It's not easy to find the next bullish black horse in a bear market, and do you have a clear strategy to DYOR (Do Your Own Research)?What you need to understand is that "there is no shortcut to prosperity", money grows with knowledge, so continuous learning is the only way to support your wealth!
Three main angles to analyze the fundamentals of cryptocurrency projects:
1. Chained data
2. Projects
3. Finance
Chain Data Angle
Transaction Value
How many tokens worth of the project have been traded over a period of time? For example, if a total of 100 transactions worth $10 were made on the Ether chain today, that would be $1,000 worth of transactions per day. If there is a significant increase in the volume and value of the project, it means that more people are using it and trusting it, but it doesn't mean that it won't run away!
Active Addresses
On-Chain Active Addresses counts the total number of incoming and outgoing addresses (filtered for duplicates and inactives) in the blockchain network that have been recognized as transactions, and typically the active addresses that interact with a project party are supporters of that project party.
In the long term, a sustained increase in active addresses is a good sign, regardless of price increases or decreases. If the overall price of tokens for a particular item increases, it is possible to keep an eye on the number of active addresses as aReference Indicators for Determining Long-term Trends。
Transaction Fee Gas Fee
When investors use blockchain services such as buy/sell transactions and transfers, they have to pay a fee, which is actually a miner's fee (Gas Fee). The fees paid by users reflect their demand for block space, as users compete with each other, and the higher bidder's transactions will be recognized faster so that they can pack their own transactions into the block in a timely manner.
What does this mean? When you trade crypto assets on a blockchain, a miner (Validator / Miner) will verify your transaction records and package them into blocks on the blockchain through a specific consensus mechanism. To put it simply, when you are working on the chain, each node will record the whole process for you. Users will need to pay a fee to these miners who help verify and record transactions, and this fee is commonly known as the Gas Fee.
In fact, just like the traditional financial industry, we need to pay extra handling fees to the banks when we transfer money between different banks.
Total Locked Position Value
Taking equity pledging as an example, it has a similar concept to proof-of-work PoW mining. Users can pledge their token holdings to participate in block verification. It is worth knowing that in a proof-of-stake mechanism, the block is "forged" rather than mined. Cryptocurrencies using Proof of Stake usually start with the sale of pre-mined tokens, or are issued using a proof-of-work algorithm, before switching to Proof of Stake.
Total Value Locked (TVL) is an indicator for evaluating projects in DeFi, the larger the TVL, the larger the capital under management, the TVL can be used to simply assess whether a project is undervalued or overvalued, and the amount of money pledged within a given time period can be used to gauge whether the user has interest in, or trust in, the project party.
However, TVL is also a very confusing indicator. Current data does not guarantee that the same data will be available in the future, especially in a volatile market, where short-term incentives from project owners and currency fluctuations can cause TVL to change dramatically, so it is important to be aware of this.
project angle
livre blanc
There are no clear rules on what should be included in a white paper on cryptocurrency, but at the most basic level, it should clearly set out evidence-based research, analysis, security, so that investors can easily understand the value of the project, and more importantly, what problems it is intended to solve.
To the editor, the basic information of the white paper should best include: currency name, team background, project concept, operation structure, and future direction. When analyzing the white paper, you should pay attention to whether there are any red flags, whether the goals of the roadmap seem realistic, and you should also find out the real function or purpose of the project. For example, what does the technology actually do? Does it create a decentralized application? If you're still not sure what the project does after reading it, then there are two possible conclusions:
1. this program is so advanced that you need more knowledge to understand it.
2. the project hasn't really done anything yet.
Team
This is a relatively simple analysis, as investors should look for team members with the necessary skills to realize the project, whether they have previous successful venture capital experiences in the relevant industry, and whether they have been involved in any dubious projects or scams, among other things.
If you don't recognize the names in the teamThe easiest and most direct way is to use Google and LinkedIn to search for their personal background information.。
Financial Perspective
market value
The market capitalization of a cryptocurrency is actually similar to the market capitalization of a stock, and is a mathematically calculated indicator of how much a cryptocurrency is worth in the marketplace. It is calculated by multiplying the amount of cryptocurrency in circulation by the current price, which basically represents the cost of buying each available unit of that cryptocurrency.
Example: If 10 million A tokens are issued and traded at $1, the market capitalization is $10 million.
After all, cryptocurrency is a new field and is still in the early stages of development, there are still a lot of irregularities and instability in the market, and the market value of certain items may be highly manipulated, so in addition to focusing on the market value as an indicator, we should also pay attention to the market value.ComprehensiveOther factors to analyze.
Lock-up period for holders
In order to attract users to give away a large number of tokens, but for the sake of controllability of the tokens, the project side usually chooses to lock up the position to kill two birds with one stone. Attracting users and ensuring the controllability of the tokens at the same time.
In order to stimulate future prices and widespread distribution of tokens, the project sponsors will lock up the tokens of early investors during the ICO phase for a period as long as several years. During the lock-up period, token liquidity may be low, resulting in a higher demand than supply, which stimulates the price to rise.
For users, locking positions protects their assets to a certain extent and prevents them from being harvested during volatile market conditions due to impulsive panic. In addition, the incentives associated with locking positions are similar to a bank's very low-interest time deposit.
However, locking positions is only a means to an end, the future of the project still depends on its own starting point and strength, otherwise locking positions may just be used to cut leeks.
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