Discovering new investment opportunities 101: The fundamentals-driven research algorithm β
Research, validate, act, repeat β that's the golden rule for any investment activity, whether it's memecoin trading or following well-established narratives.
Ready for the gem hunt?
β― Step 1: Define your goals.
When it comes to long-term investments, it is crucial to rely heavily on the fundamentals of the project issuing a token.
However, for short-term decisions, the driving force behind any choice should be pumpamentals β specific metrics related to a token rather than the overall project.
LONG-TERM INVESTMENTS
β― Step 2.1: Aggregate the data
Helpful tools: @tokenterminal, @DefiLlama, @MessariCrypto.
In some cases, you may also find @DuneAnalytics, @Footprint_Data, and @glassnode to be very helpful.
Here are some key factors to consider:
β’ TVL dynamics: Look for a long-term and sustainable growth trend. It's a positive indicator as long as the token price is declining or staying relatively stable.
β’ Revenue flows and P/S ratio (the market cap divided by annualized revenue). A lower ratio is generally more favorable.
β’ Incentives: They drive user growth and increase activity, which can contribute to stronger fundamentals.
β’ Changes in leadership: Keep an eye on shifts in the leadership landscape within specific ecosystems or industry sectors (e.g., lending, RWA, etc.).
Begin by jotting down the protocols that appear strong in terms of fundamentals. This will give you a shortlist to work with.
Now, it's time to delve deeper into the tokenomics side!
β― Step 3.1: Tokenomics
Useful tools: @nansen_ai, @Alphanomics_io, @0xScopescan.
To analyze the token release schedule, consult @Token_Unlocks.
Important factors to consider:
β’ Circulating supply vs. Total supply and token release schedule: It is ideal for the circulating supply number to be close to the total supply. This minimizes vulnerability to new token emissions and unlocks, making your investment more secure.
β’ Token volume and buying activity: Look for deep liquidity, high trading volume, and a high accumulation ratio (which can be checked on ScopeScan). These indicators signal a healthy and well-established token.
β’ Smart money flows: Pay attention to whether VCs, smart DEX traders, and whales are buying, accumulating, or selling a specific token. For this part of research, I usually use Nansen.
β― Step 4.1: Catalysts
This step will require a deeper dive into each protocol in particular.
Let me illustrate this with a @fraxfinance example:
The FraxChain release is expected to take place in Q4 '23 βΒ Q1 '24. The fair Frax ecosystem valuation will increase by ~$100M after this release, so a $FXS price action will not be long to wait.
SHORT-TERM INVESTMENTS
Now, we hunt tokens rather than protocols that can generate some good yields in the short term.
Obviously, this part is riskier, and my previous analytics algorithm on copy trading (I will share the link below) will be helpful to filter out the noise through a curated selection of wallets to track.
β― Step 2.2: Pumpamentals
Useful tools: @ChainEDGE_io, @Alphanomics_io, @alphascan_xyz.
Pay attention to:
β’ Watch the moves of smart DEX traders, including volume and buy/sell ratio. If you're dealing with memecoins, look for new tokens before traders begin taking profits, or old tokens that suddenly experience a spike in activity (a potential pump signal).
β’ Keep an eye on social hype and token mentions (AlphaScan is particularly helpful for this).
β― Step 3.2: Security Check
While high accumulation rates and smart money flows typically don't indicate a honeypot, it's always wise to double-check the security risks. You can do this by consulting with @DeDotFi and @dexscreener.
On DexScreener, select a few addresses that bought the token early to see if they are able to sell. Keep in mind that selling activity can sometimes be faked by whitelisted addresses, so incorporating this step into your research flow is a good security measure.
Discover some valuable links to enhance your research in the comments below!
Feel free to share your thoughts on this approach and let me know if you incorporate any additional steps or utilize alternative tools in your research.
Research, validate, act, repeat!
Research, validate, act, repeat β that's the golden rule for any investment activity, whether it's memecoin trading or following well-established narratives.
Ready for the gem hunt?
β― Step 1: Define your goals.
When it comes to long-term investments, it is crucial to rely heavily on the fundamentals of the project issuing a token.
However, for short-term decisions, the driving force behind any choice should be pumpamentals β specific metrics related to a token rather than the overall project.
LONG-TERM INVESTMENTS
β― Step 2.1: Aggregate the data
Helpful tools: @tokenterminal, @DefiLlama, @MessariCrypto.
In some cases, you may also find @DuneAnalytics, @Footprint_Data, and @glassnode to be very helpful.
Here are some key factors to consider:
β’ TVL dynamics: Look for a long-term and sustainable growth trend. It's a positive indicator as long as the token price is declining or staying relatively stable.
β’ Revenue flows and P/S ratio (the market cap divided by annualized revenue). A lower ratio is generally more favorable.
β’ Incentives: They drive user growth and increase activity, which can contribute to stronger fundamentals.
β’ Changes in leadership: Keep an eye on shifts in the leadership landscape within specific ecosystems or industry sectors (e.g., lending, RWA, etc.).
Begin by jotting down the protocols that appear strong in terms of fundamentals. This will give you a shortlist to work with.
Now, it's time to delve deeper into the tokenomics side!
β― Step 3.1: Tokenomics
Useful tools: @nansen_ai, @Alphanomics_io, @0xScopescan.
To analyze the token release schedule, consult @Token_Unlocks.
Important factors to consider:
β’ Circulating supply vs. Total supply and token release schedule: It is ideal for the circulating supply number to be close to the total supply. This minimizes vulnerability to new token emissions and unlocks, making your investment more secure.
β’ Token volume and buying activity: Look for deep liquidity, high trading volume, and a high accumulation ratio (which can be checked on ScopeScan). These indicators signal a healthy and well-established token.
β’ Smart money flows: Pay attention to whether VCs, smart DEX traders, and whales are buying, accumulating, or selling a specific token. For this part of research, I usually use Nansen.
β― Step 4.1: Catalysts
This step will require a deeper dive into each protocol in particular.
Let me illustrate this with a @fraxfinance example:
The FraxChain release is expected to take place in Q4 '23 βΒ Q1 '24. The fair Frax ecosystem valuation will increase by ~$100M after this release, so a $FXS price action will not be long to wait.
SHORT-TERM INVESTMENTS
Now, we hunt tokens rather than protocols that can generate some good yields in the short term.
Obviously, this part is riskier, and my previous analytics algorithm on copy trading (I will share the link below) will be helpful to filter out the noise through a curated selection of wallets to track.
β― Step 2.2: Pumpamentals
Useful tools: @ChainEDGE_io, @Alphanomics_io, @alphascan_xyz.
Pay attention to:
β’ Watch the moves of smart DEX traders, including volume and buy/sell ratio. If you're dealing with memecoins, look for new tokens before traders begin taking profits, or old tokens that suddenly experience a spike in activity (a potential pump signal).
β’ Keep an eye on social hype and token mentions (AlphaScan is particularly helpful for this).
β― Step 3.2: Security Check
While high accumulation rates and smart money flows typically don't indicate a honeypot, it's always wise to double-check the security risks. You can do this by consulting with @DeDotFi and @dexscreener.
On DexScreener, select a few addresses that bought the token early to see if they are able to sell. Keep in mind that selling activity can sometimes be faked by whitelisted addresses, so incorporating this step into your research flow is a good security measure.
Discover some valuable links to enhance your research in the comments below!
Feel free to share your thoughts on this approach and let me know if you incorporate any additional steps or utilize alternative tools in your research.
Research, validate, act, repeat!
@tokenterminal @alphanom_intern @DegenMiami @0xScopescan @DeDotFi @dexscreener @ChainEDGE_io @MessariCrypto @fraxfinance @nansenportfolio Alphanomics is an invite-only research platform. Please use my invite link below to gain accessβ
Link: platform.alphanomics.io
Link: platform.alphanomics.io
@tokenterminal @alphanom_intern @DegenMiami @0xScopescan @DeDotFi @dexscreener @ChainEDGE_io @MessariCrypto @fraxfinance @nansenportfolio For ScopeScan, I have a 50% promo code to access their PRO mode.
Link: scopescan.ai
Promo code: stacymuur
Link: scopescan.ai
Promo code: stacymuur
@tokenterminal @alphanom_intern @DegenMiami @0xScopescan @DeDotFi @dexscreener @ChainEDGE_io @MessariCrypto @fraxfinance @nansenportfolio Below, you'll find the first part of my Research Algorithm series β Copy Trading β
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