This article details how to use Token Metrics to research tokens
One of everyone’s favorite crypto acronyms is DYOR; we see it everywhere from Twitter to YouTube.
But what does it really mean?
It means asking questions like:
What does it do?
Why does it do it?
Does it have a future?
Is there something out there that does the same thing better?
Those questions, along with many more, are what we take the time to research so that you can see your portfolios go to the moon.
The first step in reviewing any token is reading its white paper abstract; the white paper can usually be found on the token website.
There are three main categories we review at Token Metrics, fundamentals, technology, and technical analysis.
When researching from a fundamentals perspective, we consider if they have customers, who is on their team, what their reputation is, and their marketing strategies and strategic partnerships.
We want to see multiple team members with two or more years at a Fortune 500 company or two or more years at a top 20 blockchain project.
It is also important that at least one member and ideally more than that, is a successful developer and has strong technical acumen.
We also look at products with large followings on Twitter or Reddit to see the hype around it.
Then we dive deep into a coin’s Github and review the code to determine if it’s a good project from a development perspective.
On top of an in-depth review of the code itself, we like to make sure that the code is being regularly updated.
A project that isn’t being regularly updated is much more likely to be a scam or lose traction in the fast-moving crypto space.
If a project does not have a Github or some certain of other open-source code, then that is a warning sign to stay away.
The turnover or liquidity ratio is a metric we like to look at to determine how liquid a project is.
Turnover ratio = Trading Volume / Market Cap
A good rule of thumb is to not invest in a token with a turnover ratio of 10% or lower because it can become extremely hard to sell in the event of a market crash.
The purpose of using the turnover ratio is to find projects that are liquid and also have a lot of hodlers involved.
Doing all of this research can take lots of time that many people don’t have.
The score for each category we review takes many data points that then become the fundamentals, technology, and TA scores, and then those scores aggregate into the overall Token Metrics grade.
If you ever wish to learn how we come about these scores for a given token, you can view that information on the token’s fundamentals and technology pages.
This is why we started Token Metrics, to make the crypto space more accessible and easier to navigate for everyone.
For more on how to research cryptocurrencies to send your portfolio to the moon, refer to the below video featuring our founder and CEO, Ian Balina.