Bitcoin Forum

You must have all heard by now the term DYOR (do your own research), but maybe you are wondering how exactly to that when investing. So i figured that i'll post and example of how i do my own research and what i am looking for in a coin fundamentals.

What do you need to know when investing?

Project itself (and the technical solution they offer):

Read the project white paper and start by asking yourself: "What problem does this solve?". Many projects are solving made up problems that can be solved with databases, or they have been solved already. They don't need a bulky blockchain. Some projects just put the word "blockchain" in there because it's a buzz word for easy funding from gullible investors that are incapable of doing research themselves.

New coin projects are rarely needed, and forming secure blockchain is not easy task, these projects have high change of 50% attack and are clumsy and costly way to store a ledger. So ask yourself, why new blockchain is needed?

New token projects can be either security tokens or utility tokens, or in some cases both. Security token projects can be shut down by SEC as selling unregulated securities and many of them have already been shut down. So you do have to keep an eye if the project is complying with regulators.

Most of them are not. These projects are mostly centralized by default. And even if they are complying with regulators, tokenizing enough assets to have an impact requires huge partnerships to work.


Tokenomics/coinomics:

When investing to ICO/IEO, you have to pay attention to tokenomics. This means that you have to study if the investors get a fair share of the tokens and is the project giving up too many free tokens that will devalue the poject. Always check their bounty program and the percentages they give to bounty. Bigger the percentage is, more likely it is the project to tank at the moment they list. More % they give to investors the better valuation will investors have for their money. If they give any discounts to any group of investors (early etc) that's always a red flag, because investors want to be treated equally. Giving percentages to advisors can be a bad thing too if advisors have no real use case. They might be just worthless influencers and dump on the project when they get bored.

During the IEO/ICO money rising phase it's also important to know what's the hard cap of the project (max cap on the money they are rising). Putting hardcap too high tells me that project creators are greedy and they don't care if the project value tanks. It's way better for investor to invest into something that doesn't have unreasonable high marketcap valuation from the start. These mid/low-cap projects tend to have room to grow and more value for investor's point of view.

Token issuance rate is important to know. This is an example of a horrible idea ->

https://i.imgur.com/9YXhGrF.png

(source: https://research.binance.com/en/projects/solana)

In SOL's case, the value will most definitely crash in the start of year 2021 when new tokens flood the market and fast inflation crashes the price.

Sometimes the project tokens are place holders until the real blockchain comes in. If the project gets own blockchain, you need to check the plans for the mining reward rate and max supply as well.


Team research:

Ceo should have always have a strong background in coding, it means he/she is knows what's really happening on the project development, CEO who doesn't have coding coding is a sign of a failed unnatural hierarchy. Any good project has always got coders in charge.

All members in the team should have a good reason to exist. Having unbalanced team with too many marketers or advisors is bad. When it comes to coders you should also check their github activity. In general, you should google every team member and their track record. Bunch of failed projects in the history tells me that they are not finishing up what they started. Once i did a background check to ceo and found and found seemingly unrelated article where i found out that the ceo already abandoned our project in secrecy, i sold my coins and shared my findings with the community and the price tanked hard.

If members are anonymous/pseudonymous, just avoid the project. For latest example - Google "Bruno+Block+oyster"


Community:

For older projects you are looking at the community. And by community i am not talking about the number of members in the telegram, those mean nothing. I mean active talk about the project itself, not only about the project price but the tech and look for people who are forming local communities, asking how they can help and finding their way to support the project.


Future/past:

Then you are looking at their future plans and track record. If the project development is dead, the investment isn't probably a good idea. If they are building something, look from the github that how many people are actually building it. Just one developer isn't enough.


Competition:

Always, and i mean always check the competition. And by competition i mean the projects that are trying to solve the same problem as your coin. You can't trust one community on this, they will have biased arguments and you should hear the both sides because every project has supporters who will defend and fight to the teeth on why their product is superior. And even if the project is superior, that's not enough by itself for creating a standard. Google Betamax vs VHS if you need an example.


Marketcap:

Remember that if you are looking for huge gains, i mean 100x gains, you can't assume that high marketcap coins will do that for you, not very fast anyway. Low maketcap coins have way more room to grow and when they do they rise fast and high because it doesn't take that much money. Low marketcap coins are the ones where over night millionaires made their fortune. Most of these coins aren't lowcaps anymore, but they were. That's my point.

Nothing more comes to mind right now, if i remember something essential, i'll update the article if i can.



Ps: This article is not about trading but investing. In trading you should be focusing more on TA then fundamentals.
17.8 edit: fixed typos

BITCOIN is it for me - it solves problem other financial system has, realistic/something/comprehend with -


BITCOIN still for me - bitcoin makes me undisturbed/worried about this, the headaches/scam there are much -

 
BITCOIN - bitcoin owner/creator(s) might be anonymous but damn it you can't take anything away from the technical abilities/mind set, set basics/standard/trails for other-

BITCOIN still -do we have to talk about how big/large the community is? Come on the name rings loud bell sounds.-


BITCOIN - the past has been the best of any crypto-coin and the future looking  balance realistically, even in stricken times like this pandemic bitcoin has it heads high up-

 Testing other crytocurrency -apart from bitcoin- is rigorous/can fail, trust in bitcoin it's heads, shoulders over others.

Ahahaha you are one solid BITCOINer. People behind Bitcoin should award you or something.  ;) Anyway, other things I look at when looking for a good project to invest with is a real team and one that are active in communicating its investors and followers. Looking into the whitepaper is my 2nd filter in choosing the best project to invest with.

Well good for you, it's the safest blockchain and a good choice. But there's innovative development happening all over the map. I am not just disregarding those because of Bitcoin.

That will do but with the team that only aims to scam even though how good is the project it will jusy turn out to be scam later part of promotion or after putting in an exchange. Most of the projects nowadays are dead or will fail unlike in the pas few years to which have higher chances in getting high success rate and reward paying projects that are now listed in the coinmarketcap. There are still good project but it so hard to find them because of the numbers of the projects being created. This is one of the reason that most projdct fails because of the numbers of project and most likely common projects like same purpose of exisiting projects.

Can you show me an example of a good project that exit scammed and was looking good viable project, because i haven't even heard about one?
I might sound arrogant but i bet i can see at least some red flags in it. If i can't, i wonder why they exit scammed if they had a revolutionary project.

Most of projects have been mostly copy paste, yes, but i wouldn't call them "innovative". If you want to keep lumping all the new projects as no value shitcoins, you have every right to do so. I don't judge you, it's not worth time most of the time because it's shitty job looking trough the garbage. But you will also miss out the gems in there too.

SRM rose 20 times from its IEO price and it surprised all when keep rising and rising in its first 2 days. Later DeFi coins or tokens did not have same price rides. Their price more easily to fall down. SOL, SAND, and the latest is CRV. CRV price has fallen from 0.0021 to 0.0005670 within a half of day. It plummetted very fast. I bought at 0.0007 and still have temp loses.:'(

Simple whales are done profiting on them. So whats the point of leaving their shares for too long? Most traders have this kind of strategy. They will play along until they lured others and when the price is at its peak they will dump their tokens and find new gems.

For a not player or risk taker this is not advisable. What OP suggested is very important but there are some factors with the new era especially when we are talking about defi.
 

Exactly, and this is why I don't agree with the "Marketcap" point mentioned in OP. You shouldn't build your investment plan based on the coin's marketcap.
Investing in coins with low marketcap doesn't guarantee a profit simply because such coins can be easily manipulated by whales.
If you are a small investor then most probably you will end up losing your money.

Actually it is very hard now days to find a good project.

In my opinion there are four things that everyone should look into any project and they are:

1. Tokenomics or coinomics
2. Marketcap
3. Product
4. Usage

I always prefer projects that are related to blockchain technology and are trying to improve it. I do not invest in projects that are looking to change the real world scenario.

Im a risk taker too and I understand what OP means. Partly I agree and not. First, if youre a trader and your goal is to make profits. Its logical to think that low marketcap can make you earned cause price appreciation could happened especially if its new project. However, you do this, if the project has solid concept and showcase their importance to the crypto world otherwise it will be a pump and dump case.

Its only a part of of a basis for a success trade but everything boils down to the project performance. If whales thought of it as shitcoin hype, this will skyrocket but even whales can know if they are playing it right or not. Anyway alway dyor to be confident when dealing with trading new projects.

I've spent time in the past researching altcoins and trying to find what I thought was opportunities in vain. I get it we can make 10x- 100x and make millions by finding projects that won't dump their coins on exchanges the moment they get listed. Still, what have these new projects to offer? 99,9% of them nothing.

I'm serious less than 1 out of 100 projects have something to offer. We have 10,000 currently and only 20-30 of them will be relevant. Most projects do not have anything besides an ERC20 token and a few lines of Solidity code.

Basically, I'm treating altcoins as a way to add to my Bitcoin position and I'm not feeling well holding too many of them. I don't see them as having long-term value and certainly I didn't gamble with any DeFi. I bought some alts during April, bought some more during June, and sold a few weeks ago. I felt glad to increase my Bitcoin position but probably I'm not going to go bellow 90% BTC again and felt it was unnecessary risk.

Anyway, the post describes most of the essentials when doing research. In case of a fraudulent project, a red flag will probably appear after taking these steps.

Ehmm.. i guess this PS is not correct. Afaik, when you trade, all these 3 things you should at least know. Very useful when market is in trend.
1. Fundamental
2. Sentiment
3. TA

The combination of points 1 & 2 will affect TA. Example: Do you still remember MA golden rules? If the MA 50 breaks (pierce) the MA 200, based on TA. market will experience trend up/down. But what will happen if points 1 & 2 experience significant changes? From negative to positive as example? Ofc, MA position will follow right?

Focusing in TA is good. However, Imo, if you (at least) able to mastering fundamental and sentiment analysis, then both analyzes will strengthen your TA.

PS : I am TA lovers (tend to be TA hardcore).

Finally someone made a decent guide how to actually do the research. People so often tell newbies to do research, but they don't understand that newbies can't do good research, and there's so many dangers for them, like influencers who shill for scams, website that promote shitcoins, fake communities and so on.

What I want to add for beginner investors is to be highly skeptical when dealing with crypto. Even in traditional venture capital the risks are very high, but in crypto they're through the roof because of added risks of scams.

Technical Analysis is very effective, especially you are late from their ICO/IEO or any offerings they conducted. But with the help of Technical Analysis, you can enter at any point, depends on how your analysis shows where or when you will enter and will turn to become investment.
I am worried again once we are again in bull run just like what happened before, around 2017- 2018 a massive of new people investing in cryptocurrency without such knowledge and got rekt.

Can't agree more. For me, TA is one way of analysis that I think is effective. As I have mentioned in my previous comments.

However, imo, wouldn't it be better if we (at least) understood the fundamental and sentiment causes of price movements. Like forex traders usually did. They always check forex factory, in case there's a news that cause price move sharply or strengthen previous trend.

One of the first thing to research is the transparency of token distributions by using the available tool for tokens on etherscan.io (https://etherscan.io)

YAM: https://etherscan.io/token/0x0e2298E3B3390e3b945a5456fBf59eCc3f55DA16
I click on Holders tab to get the distribution list https://etherscan.io/token/0x0e2298E3B3390e3b945a5456fBf59eCc3f55DA16
To get more visual distributions, click on Token holders chart but for YAM it is not found (not available) https://etherscan.io/token/tokenholderchart/0x0e2298E3B3390e3b945a5456fBf59eCc3f55DA16  ;D

I think after answering this question the next question you should as is if the team can do what they are trying to solve. Because even if they have this good unique vision and project if they don't have a team that can do what they are envisioning then this project will be stalled and probably lack any kind of development. That's why the project itself should also always be matched if their team can do what they want to do, this is really crucial for investors to see if they are looking for a potential in a project.

Well, yeah, without an explorer it's harder/impossible to confirm tokenomics. Maybe i should update that, but that technique hasn't been used since Onecoin i think (and that's not really anything to do with altcoins anyway).

(You can still see the token YAM holders without a fancy graph - (https://etherscan.io/token/0x0e2298E3B3390e3b945a5456fBf59eCc3f55DA16#balances) And when you see that scam, you don't need a graph :D.

Dealing with crypto, rules must be abide, more research must be carrying out not to be scam. No roof for short cut because all protocol must be follow.

Simply look for the things that you don't understand in investments. By that, you can widen your perception towards things that will help you have a good quality of trading in the market.

It is not that hard to seek for information that you can use as a tool for learning. I'm really a fan of self-study and self-learning because it can make you independent about the things that you can use in your surroundings. Don't always rely on the things which are already in your mind, don't be contented with that, always look for more knowledge.

Nice work OP.

One of the most difficult things for people on these boards is to not only read about DYOR and know that you should, but actually doing it. How many members on these boards who participate in bounty campaigns or even invest money in new projects, have actually taken the time to read the complete whitepaper? Some projects even create "one pagers", because they know most people don't even bother reading the whole WP.

So rule number one of DYOR should be to actually do your own research and not just having the intention of doing so. ;)

Allow me to add a link to your thread, to a post I made over 2 years ago - a short DYOR checklist - which is however still as relevant today: https://bitcointalk.org/index.php?topic=4388247.

Feel free to add your comments. I don't tend to bump my posts, but I'm sure it can be helpful to others in the future, too.

Nothing guarantees anything, op probably meant the huge profits are to be made with low caps. If you get lucky somehow, you can get in these low cap 'gems' before whales enter and boom.

you're right about the fundamentals. At least we must also understand the fundamental causes and sentiment of price movements. Fundamentals are signals of the start of a coin pump and dump. If you only rely on TA, it will not be balanced and less accurate.

back again  OP's discussion about DYOR i investing. All the points mentioned are interrelated and equally important. Stay on how to do correct and accurate research. Investments will be very profitable if you do research well and get a successful project in the market.

Well i guess i was wrong with the sol. Marketcap just mooned and price even moved forward. I didn't count the effect of the altcoin season.

You forgot a few essential things: the whitepaper, the source code and the new technical developments the project offers. The whitepaper and source code should be the main factors to check before you do an investment into crypto. If you not familiar with the technical background and if you can not read source code then look for competent opinions from people in the community who can.

Literally amongst the first things i mentioned was "Read the project white paper".

But i agree with the source code thing, and opinion of an expert about it would be valuable. I thought i had included that in the section about the project itself or "competition". So that's a good point.

I'll update that later and give you credits for noticing that. :)

I wouldn't consider it a red flag but if it's hefty discount like get double or something like that then it is a red flag, almost all projects give some discount to early buyers these days, imo 5-10% is ok.

100 percent agree with your sayin, actually theres dozen scam project that almost everyday pop up from airdrop and sorta inversting shi* and yeah most of it on ERC 20 other token. They usually say this project actually have impact to real life or somethin like that. Dont invest to people who DM you and share screenshot their Success from "A" company