How to evaluate fundamentals of a project？

Purpose:

Objectively evaluate the intrinsic value of assets, outperform the market on long time scales, and build long-term confidence (against short-term volatility)

Classification of Fundamental Analysis:

  • Project Analysis

  • Economic Analysis

  • On-chain Analysis

1. Project Analysis

  • Generally start with a project analysis

  • Read the white paper over and over again, a good white paper will make you want to go deeper into the project:

    • The problem to be solved

    • The technical solution

    • Scenarios for token use

    • Tokenomics

    • Team background:

      • Dig into academic citations & LinkedIn work experience

      • You can see if the team is in it for a long-term vision or to make a quick buck

      • If it's an anonymous team:

        • Online presence

        • dev's github activity

        • Willingness to answer DMs

    • Look closely at the roadmap:

      • Is it the right time to invest?

        • If it's not a product that's coming out in two years, don't rush into it yet

      • Keep up with it as an assessment of ability to deliver

        • Then how well the project progress is disclosed is important

  • Competitor Analysis:

    • Who was the first to do this? How much MC?

    • What are the advantages of this project over competing products?

    • Has this product been successful in engaging users?

    • Why would a user choose this product over his competitor?

  • Social Media Analysis:

    • Do they have a media operation? Are there events being held? Is the strategy & content on point?

    • Do they have a strong community? Are they happy to help with marketing?

    • Is there a lot of online buzz (other than bots)?

    • What is the quality of other people in the project's discord and telegram?

      • Is there a deep discussion or are they just asking "wen WL"?

    • Is there a good community meme?

      • Memes show that the project's community is passionate and committed, and help it go viral

    • Has a good tweeter written a project analysis of the project? Your own analysis may be lacking, so it helps to read others'.

  • UI/UX:

    • If you need to google "how to use XXX" it means the product interface is not intuitive

2. Economic Analysis

  • MC and FDV

    • FDV

      • FDV is often not a meme

        • Especially if there is no product, no users

      • The shib & solana ecology is a lesson

    • MC

      • MC also depends on liquidity, otherwise it is misleading

        • Poorly liquid assets can easily be crushed by large investors when they cash out

        • On DEX you can try entering large amounts and look at the slippage to get a feel for liquidity

  • Tokenomics

    • Prices are influenced by supply and demand.

    • Is token really necessary? What is its use in this?

    • Token distribution, unlocking events, release speed

      • May be different from the original white paper

      • If you can't find it, it's probably not a good project

      • New tokens entering circulation need to be able to be absorbed by the market, otherwise they will cause heavy selling pressure

    • For live products, use @tokenterminal to look at 1) protocol revenue 2) P/E and P/S of protocols and dApps

      • If the revenue is promising, the protocol is growing well and the P/S is low, it is a good long-term value investment

3. On-chain Analysis

  • Using @glassnode, @nansen_ai and @DuneAnalytics DuneAnalytics)

  • Some metrics

    • Number of addresses & active addresses

    • Number of large addresses

    • Number of long-term holders vs. number of short-term holders

    • Exchange balances

      • For example, if a large percentage is transferred to an exchange, it is likely to indicate that someone is trying to sell

    • Wallet addresses worth watching

    • ...