Peter Lynch, philanthropist and famous American investor, said: "People hear a stock tip on the bus ride and put half their savings into it before the sun goes down... and when they lose money, they blame institutions and programs for trading".
If you have clicked on this article, it means that you are ready to invest intelligently. For those who do not yet know what DYOR means, it is an acronym coming from an English expression "Do Your Own Research".
Peter Lynch, philanthropist and famous American investor, said: 'People hear a stock tip on the bus ride and put half their savings into it before the sun goes down... and when they lose money, they blame institutions and programs for trading'.
In essence, DYOR encourages you to do your own research and analysis before investing your money in any project. If you're finally tired of blindly following the advice or opinions of others, but instead want to deepen your understanding of a topic and evaluate an investment opportunity by gathering information from multiple sources, you're in the right place!
Throughout the article, we will compare the points developed in the article to the ApeCoin project as an example. This will allow you to better assimilate some technical notions.
The numbers speak for themselves : Study the capitalization of a cryptocurrency and its circulating supply
1. The capitalization of a cryptocurrency
The capitalization of a crypto is the total value of the tokens or coins in circulation of a cryptocurrency, calculated by multiplying the total number of tokens or coins by the current price of the crypto. This is important information that will help you in your decision making. Let's see the advantages and disadvantages of too little or too much capitalization.
Cryptocurrencies that have a small capitalization often have higher growth potential than cryptocurrencies with a larger capitalization. They are more flexible and can grow quickly, which can provide attractive investment opportunities for investors. However, small cap cryptocurrencies can be riskier due to their lack of financial resources and their vulnerability to economic changes and even market manipulation. These cryptocurrencies may also be less liquid, which will make it more difficult to buy or sell.
Cryptocurrencies with a strong capitalization offer a certain stability, as well as high liquidity, which has the advantage of making it easier to buy or sell cryptocurrencies quickly. Nevertheless, they have limited growth potential, as cryptos that have a high capitalization have often reached a slower level of growth than cryptos with a smaller capitalization. They can also be overvalued, which means that investors pay a high price for cryptocurrencies compared to their true value.
2. The outstanding offer
The circulating supply of a cryptocurrency is the total number of tokens or coins that are in circulation on a network. This is important information because it indicates whether the cryptocurrency exposes itself to the risk of inflation in the future or, on the contrary, if it presents a form of scarcity. Let's see the advantages and disadvantages of too large or too limited an offer.
Cryptocurrencies with large supply in circulation have advantages and disadvantages to consider. Benefits include accessibility and high liquidity as there are more tokens available at an affordable price for exchanges. However, the downsides include a dilution of value as there are more tokens in circulation, which may limit long-term growth potential.
Cryptocurrencies with a limited offer have the benefit of higher long-term growth potential due to their scarcity, which can increase their value over time and provide inflation protection. However, their accessibility may be limited due to their scarcity, and they may be less liquid as there are fewer tokens available for trading.
3. How do I get this type of information?
To find this information, you can visit websites dedicated to cryptocurrency market data, such as CoinMarketCap and CoinGecko. These sites provide real-time data on the capitalization and circulating supply of cryptocurrencies.
4. Example: capitalization and circulating supply of ApeCoin
To illustrate this first point, we want to know the market capitalization and circulating supply of ApeCoin. We went to Coinmarketcap where we find the market capitalization of ApeCoin which amounts to $2,101,858,259. The total supply of ApeCoin tokens is 1000 000,000 and the supply currently in circulation is 368,593,750 or 37%.
Based on this information, we find that ApeCoin is a cryptocurrency with a large capitalization of over $2 billion, which may indicate some stability. However, with a total supply of 1 billion tokens and a circulating supply of 37%, the long-term growth potential of ApeCoin may be limited due to the large circulating supply, which could lead to token inflation in the coming years.
Look behind the curtain: assess the team at the helm of the project before committing
1. The team and its experience
When considering investing in a cryptocurrency, the team behind the project is important to consider in your analysis. Conduct research on team members to assess their experience and previous projects they have been involved in. If the team is anonymous, this may immediately be considered as a signal alert, but it is not always the case. In addition, it is necessary to monitor the updates and developments of the team to ensure that the project is moving in the right direction and that it is supported by a competent and reliable team.
2. How about information about the team of a crypto project?
The best way to find this type of information is to visit the official website of the cryptocurrency project in question, or check the profiles of the team members on professional social networks like LinkedIn or on specialized sites like Crunchbase. You can also research team members to see if they have a public online presence, such as blogs, interviews, or posts on cryptocurrency forums.
3.Example: the team behind ApeCoin
Continuing with our ApeCoin example, we researched information about the team behind the project, which is an important consideration when investing in a cryptocurrency. We used social networks such as LinkedIn and Twitter to find information about the team members of Yuga Labs, the company behind ApeCoin. We were able to identify the profile of Michael Figge, in charge of Yuga Labs' content strategy, as well as the profiles of six other employees with an important function within the company, on Crunchbase .
This information allows us to better understand who is behind ApeCoin and to get an idea of their experience and expertise. employees. It's up to you!
The Value of Partnerships: Why Strategic Investor Analysis is Critical When Evaluating a Project
1. Strategic investors
The analysis of strategic investors can give indications of the credibility and confidence that experienced investors, fund managers or even companies have in a cryptocurrency project. If you see big-name investors or venture capital funds investing in a cryptocurrency, this can be taken as a signal of confidence and long-term growth potential. On the other hand, if you can't find any investors or investors are not well known, this can be seen as a warning signal.
2. Where to find strategic investors?
One site that can be helpful in finding this information is Crunchbase. This site contains information on projects, people linked to the project as well as strategic investors. In the absence of a paid subscription, you will still be able to have an overview of the investors of a project.
3. Example: ApeCoin's strategic investors
Referring to our example with ApeCoin, we searched Crunchbase for information on strategic investors. We discovered that the project attracted a total of 41 investors, including Coinbase, Adidas, and The Sandbox. The fact that ApeCoin has attracted investors such as Coinbase and Adidas is a good sign of credibility. This suggests that these companies have confidence in the project and see long-term growth potential. However, it is important to note that the presence of investors does not guarantee the success of the project. You will have to interpret this result with your other search results.
Decipher the technical aspects of a project: analyze the whitepaper
1. The whitepaper, the foundations of a blockchain project
Reviewing the technical aspects of a project before making an investment decision can save your money. The whitepaper, or white paper, is a key document that explains in detail the technology used, the problems it solves, the operating methods, as well as the tokenomics of the project. The absence of a detailed whitepaper can be seen as a red flag, as it may indicate that the team did not take the time to properly document their project. Also note that a poor quality or incomplete whitepaper can be another red flag, as it may indicate that the team does not have a clear understanding of their own project.
2. How to find the whitepaper of a crypto project?
In principle, the whitepaper can always be found on the official website of the crypto project in question. It may in some cases be difficult to find. In this case, go to Coinmarketcap or Coingecko, the latter provide links to cryptocurrency whitepapers.
3. Example: the ApeCoin whitepaper
Continuing our ApeCoin example, by going to the official website, we found a detailed whitepaper that gave us a deep understanding of the underlying technology. We also discovered the vision of the project, the foundation as well as the governance of the project via a DAO (decentralized autonomous organization). 136bad5cf58d_ that the team behind the project has taken the time to think carefully about the direction it wants to take and the principles it wants to follow. Reading a whitepaper can seem long and complex, but you will get used to it over time. This will also allow you to quickly remove coins from your watchlist.
Beyond the price: analyzing in depth the dynamics of the tokenomics of the project
1. Tokenomics and use cases
The tokenomics of a cryptocurrency determines how the token's value is created and distributed, as well as its future use. Key elements of tokenomics include the total token supply, distribution mechanism, token use case, incentives for token holders, and project governance.
The use case of a crypto reflects how it is used to answer a request or to solve a specific problem, for example. If the use case is clear and useful, it is highly likely that the demand for this cryptocurrency will increase. For example, the use case for Chainlink's LINK token is to power its decentralized oracle network, which provides data to smart contracts on different blockchains. The strong adoption of Chainlink's network and the growing demand for reliable data are positive signs for potential investors.
2. How to learn about the tokenomics of a crypto?
In general, you can find tokenomics by consulting the website of the cryptocurrency in question, its technical documents or its whitepaper. Blogs and online communities can also provide information on the use planned and actual of the token in the project.
3. Example: ApeCoin tokenomics
Let's continue with our example on ApeCoin. After going to the official website, we found the tokenomics of the project. The tokenomics of ApeCoin is relatively simple: the total number of tokens is fixed at 1 billion, without the possibility of creation or destruction. The distribution of tokens is divided into four groups, the largest of which is the ecosystem fund with 62% of the tokens. 16% of the tokens are allocated to the Yuga Labs company, of which 6.25% are donated to charity. Tokens allocated to project contributors will be locked for a period of time ranging from 1 year to 4 years. And finally, 8% to the founders of the Bored Ape Yacht Club (BAYC).
As a result, ApeCoin's tokenomic provides a limited basis for assessing its investment potential. Therefore, the vision and use cases of the project must be taken into account. It's up to you to continue the search.
One last tip in your quest for good DYOR. This is to search for third-party security audits for the crypto in question. Audits can help identify vulnerabilities and weaknesses in project security, code quality, and compliance with industry standards.
2. How to find audits?
Audits are often conducted by companies specializing in cybersecurity, such as CertiK, Quantstamp or Chainsulting. Audit reports can be found on project websites or on blockchain data aggregators such as Etherscan. Coinmarketcap and Coingecko also provide links to audits for certain cryptocurrencies.
3. Example: the different audits of ApeCoin
We have done research to determine if the ApeCoin project has been audited. We consulted two blockchain security audit sites, Chainsulting and Certik. We discovered that Chainsulting issued a certificate of compliance for ApeCoin, while Certik performed a full audit of the project and gave it a security score of 90/100. This information suggests to us that the ApeCoin project has been under scrutiny to ensure its reliability and security.
DYOR is like a cry from the heart that reminds you of the importance of taking matters into your own hands. Indeed, he urges you to be independent of mind and not just follow the opinions and recommendations of others without thinking. DYOR invites you to dig deep, explore different avenues and analyze varied information from multiple sources. You have understood it, it is not enough to be satisfied with a single positive element on a crypto but to cross the results of your research in order to define whether it is an investment opportunity or not.
After doing extensive research on the ApeCoin project, we can conclude that it is a solid project because it has high capitalization. However, the total supply of tokens is very high and the supply in circulation is still low (+/- 1/3), which could lead to inflation and negatively impact the value of the token in the long term. The team is present and strategic investors such as Coinbase and Adidas give the project some credibility. We also found a detailed whitepaper on their website. However, tokenomics is quite simple, with a limited token distribution. It is important to seek more information on the use cases of the project to assess its investment potential and see how well it could offset the significant inflation risk that ApeCoin is exposed to.
Disclaimer : This is not financial advice. The purpose of the site is to inform readers. Any type of investment involves risk. Do your due diligence and do your own research on the projects featured on the site. Act as a good father and do not invest more than your objectives or financial means allow you. In this regard, read our page: Warning about virtual currencies.
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