Bonus section: how to analyze crypto projects

Below is an algorithm for studying crypto projects. This method will help you analyze crypto projects and significantly reduce the risk of buying tokens from some kind of scam.

This research will not protect you 100%, but it will significantly reduce the risks!

This algorithm is enough to avoid falling for a scam, but you also need to study the white paper of the project and understand how everything works before entering the coin.

It is best to study the project as much as possible and collect as much information about it as possible in order to build your own opinion on it. Do not rely on the opinion of some blogger, study the project, the niche, the technology, and look for reasons for the growth of the coin in the long term.

The most important thing you need to do before entering any crypto project is to find clear and understandable answers to these questions: "Why will people buy these coins? How will the coin be used? What will ensure the growth of the coin?"

For a qualitative analysis of the project, about 30 criteria are used, however, many of them are sub-criteria within the main ones for analysis. Therefore, let's analyze 20 main criteria for analysis.

For analysis, you will need 6 websites from where you will get the information you need. You can use our analysis table to make it easier: link

Market metrics

Current token price

The first thing that interests us and from which we will start is the current token price. For example, let's consider the Avalanche (AVAX) coin.

To find the current price per coin, we will use the Coinmarketcap resource. The price of the coin at the time of writing the article is $24.07 - enter it in the table.

Next, we open the price chart for the past year and find the minimum price and maximum price, also enter them in the table. $7.8 - minimum. $134 - maximum. Now we can determine how much the coin has grown relative to the minimum and how much it has fallen relative to the maximum.

Growth relative to the minimum is 308%, which means that the coin has grown three times.

Falling relative to the maximum is 80%.

Such indicators, in principle, can already interest us and be the starting point for the beginning of a gradual purchase for a part of the allocated amount. But this is just one of the factors to which we pay attention. We put a plus and go on researching further.

IDO/IEO price

This is a more in-depth metric, where we can find out the price at which funds entered the coin and the price at which IDOs were for early investors.

To do this, we go to the CryptoRank analytical service, find Avalanche in the search and go to the ICO section. We need to calculate the average price at which early investors entered the coin. To save time, we already calculated everything in advance, but you will have to do it yourself.

On average, AVAX was taken at $0.54. This is about 4500% profit for early investors. We try not to enter coins on such иксах, but there are exceptions. Usually, it is considered acceptable to enter a coin up to 1000%, i.e. when early investors have less than 10 иксов.

Market capitalization and PreSale

The next stage of market analysis is the ratio of the amount of funds raised on the presale of the coin and the current market capitalization. To do this, we also go to the CryptoRank section in the ICO section of the Avalanche coin and simply add up the amounts raised in various funding rounds.

Avalanche raised around $120 million.

And its current capitalization is $6.8 billion.

It turns out that the capitalization, relative to what was raised on the presale of early investors, is 56 times or 5600% more.

For fundamental projects, this is quite normal, but we still prefer to invest in coins when this difference is no more than 10 times. But it is worth looking at the perspective of the project, I entered at higher prices when I saw the reasons for the growth of the token.

Emission

This parameter tells us how many coins are in the market, i.e. not in the lockup of early investors. The higher this percentage, the better for us, because we are less exposed to the risk of a price drop due to unlocking of funds. To do this, we go to CoinmarketCap and see that Avalanche currently has 39% of all tokens in circulation.

Next, we need to know when and in what quantity the remaining 61% of tokens will be unlocked. To do this, we go to Messari and search for Avalanche. There, we click on "Profile", then "Token Economics" and "Supply Schedule".

Now we see the full picture of unlocks for each group of early investors and understand that a large number of tokens will be unlocked ahead and more tokens will be printed for staking, which can put downward pressure on the price. All tokens will be released to the market by around 2026-2027. This is a very useful tool and another aid for project analysis. Use it!

Twitter

Moving on from market indicators to social indicators. One of the fundamental factors in the analysis, which is also divided into several categories.

We go to the Avalanche page on Coinmarketcap and in the community section we find a link to Twitter. In the Twitter profile of Avalanche we see that many of the people we follow are already subscribed to this project.

As for specific numbers and what we want to see here?

The more matches in subscriptions, the better. But special attention should be paid to funds and projects, as various communications and financing for development are mainly carried out with their help.

The final list of subscriptions that interest us:

• Funds

• Projects

• Influencers (bloggers, celebrities, and just media personalities)

• Audit companies

In addition to all of the above, you can use the analytical service CoinsGuru, which already includes a huge number of reputable profiles and gives an automatic score to the project.

Simply copy the link to the Twitter profile of interest and paste it into the search bar.

Since Avalanche is a fairly famous project in the cryptocurrency community, its Twitter score is high.

In addition, all subscriptions on this service are automatically sorted into the categories we need. Another tool for quality analysis.

GitHub

GitHub is a project management and code versioning system, as well as a social media platform for developers. It allows you to work collaboratively with others around the world, plan projects, and track your own and others' work.

To find the GitHub for a particular project, we still use Coinmarketcap, by selecting the corresponding coin and clicking on the "Source code" button.

We are redirected to the public repository of the Avalanche project on GitHub.

Now, in order, what we pay attention to:

1. Contributors are the number of programmers who are working on the project. The more, the better. 67 people in the case of Avalanche is a good indicator.

2. Stars are the equivalent of "likes" or favorites on GitHub.

3. Commits are additional improvements and bug fixes in the project code.

4. Releases are important updates to the code. Like a new version of Windows or iOS. An important parameter that shows that developers are constantly improving the project.

A good GitHub means that the project is actually being worked on and is constantly being improved.

But keep in mind that some projects completely hide their GitHub and we cannot assess it by all of the above criteria. This is not bad or good, because projects do this for various reasons. For example, the Binance (BNB) exchange token hides it for reasons of information security, because it is a private centralized company.

5 additional metrics

Let's move on to the last five categories of evaluation that can be taken into account when analyzing a project.

Trading volume

This is the simplest category of evaluation, we still go to CMC and look in the "Volume 24h" section. It shows us the total amount of funds that were bought and sold for the token in one day. The higher this indicator, the better.

It affects whether we can buy or sell the token without any price dynamics. Also, the more trading volume a token has and the more liquidity there is, the more stable it is and the less likely it is to be a scam.

Audit

Source: CoinMarketCap

We use the same CMC. Right under the project there is a section "Audits" in which the companies that check the project's code for backdoors, errors, vulnerabilities, etc. are shown.

This section is not available for everyone on CMC, so in other cases we can refer to the project's WhitePepper, where this item will be reflected. Avalanche's CMC page does not have audits, but this is how they should look on the example of PancakeSwap(CAKE)

Multichain

Low-quality projects or even scam projects are unlikely to bother to make their token multichain, i.e. so that it exists in different networks. This is a rather complex process.

In order to check in which networks a particular coin exists, you can use the BlockScan service. We copy the smart contract of the coin of interest to us and paste it into the search engine on the site.

Source: BlockScan

Since it does not support the Avalanche network, let's take the Ethereum (ETH) smart contract as an example. As we can see, the Ethereum token exists in many networks and L-2 levels, which is of course good.

Events

Everything that is currently happening, has already happened, or is planned in the analyzed project. Listings on exchanges, partnerships, collaborations, updates, and so on.

The first place where we can track the news of a particular project is, of course, Twitter. But there are also specialized sites that aggregate most events, for example CoinMarketCal

Go to the site and enter the name of the token we need in the "Key Words" line.

Source: CoinMarketCal

Here we are shown upcoming news. You can also track past news by selecting a time period.

Portfolio of funds

Does any of the funds hold the token we are analyzing?

It is not so easy to find out about this, but there are resources that can help us do this.

1. The same CMC. Go to the category tab and in the search, by pressing the "F3" key on the computer, enter the word "Portfolio". Scroll down and find the funds that interest us, then check which coins they have in their portfolio.
   
   

2. Use the CryptoRank service. Go to the "funds" tab and select any one you are interested in. Here is an example of the Alameda portfolio.
   
   

3. Directly on the fund's website. Go to the fund's Twitter, and from there to their website and look at the latest investments.
   
   

Now you know how to analyze projects, what metrics to focus on, and how to use resources to get these metrics. It is never worth analyzing a project based on a single metric, so do quality research and choose projects wisely!