In an industry where many of the influencers in the public eye have their own self profiting agenda, it’s now more important than ever to do your own research when purchasing crypto assets. Doing your own research does NOT mean solely watching YouTube videos. The vast majority of crypto youtubers will be shorting the tokens they are slating and will likely be holders of the tokens they are promoting.
This article provides you with a step-by-step guide to conducting your own, all important research that will equip you to profit from an industry that still has masses of unregulated ‘noise’. Before we begin, it’s worth pointing out the necessity of first having a good foundational understanding of blockchain technology and the fundamentals of the crypto industry. You must know the basics before you can adequately comprehend and accurately assess what the different projects have to offer in terms of innovation within the industry.
A very good acronym to remember when doing your own research is FTTR. This stands for Fundamentals, Team, Tokenomics, and Roadmap.
Fundamentals can be boiled down to several simple questions:
1) What problem is the project attempting to solve?
2) What protocol will it be built on, Ethereum? Polkadot? Or is it aiming to create its own ecosystem, and if so, is there any more room in the market for this ecosystem?
3) Is there longevity in the project? Are there opportunities for research and development and further application of the project? In short, what is the vision, the potential of the technology, and are there aspirations of developing industry revolutionising advancements?
When it comes to the team, it is hard to stress the importance of this. Projects with invisible teams should be approached with caution. Ultimately, a project can only be a success if the team is committed, experienced, and professional. You should be able to find the team’s work history on platforms such as LinkedIn. The team will also most likely have key members on their websites and other marketing platforms.
For example, (shameless shill) at OMNIA DeFi . We are committed to being fully transparent regarding the composition of the team and are live-streaming our token release. Another example of a team with supreme pedigree is Harmony One, an Ethereum scaling solution which is a pioneer when it comes to transaction finality, sharding, and staking rewards. Analysis of the team quickly indicates why this is the case. OMNIA Defi’s and Harmony One’s teams obviously shine (more shameless shill)! Food for thought for anyone chasing a quick buck.
Tokenomics are a crucial aspect of the investment potential in a project. A token price can only grow as much as it’s circulating supply and market capitalisation will allow it. We won’t get into the maths behind it, however here is a useful tool which helps configure the price potential of tokens in relation to the two key aspects mentioned above. It’s also worth finding out how much of the token supply has been allocated to founders and funders. If this is a significant amount, then potentially, as soon as the price begins to rise, the market could be flooded with the token as part of a big sell off. A recent example of this is when Vitalik Buterin dumped the Shiba Inu Tokens causing mass congestion on the Ethereum network.
A project roadmap (please scroll down!) will not only inform you as to its potential longevity, but also how good the team is at meeting deadlines. This in a rapidly moving industry is vital. If there isn’t a roadmap on a project website, you can use a site like coinmarketcap to see what upcoming events are in store for various projects. One thing to be very wary of when trading in light of these events, is that there is a significant “Buy the news, sell the event” mentality in crypto. With experience, that will become all too apparent.
With all this in mind, it’s also worth noting there is no such thing as doing too much research. A fine example of this would be the pre smart-contract launch of the Cardano ecosystem. It’s much better to understand your target project inside out before venturing into the unknown. Be careful out there, and remember… FTTR!
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