To research alt coins can be a tedious task. Researching the crypto market involves several different fundamental techniques than the equities or commodities markets provide. Some of these aspects involve elements such as the market cap, tokenomics, utility or wallet and blockchain activity. For proper alt coin research, we will take a look at all of these aspects.
First and foremost, you have to do your own research to figure out if the crypto coin is active financially speaking. To figure this out you can use a tool such as coinmarketcap or coingecko. Once, that’s out of the way, you are interested to see if the coin is traded on a reputable exchange as well. Bear in mind that DEX’es don’t have a listing or requirements criteria and crypto coins are not backed up or insured like the SEC does for listed equities.
Get a sense of how the blockchain / alt coin works
For this step you can use Youtube and get a feel of how it works. You can also visit websites such as binance research, ICO drops and Messari. During this phase, make notes of any questions you might have.
Messari – alt coin research tool
One of the most useful tools out there for al coin research, you can head over to the profile section of any coin for a quick rundown:
The following is of importance:
- Founder & CEO
Binance research is useful to research core components of any alt coin, stable coin or main coin. Because they are the big players they are professionals in the space. You can trust their information to be accurate since they are the biggest players in the market.
This app acts like timemachine for past events for an ICO( initial coin offering). However, it’s not always accurate. Look for images of how money were raised and where they were allocated.
First and foremost, you are looking for allocations that are in the hands of the community not belonging to the people who funded the project.
This is because they could sell the coins when the price will rise. As a rule of thumb, any blockchain that contains wallets with 10% or more of the blockchain’s crypto, is generally a red flag. The reason for that is because if said wallet decides to dumps all the alt coins on the market then that will lead to a price fall.
Crypto whales don’t influence the market since they mainly trade on OTC( over the counter markets) in order to not drastically influence the price of the asset. However, who’s to stop them from entering the regular markets when the OTC markets dry up?
Avoid cryptos looking like these :
In the picture below this release schedule shows a massive influx of coins for all kinds of consumers ( founders, community, private investors) all dumped on the market in 2021.
Checkpoint: assuming everything is alright so far, then head over to the next section.
CEO / founder
Look for the most recent interview of the CEO / founder on youtube to carry on with your alt coin research. Watch them in a chronological order. By doing so you are attempting to answer the questions you previously jotted down. Additionally, try to see if the founders / CEOs or people making the videos have a valid list of credentials. A former Apple employee doesn’t mean anything if they were fired for being drunk on the job.
Try to find crypto channel of the alt coin which will explain core components in layman terms.
The about section on the official website is a good place to start however most of the time, the information here is vague or hard to digest. Since we previously made notes about how the crypto works and whatever questions we might have about it use that info to go through the stuff you learnt and make sure everything applies.
You can do most of this by digging through the crypto’s documentation.
These 6 categories are of interest along with any other topics you might need clarifications on : tokenomics, ICO, consensus mechanism, Inflation, Mining and Staking.
A simple explanation should usually exist at the beginning or the end of the page. If still unclear, try to find the white paper. Also use ether scan or other blockchain explorer to see the token distribution. Thusly you can check who the largest token holders are . The largest wallets are sometimes used by smart contracts for staking. If it’s not an ERC20 token then use their blockchain explorer to see the list of biggest wallets. If you still can’t then that should be a red flag.
Any important updates to the project or that have happened which needs to be included in your alt coin research ?
A roadmap, a road blog and the news is what you need to look for in this step.
Most of the time, the road map can be vague. Nevertheless, you are interested in correlating information from the roadmap with the blog to see if they are consistent. The blog can be sometimes found on the medium page or the gitbhub account. Although these might be indicators the project is not intending to be around very long, you can still execute a short term play:
Partnership announcements , changes in tokenocmics – good news
Open coint telegraph, coin desk, decrypt see if there were headlines. If there’s nothing it doesn’t necessarily mean it’s a negative because the crypto media can be a bit slow.
Summary / Example
1 Coingecko – see if actively traded
2 Youtube – makes notes
3 Masari / binance research find out who works, make notes
4 ICO drops how much money did they raise and how did they allocated tokens . Watch the images to check if they were consistent
5 Watch again youtube other videos and clarify initial questions
6 Check crypto channel if no turn off,
7 dig trhough documentation – all staking , mining etc
8 Make sure if they made progress on what they are progressing
9 Make sure they made headlines
Make judgement to finalize your alt coin research