The Cryptocurrency adoption rate has seen a very impressive curve in the past couple of years. There is no doubt that investors who believed in the defi crypto and crypto projects from early on have ended up as millionaires. Especially early Bitcoin adopters who did their research and believed in the possibility of Bitcoin’s future and other defi crypto projects that will soon be following suit.
This brings us to think of the possibilities of when our choice of token might not yield the best results. With the numerous crypto projects coming out every day, it is tough to define which one might be the best upcoming crypto projects or the top crypto project or among the best upcoming crypto projects or which one may turn up as a scam. That is exactly what we will be discussing in today’s article.
How to assess the best defi crypto project:
|1. Tokenomics | Market cap, supply and demand, and circulation|
|2. The defi project or crypto project idea and roadmap|
|3. Token use cases or applications|
|4. Social media proofs and News/PR|
|5. HNI and Institutional Interest|
|6. Project community: Founder, developer team, and users|
Tokenomics | Market cap, supply and demand, and circulation
Decrypt defines Tokenomics as the study of how cryptocurrencies work within the broader ecosystem. Thus, Tokenomics is the science of the token economy. It covers all aspects involving a coin’s creation, market cap, its total supply, and how the tokens are circulated.
Market Cap of the Crypto project
To study for the defi crypto project evaluation, we can divide the token’s market cap into the following:
The risk associated with a defi project with a smaller market cap is as risky as it is rewarding. This is a tricky play and depends on how much volatility and risk you are willing to afford. But as a thumb rule, the lower the market cap of a defi project, the greater the risk.
Total Supply of the Token
The very next thing after segmenting which category of Market Cap the defi project stands on is to search for the Whitepaper of the project or even the official blog with all the details of the crypto defi project you are interested in. This is to find out the number of tokens that are in supply and the total number of tokens that will be minted.
Total supply of RUNE in Thorchain ecosystem
(Source: Thorchain medium)
If there is a continuous minting of new tokens without there being enough demand in the market then chances are the price of the token will eventually go down. There can be a different approach to this like Bitcoin has a hard supply of 21 million in total as for Ethereum, there is no hard limit for now and the total supply of ETH keeps changing. Then there’s the Binance coin (BNB) who follows the burn mechanism, which reduces the already circulation supply of the token and likely results in increasing demand.
The defi project or crypto project idea and roadmap
Any defi project or crypto project starts with ideation and how it will benefit the crypto space. Your focus should be on finding projects with a clear value proposition and a new approach to solving real-world problems. That is what makes a company worth your time and a good investment.
Here are some questions you should ask yourself when looking at the vision or the ideation of a defi crypto project or a crypto project:
- Is there a specific use case and is it aimed at solving a problem?
- Is the proposed, blockchain-based method significantly better than the centralized, traditional approach?
- Are the advantages clear and measurable?
A vision alone does not mean much if there is not an adaption strategy. For that, you should dive into a project’s roadmap, that will give you a detailed plan for the next 24 months.
If the project’s roadmap and Whitepaper piqued your interest, make sure to be a part of the community and set crypto alerts or crypto news alerts to stay updated on the developments.
Questions you should ask yourself when looking at the Roadmap of a blockchain defi project:
- Does the roadmap provide a clear strategy and is it realistic?
- How is the team setting up their marketing strategies or even the team?
- How did the team deliver on their roadmap so far?
Token use cases or applications
If the crypto defi project that you are researching has been in the market for a while, it is always advisable that you read up on them. Parameters that you should cover:
- How is the token doing so far?
- What are the expert investors saying about the project?
- What new projects are the founders planning for the next few years?
- How good are they with their promises and deliverables?
- How valuable is the crypto project in terms of real-world applications?
- How are institutions and the Twitter community reacting to the new project?
Social media proofs and News/PR
The questions that we have stated above are easy to ask and even easier to answer. Search any one of the social accounts of either the founder or any social account created for the defi project and there will be enough information and discussion to answer all your queries.
Since the cryptocurrency boom a couple of years back, the media had been covering every minor to major change or improvement happening within any defi crypto projects. They have also made it possible for us to gather crypto news alerts of our choices. The best Cryptocurrency exchanges and the founders of any upcoming projects had been sure to maintain a steady PR strategy to release defi crypto news and keep their audiences up to date. It would be another source of information that can assist you in evaluating the future or present of the defi project of your choice.
HNI and Institutional Interest
HNI or High Networth Individuals and Institutions like Mastercards or Tesla are always on the lookout for the new best defi crypto projects to invest in. Thie validation and investment in any project automatically brand the token as a project which has potential. The very best example for the same would be the Dogecoin surge.
While conduction any research the attention from well-known investors always serves as the initial stability that new defi projects rely on. Though this does not mean one should deviate from conducting sound research. This validation from HNI and Institutions should be another tick mark to the reasons why that particular crypto defi project should be something they should invest in.
Project community: Founder, developer team, and users
The last factor before diving into investing in the defi project is to do a little bit of research on the founding members, the developing team, and the category of users the project comprises. The best way to proceed is
- Visit the website of the defi project
- Find out the team heads
- Check their social accounts
- Dig some earlier projects they had been a part of.
That is it. If you dedicatedly follow the 6 steps, that is more than enough knowledge for you to start mapping out a possible outcome and also help you decide if the defi project is of interest to you.
How to find new cryptocurrency projects?
There are so many interesting stories of individuals who have earned a huge amount of money, in the last decade, from the internet. While some of the stories are start-up success stories, the others are based on the successes of various cryptocurrency projects and investments in the top crypto projects that most did not deem potential.
A lot of investors missed the opportunity to invest in Bitcoin, and now, not many people can afford to buy one full Bitcoin at the current price (₹31.32 lakhs on 27 May 2021). There are a couple of other cryptocurrencies such as Ethereum and Litecoin that are relatively new but are also moving very fast as the cryptocurrency market continues to grow.
Interestingly, potential cryptocurrency investors can always find newer cryptocurrencies, just fresh from their ICOs. But not all investors are experienced enough to choose one new crypto defi project from 900 others available for trading on different exchanges. Here are a few ICO tools that you can use to discover new cryptocurrency projects!
5 easy-to-use tools for cryptocurrency and ICO
Now that we have covered what criteria of a crypto project we should look at before deciding on our cryptocurrency investment strategies, let us now take a look at the best cryptocurrencies to invest, in 2021.
Best Cryptocurrency to Invest in 2021: Top 5 cryptocurrencies in India 2021
|Cryptocurrency||Price as of 20 May’21||Price prediction|
|Bitcoin||$ 35,495||$ 80,000 by July’22|
|Cosmos||$ 13||$ 46.5 by the 2021 year-end|
|Binance Coin||$ 309.77||$ 505 by May’21|
|Tron||$ 0.07||$ 0.15|
|ZCash||$ 141.84||$ 200|
Also read: What is cryptocurrency diversification?
Top 7 cryptocurrencies to invest in Best cryptocurrencies to invest in the world
|Bitcoin Cash (BCH)|
*Please note that this article is not aimed to give any advice regarding investment in cryptocurrencies. It is advisable to conduct sound research before investing or diving into the crypto space.