Much to the chagrin of cryptocurrency proponents who call for the immediate mass adoption of blockchain technology, there are many “digital landmines” that exist in the crypto ecosystem such as rug pulls and protocol hacks that can give new users the experience of being lost at sea. 

There’s more to investing than just technical analysis and gut feelings. Over the past year, a handful of blockchain analysis platforms launched dashboards with metrics that help provide greater insight into the fundamentals supporting — or the lack thereof — a cryptocurrency project.

Here are three key factors to take into consideration when evaluating whether an altcoin or decentralized finance (DeFi) project is a sound investment.

Check the project’s community and developer activity

One of the basic ways to get a read on a project is to look at the statistics that show the level of activity from the platform’s user base and developer community.

Many of the top protocols in the space offer analytics that track the growth in active users over time. On-chain dashboards like Dune Analytics offer more granular insights into this metric such as the following chart showing the daily new users on the Olympus protocol.

Olympus daily new users. Source: Dune Analytics

Other pertinent data points to consider when it comes to evaluating community activity include the average number of active wallets on a daily, weekly and monthly basis. Investors should also look at the number of transactions and volumes transacted on the protocol, as well as social media metrics such as Twitter mentions…


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