An important factor that allows us to gain a foothold in this cryptocurrency market is knowledge. We must follow up on projects and learn new conceptual information. Therefore, I want to introduce some very useful tracking methods to you.
The uniqueness and innovation of the project
What will make a project unique in people’s eyes? It’s not a staking project with a higher annual yield than other projects. It’s not a game with more players than other gamers. It’s not even a payment app with lower transaction fees than other payment apps on the market.
However, don’t choose a project that is too unique but does not bring high use value. Ask yourself a question: Does this project have unique innovative features and bring value to the market?
Tokenomics
When researching a project, token economics is the element that takes the most time and effort. Understanding token economics will help us estimate prices and grasp the practicality of a project, greatly helping with subsequent investment decisions.
Token Allocation
The token distribution time of each project is different. Some choose to do it before the project is released, and some choose to sell it publicly. Usually the tokens are allocated for the following purposes:
Team: Tokens are reserved for the project’s founding team members.
Seed/VC/Investors: Tokens are sold to investors at a discounted price.
Private sale: A limited number of tokens are sold.
Public sale: Tokens are sold publicly.
Foundation/marketing: Tokens allocated for marketing the project.
Liquidity pool: Tokens used to create liquidity pools.
Staking/mining reward: Token reward for staking/mining activities.
Token lock-up period
The tokens will be returned to the purchaser at different times. Ideally, the tokens should be paid out in installments, with smaller amounts of tokens each time. The longer the payment period and the smaller the amount of tokens each time, the smaller the impact on the token price.
Always keep a close eye on a project’s token release schedule; if a large unlock is about to occur, the token price could experience a severe sell-off.
Venture/Seed Round Prices
Find out the price at which large investment funds purchased the tokens and compare it with the current token price. Tokens that were purchased by investors at a lower price and have gained multiple times in the current period tend to be more profitable. For slower growing tokens, holders are more reluctant to sell. Investing in projects that reserve a large number of tokens for investment funds should be avoided.
Practicality
What benefits do people who own tokens get? Here are some useful features that a good project should have:
Staking/Boosted Annual Percentage Yield (APY)
Discount: Reduce transaction fees
Verification: Participate in verification and get rewards.
Check your wallet
Use a block explorer to check if any wallet address holds too many project tokens.
team
We should also carefully research the information of the development team behind each project before investing. We have many different platforms to find information about the project team, such as Linkedin, Twitter, or even just Google search or YouTube.
Also, the way the team interacts with users or the way they update information about the project progress can help us understand the project better.
Catalyst
Some of the factors that contribute to the rise in token prices include:
Product/Mainnet Release
Listing on centralized exchanges
Collaboration with other projects
marketing
Twitter: How often does the project post, how many followers does it have, and how they interact with their followers.
Telegram: Is the Telegram group active? Answering questions demonstrates professionalism. Are projects updated in a timely manner?
Summary
To start researching cryptocurrency projects, there are many important factors to consider when analyzing a long-term investment project. Through the above articles, I hope readers can gain more knowledge. I wish you good luck!