How Do You Know A Good Crypto Project?

Crypto and risks are inseparable. There are no guarantees-only calculated decisions in crypto trading, and I will explain why.

First, crypto markets are highly volatile. Prices can shift from bullish to bearish in an instant. Second, identifying a solid crypto project requires thorough research. You must analyze data, remove emotional biases, make informed predictions, and hope it turns out that you are correct at the end of the day. 

Whether you are a crypto newbie or an expert, you must work to find a good project. So, how do you know a good crypto project? You may ask. The answer is Research.

This article has you in mind. As you read it, you will find out what is required in your research, how to go about it, and key things to look out for. Let’s talk more about a crypto project and research.  

What are Crypto Projects?

Projects are a set of objectives that must be completed within a timeframe to achieve a particular goal. There are slight differences between a crypto project and a project with a set time frame.

A crypto project is known by any of these three (3) outcomes 

• A cryptocurrency is created and listed,
• A new blockchain is built and completed,
• A widespread adoption and sustenance of the new blockchain coin was built.

In addition to making a profit, these outcomes are good outcomes for a crypto project.

Research

Research is the work done to determine whether a crypto project is worth investing in. Here, you look for loopholes and the possibility of the project failing. If, after thorough research, the results are good, then it’s worth investing in. These are the 3 key types of research:

• Technical Analysis involves studying the charts for a coin’s past price movement over time to predict its next movement. 
• Sentimental Analysis is knowing what people say or feel about a project. These people could be crypto influencers, social media users, or news sources. Sentiment analysis is difficult and unreliable, but it can help in some ways. 
• Fundamental Analysis involves studying the factors surrounding or directly following the project. These factors include tokenomics, the team, the whitepaper, use cases, project ideas, etc.

Note: The chances of making a good prediction do not come from one type of analysis alone. It’s a combination of multiple factors that determines the outcome of a project. Therefore, always do your own research. 

Factors To Consider During Research

1. Tokenomics

Tokenomics in crypto is the economic study or analysis of a coin. It is a great source of information during research. For new projects that have no charts to analyse, its whitepaper or website serves as its tokenomics. In tokenomics, we look at:

• Market Cap (MCap):  Market Cap shows the value of a cryptocurrency. To get it, divide the amount of tokens/coins in circulation by the price. Projects with small MCaps come with high rewards but are very risky. While projects with big MCaps are less risky but have low rewards.
• Fully Diluted Value (FDV): FDV is the value of a coin when it is in full circulation. When your coin has attained FDV, it could be a sign of a fall in price and probably not worth investing in, except with a few exceptions. 
• New vs. Old Tokens: New tokens tend to perform better than old tokens. But beware of new tokens launched with high market caps.

2. Presale Data

Presale data is all about how the public gets the token or coin. Coins get distributed through presale and given to early users, miners, airdrops, etc. Airdrops sometimes indicate how well a project will perform, e.g. Uniswap airdrop paid its receivers well and was good. Use Token Unlocks to understand token allocation and release schedules.

3. The Team

The team behind a crypto project matters a lot. If a team has been successful with previous crypto projects, future projects from them will likely do well, judging based on their track record and reputation. Also, do not invest in projects with an anonymous team because they are likely to be scam projects. The team behind successful projects will replicate their success to other projects. Meanwhile, do your research on them and trust them.

4. Social Media

You can come across a new project on social media to research. Places like X(Twitter), YouTube and Discord are good places to find projects. 

Also, if you have a project you are monitoring, check their social media, look out for engagements, type of content being put out, frequency of content created, team activity and project updates. 

Even if the project eventually fails, a new team or project can arise from a previous one and turn out to be successful.

5. Problem-solving and Usecase

Every project has a goal, and it is problem-solving. Bitcoin solves inflation, Ethereum solves slow transactions, and so on. 

A crypto project should solve a real-life problem and be of value to investors. Do not invest in a project with unclear goals that sound very convincing even when you do not understand it. 

6. Whitepaper

A whitepaper is a document that contains everything about a coin. In it, you will find:

• Project goals: The project’s objectives and the problems it aims to solve.
• Technology: How the project works, including its consensus process, node operation, and token system.
• Team: Information about the project’s creators and development team.
• Tokenomics: How the project’s token will be allocated and any incentive mechanisms 
• Roadmap: The project’s current and future development plans.
• Evidence: Statistics, lists, or charts to support claims.

A good project whitepaper must be clear, concise, and meaningful. If you find details you are unsure of or do not trust, walk away.

Other things to look out for during research include:

1. Liquidity of the project, especially the locked liquidity.
2. Whale wallets.
3. Potential, i.e. where a project is expected to be in the future.
4. Hidden signals.
5. Catalysts that could drive a project’s value up in the future.

Disclaimer

1. Do Your Own Research (DYOR): No research can convince you to invest in a project more than your own research. Regardless of every step and precaution stated, research to decide what it will be for you.
2. Not Financial Advice (NFA):  This article is not financial advice for you. It is your call to make.
3. No Guarantees-only Calculated Decisions: Crypto is a risk. At the end of your research, you can only predict an outcome that may or may not go as expected. So, only invest what you are willing to lose. 
4. It All Matters: All types of research matter. Do not leave out or disregard the results of any kind of research you make.
5. Many Variables: There are so many factors that determine if a project will be a good or bad one. So, carry out in-depth research and not shallow research.

Conclusion

The goal of every research is to decide whether to invest in a crypto project. So, with this article, it should be clear how to know a good crypto project when you see one. 

While there may still be other ways and tips to spot a good project, Remember that nothing here is financial advice. Do your research and decide whether to invest. All the best.