Coin Circle Survival Guide——Project Investment Research Skills
Author: Fuliya, Sailor
Disclaimer This article is not intended as investment advice. Investment involves risks. Please independently and comprehensively understand the project information, and make careful choices and investments based on your personal risk tolerance.
1.1 Introduction to investment research
During the project investment and research process, we must have some basic capabilities to enable the acquisition of information to be more extensive, detailed and accurate.
For example, learn to collect some commonly used websites (exchanges, blockchain addresses, price analysis tools, promotion platforms, etc.), learn to use social tools (Twitter, Discord, Telegram, etc.), understand larger investment institutions, auditing institutions, technical tools, white papers, economic models, etc. All of the above are essential.
In addition, you should read more, such as the white papers of leading projects, study their economic models (such as the white papers of Bitcoin and Ethereum), and large investment institutions (such as a16z, Binance, etc.). This way, you can make comparisons when analyzing projects. With the accumulation of time and knowledge, you will form your own thinking logic. The following content will introduce in detail how to analyze a project and the methods and standards of analysis.
1.2 Introduction to Capital and Consensus
1.2.1 Large investment institutions
Large investment institutions have a pulling effect, such as A16Z, Binance, Coinbase, etc.
1.3 In-depth analysis of the project
1.3.1 Organizational judgment and search
1. The quality of a project can be judged by the amount of capital investment. If an investment institution invests in two projects, look at the investment ratio of the two projects, discover the priority of the projects by focusing on them, and then compare them.
2. How to find an institution, take sol as an example, enter the non-small account, click on the sol profile option, and check the sectors it belongs to, including coinbase, SBF investment, coinlist online and solana ecology;
3. Click to enter the Binance investment section to see the introduction of Binance and the currencies invested in the Binance section;
4. If you want to see which tokens a16z has invested in, you can find a token that you know belongs to a16z, such as avax, and then enter the profile to find the a16z section;
5. In addition, you can enter the official website through the official website, check the investors (investors) on the official website, and then follow the clues to see what projects the investors have invested in. By the way, follow the investors’ Twitter. The following are reliable investors
1.3.2 Personal judgment and analysis methods
1.3.2.1 Remove the protagonist consciousness
Get rid of the protagonist consciousness, and when you hear about this project, check the progress of the project (start-up projects found by your own active research are not within the scope of the following discussion);
(1) In the first 1 to 2.5 months of the project, it was positioned as a capital disk. Even you heard it, and maybe the market lady also knew it (except for internal information or gossip). In such a short period of time, everyone knew it. , 80% of the time it’s the late stage of the project. The CX was effective in the early stage. Leek entered the market crazily and pulled the deal quickly.
(2) 3 months is a project cycle, which is also the quarterly planning stage. Three months can tell whether the initial boast of the project has been realized. If the project is still there after 3 months, it means that the project is at least proceeding as planned. Put it in your own observation pool and continue to pay attention. Note: This is to continue to wait and see, not to enter the market.
(3) If a project has been in progress for more than 5 months, it means that the project is still working. If no one has heard of it in the early stage, it means that it is still working! If there is no time for CX, 5 months is enough for a project to form a certain scale. It is recommended to put it in your own research pool for the next step of screening.
(4) For the Soil-filled Dog project, you must remember: invest the funds you can bear to return to zero, and move in and out quickly to preserve your principal.
1.3.2.2 Check official recommendations and social media
To truly understand a project, you need to listen to the voice of the community and understand the true feelings of community members. Generally, you can find relevant links of the community on the official website, such as: Twitter, Telegram, Discord, Medium, Reddit, WeChat, Instagram, Facebook, etc. At the same time, you need to understand a project and have the ability to continuously track the project.
The higher the project's Twitter followers, the higher its market value. Overseas projects basically rely on Twitter for operation and promotion. For example, ada has 1 million followers on Twitter, and mask has 50,000 followers. Judging from the level of attention, there is a gap in their market value rankings.
Check the official tweet on Twitter, including: operation start time + number of fans + update frequency + tg link, etc.
(1) No Twitter: No one knows about the Internet, China is blooming everywhere, and the project owner is not even willing to pay for a translator and an operator, because he only wants to make money, and the only thing in his mind is you, a little leek, and his target is you. This is a centralized project and very dangerous, please stay away.
(2) Fans with less than 2 million fans will not be considered. In addition to the number of fans, the fan interaction rate will also be looked at (because fans can be purchased), so fans with less than 2 million fans will not be considered;
(3) Those who have just started operating Twitter are not considered, but the project may just be looking to expand outward. Sometimes it can be considered but investment is not recommended;
(4) Those who update their Twitter accounts once a week are not considered, as they may be robots, and those who post weekly reports;
(5) For the number of fan groups added, the first is the Twitter fan group, and the second is the Telegram fan group. The number of fans is more than 20,000 and the frequency of interaction is high. The judgment method is to not click into the group within 24 hours after joining the group. The next day, check whether the group displays 999+, 700+, or 800+ unread messages, because they are all live human interactions, not robots;
(6) Number of international telegram groups
Ø There are only Chinese people in the group and they are not considered
Ø There are two telegram groups in Chinese and English, you can consider
Ø There are multiple national telegram groups that you can consider. It shows that the project is decentralized, has a large market, many players, and is relatively safe. Click in to take a look and compare.
Ø If you don’t have Telegram, look at the Dapp interface. It’s best to look at projects with English interfaces. You can study them, but they don’t mean you can invest in them.
Ø In addition, the number of fans of the project depends on how long the project has been running. For example, after one year of operation, the number of fans is still 10,000 or 20,000, which means that the project is not very powerful and the project team may not be thinking about this.
1.3.2.3 Situation of SSE
Enter non-small accounts, Mytoken, CMC, qkl123, etc. to check which exchanges are on;
1.3.2.4 Institutional lineup
Look at the institutional lineup: The overlap of investment institutions is greater than 2, which means the project is relatively stable. A single investment from a relatively large institution such as a16z, such as coinbase, Binance, and a16z, can be done if two of them overlap or a single a16z investment is acceptable. In addition, those who invest in institutions but are not listed on the exchange can ambush, which is a big plus. So why not go to the exchange?
(1) Look at the circulating market value of the circulation volume, such as FIL, the circulating market value is 46.7 billion, and the maximum supply market value is 730 billion. Here we should pay attention to whether the circulating market value is small. The underlying logic of financial instruments is the concept of time for space;
(2) Is the sector hot enough? If it is not hot enough, it cannot be listed on the exchange. To check the popularity: enter the sector to which it belongs. The sector to which fil belongs is decentralized storage. Then enter the sector to check the popularity of the leader in the sector. If the leader is hot and your token is not hot, continue to look at technical development;
(3) Whether the progress of technical development and product development has not kept up, you can check it through the popularity in the non-small account (GitHub data viewing will be explained separately later). At the same time, it is very important to look at the "latest submission time". For example: the project invested by a16z is not listed on the exchange, the price is very low, and the GitHub submission time is October 2019. There may be problems with the project in the middle. Don't buy it yet, and continue to pay attention to the community's popularity;
(4) Social popularity: Telegram groups, discord, etc. How many people are there in the group? How many speaking interactions are there? According to normal logic, there will be a lot of scolding when joining the group; abnormal logic: continue to brag, invest in a16z, there will be major benefits after being listed on the exchange, etc. (flood army or robot);
(5) Twitter: Generally, a16z’s investments will be followed by large community AMAs, celebrity attention (driving role), and large project interactions (important). If there is no above attention, it is suspected that a16z may have misunderstood and continue to be skeptical;
(6) You can find out whether a project has marketing potential by looking at its popularity in social media and Twitter accounts, because good wine needs to be hidden in a remote alley. If a project has no marketing or does not know how to market, and has no popularity, you cannot buy it even if its technology is great.
1.3.2.5 Project Partners
Find out which companies are the partners of the project, and also look at the background of these companies.
1.3.2.6 Audit status
Audit report and audit team. Whether there is an audit team. If there is an audit, it means that the project is safe. Some projects may not have it, but it is generally more common in the Defi field. Auditing requires time and money. (Silent cost < listing fee>, for example, projects currently do not require listing fees on ok exchanges or second-tier exchanges, so listing means hitting the market, so there is no silent cost), so projects that have been audited are more reliable.
(1) You can go to the project's official website to find the audit company and look at the audit report and the unit that issued the audit report (Manwu, Lian'an, Certik, e.g. Hachen);
(2) Check whether the audit company has audited other reliable projects;
(3) Go to Twitter to find the official website and look for the word "audit" on the official website;
(4) Audit reports and audit companies may also be falsified and need to be reviewed, and the analysis can be conducted by looking at the audit company's past audit projects;
Note: Passing the audit report does not mean that the project is good. The audit only helps to fix project vulnerabilities, etc. However, the project party dares to hand over the code to the audit company for audit, which means that the project party wants to develop in a good direction.
1.3.2.7 Promotional Platform
You can follow the popularity of the project through the news and frequency of appearance in the publicity and promotion platform.
Promotion platforms include: Golden Finance (anyone can post articles, such as fil. Find the consultation column in Feixiaohao. Pay special attention to when the last article was posted and who posted it before the time. You can find the popularity of the project through the consultation frequency), Feixiaohao, Lianwen, Lvdong, Xingqiu Daily, Bibi News and Twitter and other social tools
At the same time, see whether there is empowerment between projects and whether they participate in industry conferences.
1.3.2.8 Project Team
The main members of the project are generally found from the project official website and white paper. At the same time, the main members of the project must be verified as follows:
(1) Nationality of team members: Which country this member is from means which country the project is being done in;
(2) Members’ historical project achievements: The higher the member’s achievements, the higher the value assigned to the project. The creative team is the second face of the project and is a bonus;
(3) Character: Character is very important;
1.3.2.9 Project planning and service awareness
The initial design goals and service awareness of the project are as follows:
(1) Those that are listed on the exchange in a short period of time (1 to 3 months) are very dangerous. It is not because they are powerful, but because it is easy to cut them after they are listed on the exchange. You can observe a coin that is listed on the exchange in a short period of time for verification. The sickle will be raised within 10 days. Such as animal coins, low coins, etc.
(2) Is the team proactive in responding to community maintenance requests? Does the team follow through on their promises? This is quite important.
(3) Has the boast you boasted before come true? What’s next? What step has it taken? For example, if the project has been going on for 5 months, whether the last quarter's plan has been realized, where the current quarter's plan is, and how it will proceed in the next quarter all depends on the team's execution ability.
1.3.2.10 Coin holding address
As the number of addresses holding coins increases, the price of coins should also increase accordingly. For example, Babydoge’s coins increased from 40,000 to 400,000, but the price only increased by 10%. At the same time, the turnover rate increased, which means that the early profitable ones began to sell their coins. They should sell their coins decisively. But it depends on the situation. For example, is there a big move behind the project? Is it worthy of your trust (the basis of trust is the previous content research)?
The currency holding address can be found through the blockchain browser (which will clearly reflect the circulation volume and currency holding address), non-small account, and mytoken.
1.3.2.11 Volume and K-line analysis
This indicator belongs to the exchange K-line data. It depends on the monthly K-line volume. The monthly K-line will reflect the real buying volume and whether the main force is entering or exiting the market. The entry and exit of the main force also takes time.
1.3.2.12 Maintain currency price mechanism
Whether the project has a mechanism to maintain currency prices is as follows:
(1) If there is no linear release as you enter and exit, it must be stable. The income from staking and liquidity mining is linearly released;
(2) Only half of the income can be collected immediately, and the remaining half will be automatically deposited into the board of directors and can be collected three months later. This is slightly weaker than the linear release mechanism because when the currency price is in a panic, no one cares whether to collect half or one-third, because they only want to sell the principal;
(3) Is the gas fee expensive? If it is expensive, transactions will be less frequent and the currency price will be maintained stable.
1.3.2.13 White paper analysis
1. The analysis white paper is a relatively in-depth investment research. Through the white paper, you can explore many technical points in the project, what problems the project solves, that is, why the currency price of the project rises, and moat + competitive product analysis (these two are more in-depth researched);
2. Newbies can first read the white papers of btc, eth and leading projects. The book can understand the team's grand ideals, including various technologies and implementation difficulties. The project side has basically solved everything you think of. You must have the habit of reading white papers. If you read too much, you will naturally start to compare, and you will have the basic ability to judge new projects. Here are the ways to find white papers:
(1) Find the official website link from the exchange introduction;
(2) Search on WeChat and follow the official account to find relevant information (WeChat can solve many problems, you must learn it). Generally, those with blue labels are enterprise certified;
3. If you don’t understand the white paper, you can use the elimination method as follows:
(1) There are and are only projects whose value is deflation + instant consensus, deflation is a cheap concept (except for legendary projects like Bitcoin);
(2) If you don’t understand the white paper, just look at the project team, as explained below;
(3) In addition, for chains such as bsc, heco, oec, and various platform currencies such as okt, bnb, ht, eth, etc., you can know whether the ecology of the chain is prosperous by observing their price absorption degree and reaction speed to negative news. For example, ht and okt are still slowly correcting after the red-headed documents in September. However, on the other hand, the prices of bnb, eth and other currencies are very resistant, and have now reached a new high. From this perspective, it is found that bnb and eth similar coins have a deflation mechanism. But there is not and only deflation as the currency of value;
(4) If the platform currency only rises but does not fall, it is not conducive to the prosperity and development of the chain. For example, bnb consumes handling fees through transactions on the ecological chain. In addition to deflation, it also consumes. The price of a transaction is 5~10u. In order to save procedures Fees, users will reduce transactions, but this will stabilize the amount of TVL locked up and retain more users. This will promote the development of Binance and smart chains and increase the value. This is through deflation and ecological prosperity. , the ecology prospers, the currency rises, and the ecology becomes more prosperous as the currency rises. This is a positive cycle.
1.3.2.14 Determine whether to issue additional models
Without reading the project white paper or project introduction, when you only query the project introduction from mytoken or non-small account, pay attention to three data indicators, including: maximum issuance, circulation, and current supply. If these three indicators are consistent and not integers, it can be judged that the total number of tokens is not fixed. For example, the maximum issuance normally ends with several zeros, which is an integer. If it ends with some numbers, it is definitely wrong. For example, the maximum issuance of ATOM tokens is 287015023, which belongs to the model of continuous issuance or inflation model.
Note: If the project currency of the additional issuance model is currency-based, your tokens will depreciate and there will be no good returns. You must participate in his ecology to profit.
1.3.3 Judgment from people around you
To obtain information, you can see how people around you view this project from a multi-dimensional perspective:
1. Chain News: For example, which platform a16z invested in, search on WeChat, Zhihu, and chat records;
2. Find out what topics are being talked about through the above content, and then find out who is talking (send a red envelope if necessary);
3. Then perform two-step verification, search through WeChat, find some technical articles or investment research articles, and discover your blind spots;
4. Find someone to communicate and verify, and always tell them what I think and what my opinion is (my opinion can be drawn after spending half an hour and reading a few articles);
5. Through the above exchanges and communication, directly adopt the same opinions as mine, and then summarize them in practice. If you have a different opinion than mine, verify it further;
6. Check the character of the project owner and communicate with him (say good things).
1.3.4 Other technical analysis
1.3.4.1 GitHub analysis project status
You can find the GitHub entrance from the project's official website. Many indicators of good projects are updated frequently. For reference, please refer to the following:
(1) For example, btc, enter the code option of GitHub, and find Contributors (builders) in the right column, that is, people who contribute code to Bitcoin, there are currently 836 in total;
(2) Look at the top line of the submitted code on the code page to see when the most recent code modification was submitted. Good projects change frequently, which means that there are many people who are paying attention to them and are willing to contribute code for free.
(3) Enter the project code homepage and look at Pinned to show what language the project was developed in. At the same time, focus on the number of likes from the stars (note that these likers all have GitHub accounts and have development experience and technical personnel, quality very high)
(4) The icon data to the right of the star is called Forks, which means how many people have quoted this code. The more people who quote the code, the higher the recognition. This information can be viewed on the developer's homepage;
(5) Enter the developer's main business to see how frequently code is submitted. The dark green box indicates frequency. By the way, check the developer's attention, fans, and what other projects he has developed. Pay attention by the way;
(6) Go to GitHub and check the number of issues. The more issues there are, the more frequently they are fixed.
(7) Look at the number of closed issues to see how many issues have been closed and resolved.
1.3.4.2 Wiki analysis project status
The wiki will also describe the project in great detail, and you can analyze and dig out some information according to GitHub standards.
1.3.5 Project Value Judgment
Take the Gelato token project as an example. On September 30, it raised 11m$ (11 million US dollars). The total historical financing amount was 1720w$. At that time, the low market value was only 1500w. This way, there is no mistake in the fundamentals. At the same time, the financing amount is greater than the market value. The explanation is An underestimated project, the detailed calculation method is as follows:
Find the circulating supply, 9771341 gels, and use the total financing amount 17200000/9771341gel=1.76$ (current price). Then the current token price of this project is lower than $1.76, which is an undervalued project and can be entered.
Note: The premise must be that the news (general environment trend, after all the bad news, the currency has not risen, you can enter) and the fundamentals (investment research) are not wrong, you can enter without thinking.
1.3.6 Initial investment research ideas
1. Read in-depth articles: Spend at least one hour every day reading in-depth articles. Find relevant columns by browsing consulting platforms such as Twitter and Rhythm, and gain an in-depth understanding of the articles in that column (the articles on these promotional platforms have also been subject to in-depth research and are worth learning). At the same time, it is recommended to take notes on good articles, master some knowledge points, and build your own cognition.
2. Tool usage: In the initial stage, you only need to be familiar with the use of three tools to basically find new projects and simple project analysis, which is easy to get started. (1) Defillama (https://defillama.com/, data analysis), (2) CoinTiger software (new columns are added every day, and the frequency of updates is very fast), (3) CMC (there are a lot of information and analysis data worth learning), and you can also take notes and organize what you learn.
3. Organize and build a framework diagram of ecological sectors: For example, the Web3 sector, by understanding what each project does, classify the sectors, such as DAO, social networking, storage, etc. Only after you have established your own system can you compare other projects and quickly understand the economic model of a new project. Don’t find it troublesome. Without knowledge of existing projects, you will not be able to predict future projects. The foundation must be laid solidly.
4. First of all, only by following the investment and paying attention to the project can you see the hot spots in the early stage and the next year; secondly, when the project explodes, especially the public chain infrastructure, investing money to build the ecology, holding hackathons, and opening protocols to improve tvl are all the only way to go. , returning to the several large privacy investments we have seen recently, they will also develop in the future. The information is visible and their key points will be publicized at every step. Tracking the projects is not as difficult as imagined.
1.4 Ways to find new projects
1.4.1 Centralized exchange projects
1. Follow official promotions, such as Binance Smart Chain, Solana, etc., to discover high-quality projects;
2. The list of new coins listed on Matcha. It is easy to find low-priced coins about 15 days after the launch. At the same time, it is easier to sort out the coins with investment institutions among these coins to get about 5 times the space. The order of coin listing, Matcha - Binance - Cionbase, you can find the floor price on the matcha new currency list in about 15 days. You can check whether the currency is in hot spots and popular tracks and whether there are investment institutions and celebrity websites. You can also pay attention to the new wealth creation situation on ftx;
3. Search for the new section on Coingecko (https://www.coingecko.com/zh);
4. You can search for projects through the publicity platform;
5. Find projects through investors.
1.5 Institutions lurk the secret of 100x coins
How do VCs achieve 100-fold returns? How do they choose projects? This chapter reveals the secrets of institutional investment and how institutions judge the fundamentals of projects.
Institutional investment research on projects is divided into four categories: project track and subject matter, project team research, project development research, and institutional funding planning.
1.5.1 Track and theme of the project
1.5.1.1 The track should be large
The project theme must be large and the track must be broad, such as the current public chain, Defi, L1, L2, Gamefi, anonymity, cross-chain, etc. Some tracks are large and can accommodate a lot of funds, and some tracks are small, such as anonymity (although they are very important, they have not grown much in the past few years, so investing in these is completely meaningless). Only when the track is wide enough can the business logic be far-reaching, and the world view be large enough, can it accommodate large enough funds, generate a large enough bubble, and finally a unicorn may emerge.
For example, AAVE, a leading lending company, and P2P lending, the risk of traditional P2P reception is that the platform suddenly runs away. P2P lending or lending platforms will give interest, the borrower pays the interest, and the lender receives the interest. The source behind the high interest rates offered by P2P is that the platform project side uses the money raised by users to invest, which will cause great risks. Therefore, the biggest risk in the traditional P2P credit industry is that the platform side runs away and loses all the money. Return. But P2P lending itself is very meaningful and the market demand is very large.
If you use blockchain technology, such as AAVE, you design a lending pool, and the lender puts it into the lending pool. When the borrower borrows money, it will automatically match and complete the lending action based on AMA. As the project party, we will not control this pool. The pool is decentralized and there will be no escape. This makes up for the biggest risk of traditional P2P. Therefore, AAVE is very marketable. The total amount of traditional P2P credit is 1 trillion yuan. As a leader in lending, AAVE can occupy 50% to 70% of the market share. The conservative valuation is 500 billion yuan, and the current market value is 11.5 billion yuan. In the future, the AAVE lending platform can take the lead in the virtual economy in the Metaverse, and why institutions or major Internet companies are keen to invest in the Metaverse. In fact, it is because they value the opportunity of the Metaverse to become the next virtual economy of the Internet. Then we will You can compare the scale of the virtual economy with the scale of the current Internet. Therefore, in the future, AAVE's market value will increase from 11.5 billion to 500 billion in three to five years, which is 50 times.
The above is the most basic valuation status, because it has not taken into account the annual inflation of more than 10% of fiat currency and the financial bubble brought about by the next Defi boom. If inflation and bubbles are added, the future market value will increase 100 times.
The reason why the entire Defi is currently in a sluggish state is because it cannot expand its audience. Like AAVE, if you want to borrow money, you must deposit money first, and the deposit amount must be greater than the borrowing amount. For retail investors, they will borrow money only if they have no money. Therefore, this method is only suitable for large investors or large absentees. For example, if they don’t want to sell the ether they mined, Deposit to AAVE and lend U to speculate in coins. That is to say, the over-collateralization method limits the explosion of Defi scale. However, AAVE, SNX, etc. are currently exploring insufficient mortgage (for example, borrowing 100 ether and only mortgaging 10 ether). If this problem is solved, the entire Defi will usher in an unimaginable explosion, making the amount of DeFi locked up even greater. , and at the same time, such a scale must be built on DID (decentralized digital identity authentication) or a decentralized credit system. With the development of these two technologies, Defi has truly entered the 2.0 era, with AAVE, compound, crv and others Only Defi’s leading currency will have room for growth of 100 times or more.
Summary: To judge the subject matter and track, you must first look at the market share of the traditional industry, and then look at the track mapped to the blockchain encryption industry project. If the volume of the traditional industry is large, then the size of the encryption market It won’t be small; secondly, future valuation can be obtained by calculating the entire market share of traditional industries and enlarging the encryption track projects by the same proportion. Then compare the current price to know the room for future growth. Through the judgment of trends and the establishment of value investment valuations, the current and future valuation conditions, as well as the multiples in between, are our return on investment.
1.5.1.2 Novel and unique stories and themes
Successfully created a new category for itself and gained people's attention. In other words, if you can create a new big track project, you may become the leader in this industry. For example, the chain game Axie, an early cryptopunk, created new story themes, such as NFT avatars. In addition, Ethereum created a public chain system, and Bitcoin created a digital currency system. In situations like this where a new track has been created and the market behind the track is not small, discovering the project early will become a ladder to wealth. Therefore, you should pay more attention to the industry, because the construction of the industry and logic can make you make money. If we only judge the future based on the K-line, Fed negotiations, interest rate hikes and other news, it will be an uncertain trend.
1.5.1.3 Leading sectors and projects
To occupy the minds of consumers, you must be number one in your market segment. An expensive project has its own value, and a cheap project has its disadvantages. The leading project will have better products and narratives because he has proven himself in the leading position. We must believe that good students will become better, rather than believe that bad students will become better.
1.5.1.4 Can it become an industry standard?
One point to judge whether a project can achieve great success is whether it can become a standard. Third-rate companies compete with population (small profits but quick turnover, volume), second-rate companies build brands and achieve higher profits through brand effects, and first-rate companies set standards for the industry, that is, other industries use them as standards. For example, Apple (market value of 3 trillion) is close to the country's GDP, only slightly less than Germany. Therefore, the selection of projects depends on whether they can become the standard for this track.
1.5.2 Importance of project team research
1.5.2.1 Temperament and pattern of the founding team
(1) Idealists do not want to make money, but to realize their own vision and value. They realize this vision through their own abilities and make money at the same time. Great entrepreneurs in the world basically have such characteristics, such as Ren Zhengfei, Steve Jobs, Bill Gass, Satoshi Nakamoto, Buterin, etc. You must look at the content in the white paper to see what the vision of the project is.
(2) Having ideals alone is not enough; it also depends on whether the founder is an industry leader and has a desire to perform.
(3) Project founding leadership ability. It can be found from Twitter, for example, that tweets about projects with leadership generally show the progress of the project rather than irrelevant content.
(4) Coding skills are a must
(5) Founder’s private life
1.5.2.2 Community Operation and Marketing
As has been introduced in the previous chapter, look at the news on various publicity platforms, Twitter, etc., and look at the operations of communities such as dis and Telegram communities.
1.5.2.3 Token Value Capture Model
At present, many projects on the market do not capture enough token value. In other words, does it make sense to buy this token and how useful it is. The value of the token is a reference in addition to the previous indicator conditions. It does not mean that it will not work without it, but it is better if it has it.
In addition, this project is already at an advanced stage. Is there really room for growth after buying it? To understand the value of a project, your knowledge must be better than 90% of people in the market. Only in this way can you find and judge the quality of a project in advance, which means you already know the project before it appears. The value of projects in the early stages must be very low, and the controllability of risks is also relatively low.
1.5.3 Project development research
1.5.3.1 Project development progress
The development progress of a project and whether it can be completed with high quality is related to the confidence of investors. If it is not done well, investors will withdraw their investment.
1.5.3.2 Fund reserves of the project party
Having more money may not solve all the problems, but it will definitely not work without money. Money can support project development, project marketing, trail and other purposes.
In addition, I would like to add a little bit about the trend of public chains: public chains will definitely be a track that all institutions will pursue in the future with a very low success rate and a lot of money, because later institutions will not be able to share the cake of Ethereum's public chain development ecosystem, so institutions will try their best to develop the next Ethereum, such as Sol. However, given the current situation of Ethereum, including reputation, market share, ecology, etc., it is difficult for other public chains to subvert it, but institutions will definitely do this in the future. For institutions, they can invest in public chains, because the institutions have a large amount of funds, can make arrangements in this area, and can obtain very high returns. Even if the success rate is one in ten thousand, they will try. Most people dare not make a one in ten thousand gamble. If retail investors participate in public chains, they need to pay attention to: participating in public chains invested by large institutions in the early stage, such as private or public offering rounds, or if there are other channels to get low chips, they can invest. Later capital will definitely hype and drive up token prices;
1.5.4 Funding planning of the institution
As retail investors, we can find our own investment development path from institutional fund planning.
1.5.4.1 Small-scale institutions
When a venture capital institution or secondary investment institution, its level is very small, and its position size is only 1 million or 2 million (the minimum standard limit of investment), so small institutions will find ways to expand the scale and increase the rate of return. When a project is determined, it is usually a heavy position in the project, so it can achieve high growth of the project and obtain high profits from it. Therefore, small institutions must bet on high investment returns in the future through major projects, and use this to raise funds from society to obtain more capital, and then charge management fees.
1.5.4.2 Well-known institutions
After having a certain amount of funds, he will invest heavily in a track and lay out the entire track. For example, if DeFi has 20 projects, he will lay out all 20 projects. If one or two of the projects multiply many times, they will still make money. , this is the logic of well-known institutions. The criterion for judging well-known institutions is that before Sanjian Capital successfully invested in defi and before a16z invested in web3.0, these were well-known institutions.
1.5.4.3 Top institutions
Top institutions will hold heavy positions across the industry.
1.5.4.4 Methods of following institutions
For yourself, don't pay too much attention to the investment targets of top institutions, because the entire industry has been invested by them. You can't judge which project can really succeed, so the investment direction of top institutions cannot become your own investment direction. What we can choose is to select and find out the projects or leading projects that can be invested in from the tracks that well-known institutions hold heavily. The normal investment scale is 500,000 to 1 million. Only when this scale is reached can the funds be allocated, such as how much to invest in Bitcoin, how much to invest in Ethereum, and some small coins that are optimistic.
If your capital is less than 100,000, don't think about allocating funds, it makes no sense. There are two ways to expand your size:
(1) Just follow the method of small-level institutions to invest heavily in a promising project (keep the funds at zero after conducting your own research). Both investment and speculation must have this mentality. It is also called risk value speculation, which is not complete speculation.
(2) The other is to make your own over-the-counter funds more abundant, and then continue to invest for a few years to reach hundreds of thousands. It will be very easy to go from hundreds of thousands to millions or tens of millions.
In addition, learn the best thinking from the best people and constantly build your own outlook on life and values.
1.5.5 Other factors for ambushing 100x coins
In addition to the main content above, when ambushing coins, you must also continue to pay attention to the project's community growth rate, recent hot spots, news frequency and recent actions, and you must have the ability to continuously track the project. Then make friends with time and wait for at least half a year.
1.5.5.1 Other factors
(1) Analyze horizontally and vertically and select a better project;
(2) The market value is at a relatively low stage;
(3) The community is developing very well and the community response is good, but the community group is very backward;
(4) The increase multiple is smaller than the private placement price;
(5) Whether the technical team is working hard, use GitHub to track whether the code is being updated, and continue to update. When the currency price drops, the project team still does not give up, even if the community is full of criticism.
1.5.5.2 Verification project outbreak stage
How to verify whether a project is going to break out:
(1) Pay attention to trading volume, which is increasing;
(2) The number of listings on exchanges is gradually increasing;
(3) The total circulation volume increases;
(4) The number of people in the community increases, and the number of currency holding addresses increases;
1.5.5.3 Predicting the Project Prospects
How far a project can go in the future depends on what the project does. For example, the public chain has the most applications and the largest group, so the future prospects and opportunities are great. The direction it takes can determine the future market value.
1.6 Predict how much money a project can make
1.6.1 Reasons for making money in the cryptocurrency world
When you know that a token will rise tomorrow, how much money will you spend to ambush it? Assuming 100,000 yuan, if you take out 10% of the total assets, the currency price will rise by 50% the next day, making a profit of 5,000 yuan. You need to think about, what does this profit mean to you? Have you made any changes to your life? I'm afraid not, but many people do it. This kind of rise and fall can also be achieved in U.S. stocks and Hong Kong stocks, and it is completely unnecessary to operate through the currency circle. But it doesn’t make much sense in the end. It can’t bring you financial freedom, nor can it allow you to change your destiny.
The reason why the encryption industry can help you achieve this is because this industry is in a very early stage and has huge potential. At the same time, it can brew projects that are ten times, hundred times, or even thousands of times in these tracks with huge potential. Suppose A thousand or ten thousand dollars hidden in this project can turn into hundreds of millions in the future. This is the opportunity given by this industry to make a big difference with a small amount, rather than news flying all over the sky every day. It doesn't make much sense to make a profit of 30% today and a loss of 10% the day after tomorrow.
1.6.2 Reasons for the rise in coin prices
The influence of market supply and demand, if there are more buyers and fewer sellers, the price will rise, and vice versa. There are several reasons for this.
1.6.2.1 Control and Cashing
The project party has a high degree of control over the market. For example, if the project party issues 10 million tokens, only 1 million will circulate in the market, and only 10% will be circulated. 9 million will be in the hands of the project party, and the project party only needs to use a very small amount. Raise the price. For example, GMT has a high degree of control. The project initially had only two ways to obtain tokens: pledging bnb to obtain ido, and the other was airdrop rewards. The actual number of coins on BSC is only 60 million, but the project party announced that it is more than 600 million. The actual circulation is relatively small, which ultimately led to the project party pulling the plug. This is the reason for the short-term rise.
1.6.2.2 Heat Cashing
In the context of strong market enthusiasm and FOMO sentiment, the project team cooperated with currency value management to achieve a substantial increase in the tokens in the short term.
Note: Both controlled cashing and heat cashing refer to the rapid increase of coin price in a short period of time, with a common increase of about 50% to 100%, and it is not necessarily possible to hold on. In addition, controlled cashing and heat cashing are still difficult for retail investors to track and understand, because they are in different circles. It is difficult for retail investors to contact people in high circles, such as top investment institutions. Institutions understand projects much better and earlier than retail investors. It takes a long time for the news to spread from the circle to the outside world. When you get to know him, it has increased dozens of times.
1.6.2.3 Value realization
The price of the token returns to its value. This increase is because the development of the industry is based on how much value the product provides to users, how many users use it, and how much user income it creates. Based on the above reasons, the increase in the price of the currency is basically predictable, and the increase is also relatively large. For example, ETH.
1.6.3 How much more can the currency price rise?
For example, in September last year, Sol’s total on-chain lock-up amount was 11.3 billion U.S. dollars, and its circulating market value was 270 billion. In other words, compared with Ethereum, his locked-up amount was only one-tenth of Ethereum, but the market value at that time had reached one-quarter of Ethereum. The above data means that half of Sol's market value was a bubble, and The real market value should be around more than 130 billion yuan, which is a normal size. After most people saw the price of 270 billion, coupled with FOMO sentiment, capital financing, and any new actions and other news, they thought that it would rise in the future. As a result, they bought a large amount and locked in at a high level. Moreover, in the later period, sol has two years to digest the bubble, and it is very likely that it will not rise within two years. Although you may earn 50% in the short term, the risk you take is that you will be trapped for two years. As mentioned earlier, if you take out 10,000 yuan from 100,000 and earn 50%, that is, you will be trapped for two years with 5,000 yuan.
1.6.4 How to hold coins
1.6.4.1 Change thinking
We need to change our thinking and understand the underlying logic of the project. Value investing was first proposed by Buffett. Buffett initially chose targets whose stock market value was lower than the company's cash assets. After Buffett and Munger worked together, they found in later investments that targets that were not sold in time after making profits and whose company's profits were still growing in time often made a lot of money. However, Buffett's value investment is based on cash flow, and the current Internet industry and currency circle have no cash flow. The Internet has broken the structure of factories, dealers, individuals, etc. in traditional industries, and the Internet has no dealers, middlemen, and no cash flow, so many projects cannot make money. So when a token rises and falls, it is because you don't understand its value and underlying logic, and you don't know what you are buying.
1.6.4.2 Understanding Industry Value
What is the future significance of the crypto industry and what it can change? That’s where its value lies.
The significance of web3.0 is to allow this market to use a decentralized mechanism to reallocate resources. Traditional industries such as Toyota have a market value of US$270 billion, and Tesla has a market value of US$1.9 trillion. One Tesla is equal to five Toyotas. The difference between them is that Toyota, as the leader in the traditional automobile industry, only has a market share of 4.3%, which is a very low market share, but Tesla has a market share of 30% in the field of electric vehicles. This is what the Internet has brought Value changes. Companies like JD.com, Alibaba, Amazon, and Tesla may not make money, but their growth rates are huge, and their value is not reflected in profit margins, but in market share. In the past, mobile Internet was a subversion and integration of traditional industries, so it allowed these leading companies to occupy more than 50% of the market share. If it reaches more than 50% of the market share in an industry, this company can basically win the market. Half the valuation. This is the change brought about by the mobile Internet.
The encryption industry is the next generation of the Internet, and the value it brings is a change from the past web2.0. In the process of change, early leading projects can quickly occupy a larger share of the market, thus giving project tokens a lot of value. Large increases, these hundreds of times of increases are not caused by pulling the market, but because it occupies a large share of this track, giving investors a very large imagination space, and capital will also embrace the trend and use money to promote the implementation of the trend. , so they are willing to give such a large valuation.
Many people believe that capital will package projects and then reap profits. On the contrary, capital will not reap profits. It will only discover trends and hot spots. Think about it another way: is capital pulling up the market just to reap the profits? Capital makes money from the growth of the industry, and the top people in the world make money in this way, so why don’t we follow their example?
Whether this coin belongs to market control redemption, popularity redemption or value redemption needs to be understood from three aspects: track value, project value, and on-chain data.