only place you can get billions of dollars invested into a platform called Pancake Swap. I still see a strong domain name and brand as a big plus for the long term prospects of a project. Tokenomics is the economy within a token ecosystem. It equates to what will drive demand for a token and how this balances the initial and ongoing token supply.
If a token provides utility or is burnt using protocol fees then this will increase demand beyond just investor interest. Governance tokens with no burn mechanism are an example where there is no value proposal other than a voting mechanism on protocol changes. This is how many tokens were distributed at launch. This is often quoted as a valuation metric for a project.
Staking rewards and incentives are often used to bootstrap liquidity in the early stages of most DeFi projects. A fixed supply of tokens will be distributed to investors that stake liquidity provider LP tokens. This incentivises the growth of the liquidity pool and encourages yield farmers to buy tokens to stake. For ERC20 tokens we can use a block explorer like etherscan to see the token distribution. Generally more users with less tokens per wallet is beneficial as it means less risk of a single whale dumping their holdings.
On launch almost all demand will come from speculative investment and traders. This acts as a voting mechanism where the market projects their assessment of the best projects. Later token utility and internal usage can greatly affect the demand on exchange and ultimately price. Crypto projects will usually publish a whitepaper which will often have a page on tokenomics and how the team intends to create demand on exchange.
Assessing the viability and real world usage is key to quantifying likely demand. In the short and mid-term investor sentiment is still the key driver of supply and demand on exchange. Mr Market tends to overreact to both positive and negative news flow and then correct itself as participants rebalance and adjust.
We can borrow frameworks from venture capital investors and apply it to crypto markets. Investments have a long time horizon as their exit opportunity may not come for years. Deal flow is critical for early stage investors in crypto markets as much as it is in traditional markets. That might be signing up and contributing at hackathons or automating a weekly report on the traction of defi protocols.
The best deals and opportunities might not be available at a single moment in time and finding a way to have constant access to deal flow is critical to success.
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