This is a very short blog post on my general research as part of “DYOR” (do your own research),
The “research” I do is a checklist of things I go over to decide if something is worth investing in or not.
As a quick reminder, crypto is incredibly volatile and risky. Don’t risk anything you can’t afford to lose! 😭
You should already know the basics of crypto, such as how to buy crypto, how NFTs work and ideally already own some crypto and are comfortable with the feeling of losing 30% value in a few hours.
Step 1 - Avoiding scams and retaining our money
Making money is fine, but if you lose money then your future investments have to gain way more to recover, e.g if you have $100 to invest and lose $50 to a scam, then your remaining $50 has to get 100% gains to even be break-even again, which is not easy. So we must avoid losing money wherever possible.
Similar applies to fees, I personally avoid Ethereum entirely because of this, the fees are simply too high to justify anything, for example, if you buy a $150 NFT you may have to pay $100 extra in fees, meaning your NFT has to double in value to make any profit at all.
You can start by doing a basic bit of research and plug any coin into a website that checks if the coin is a scam such as isthiscoinascam, an example of something to avoid is snowdog which was a recent very big rug pull that scammed people out of ~$30m.
No whitepaper, no project team listed, no GitHub, a totally anonymous project that promised huge gains if you handed your money over, not much of a surprise that once it “mooned” all of a sudden it was worthless.
However, things get tricky when you find a project that is not open source and may be listed as risky despite the information being there if you do some of your own research, a good example is Gods Unchained.
This is where the research starts:
- Can you find the team on LinkedIn?
- Is the project run by a company? If so How reputable is that company?
- Are the employees reputable?
- Is the company hiring? How many employees do they have?
If you can’t find this information then things are looking really bad already, I’d personally stop here immediately. A huge amount of scams are run by anonymous teams.
If you’ve found some info and the team looks good:
- Check their social links, how many followers do they have and what’s the engagement like? A Twitter profile with 100k followers should be getting a decent amount of likes on every tweet.
- Do they have a discord channel? Are people active? What are the vibes you get in the discord? Many of them are empty wastelands or full of bots typing similar comments, avoid those.
- Does it look like a Ponzi scheme? Are there channels to gain points by inviting others, a huge red flag is where a project will provide you “points” for proving you’ve posted an ad to another community?
By now you should have weeded out a huge amount of scams and we can move on to deeper things like polish and if the project even actually has any kind of value.
Step 2 - Actual value of the project
We’ve found a real project, the team is visible online and things are transparent and ideally they have a fair release system that will allow us to join in. Now we need to figure out if the project is even making anything people will care about.
If we go to the Gods Unchained website you’ll be greeted with a highly polished website, a “Play now” button, gameplay examples and examples of the “tokenomics”, basically an example of why the project even needs to include crypto at all. In the case of Gods Unchained, it is because they want to allow players to trade cards.
Now we have to look at what the project is currently looking like, in the case of a very new project you have to lower expectations down to an MVP where it may only have the absolute basics in place.
We need to now find out how the project sums up
Is the game playable in any way currently? If it isn’t released yet then the risk is huge, art can be deceptive on unreleased projects
- Does the game look good, is the art okay, or does it look like a game from 2005 made in Unity using default game assets?
What platforms is the game on? Just web? Does it work on a mobile browser?
- If the game is only available on a single platform (e.g android or windows only) this is a big red-flag, unless it is an MVP state and they have plans to release it on other platforms later.
- If the game is desktop only this can hurt adoption, especially if the game is a typical mobile-type game but being played on desktop
How will we actually make money?
- Does the game have some sort of “breeding” or generating tradeable assets? What is the value of them?
- What is the cost to get started? Is it in your budget? A majority of crypto games require ~$100 or more investment to begin playing
- Does the game have a long-term plan? Will you have to “time the market” or can you see it as a long-term investment to hold things for the future?
- Does the NFT have any utility? If not it is just a jpeg and is simply art, no utility NFTs typically drop off rapidly and are held to sell once the hype dies down.
- Can you get in on the original release minting? If not, can you get near the mint price on the secondary market? If not it might be worth skipping.
- Typically NFTs double in price almost immediately after minting on a secondary market, however, they can often rise way more than 2x and slowly crash back down to 2x - if you buy at over 2x mint price you can lose money this way.
- Does the coin actually solve a problem and need to be a new cryptocurrency?
- Is it a shitcoin?
- Do you think the coin will exist 1 year from now? Maybe 2 years? Check the list of popular coins from ~2 years ago and only a few very popular coins are still around.
- Does the coin have any utility by owning or staking it? Can you get any extra benefits by holding the coins long term?
Step 3 - Actually investing
So we’ve found a project, it has a good team, a nice project roadmap and everything looks good for the future, so we’re going all in…Right? It’ll obviously 10x!
Sadly no, we must stick to our budget, in the case of NFTs, if you get into a mint drop they typically have a limit per user.
If you can afford to buy as many as possible, do so, otherwise, you can check the queue (if there is one) or judge the demand before buying. If there’s high demand you can visibly see, buy as many as possible and immediately recover your buy-in for all the NFT purchases if possible.
For example with NFTs:
- Pay $500 for 5 NFTs
- List one (or 2) at a total value of $500
- Hold the other 3, guilt-free.
This makes it really easy to “HODL” for maximum profits, as there’s less of a sinking feeling when prices can drop by thousands of dollars overnight.
You can apply the same method to coins and other tradables too if you can sell off when a pump happens to recover 100% of your initial investment you’re then in the clear for the rest. This goes back to step 1 of not losing any money, ever. It’s very safe and you could miss out on some profits, but you will never go down in net worth, which is more favourable for me personally.
But how do you get maximum profits? Sadly that’s very hard to figure out, it’s party luck mixed with keeping a pulse on what’s going on with the project. Selling a rare can be really hard as the discoverability is much lower than selling a “floor” NFT which will be listed as the cheapest.
- Regularly check the floor price of the set
- Check the floor of your specific rarity, e.g if you have a rare t-shirt then check the floor price for that t-shirt regularly
- Always list your NFT for sale, if it’s not really for sale then put it at an absurd or very high price so you can instantly go back and buy 2 more of the same thing, always give people a chance to make you rich.
Keep an eye on the discord and the overall hype levels, are people still interested and buying? How is the roadmap going? Have they released any decent utility so far?
- You’ll find that prices can dump after a letdown utility release and pump when a good utility release happens, an ideal time to buy/flip/sell!
- Find some whales in the community and see what they’re doing
- Similarly to NFTs, keep a pulse on the hype and sell when the hype is high and buy when the hype is dying down
What is the realistic value of the coin? Typically any community worth being in will have some sort of price/trading channel to chat in and people will figure out all this for you already
- If nobody has done the research for you and is willing to share it, you can do a simple calculation of market caps, e.g if X had the market cap of Y it would be worth 5x more, so the realistic max value of X is 5x the current value when compared to a similar coin providing similar value, so taking some profits at 2.5-4x would be a good plan
- Does the coin have any utility to staking and holding it? What are the benefits? Will these benefits still feel enough if the coin tanks by 30-40%?
- If the game loses 50% of players, will you still feel like holding the coin?
- How is BTC/ETH doing in comparison to the current coin? Typically speaking, if BTC is up, everything else goes up, if BTC is down, everything else goes down. This is not true when a coin goes on a huge pump for a specific reason, e.g a huge announcement.
Step 4 - Enjoy the profits
Hopefully, these tips are useful, it is not a full “guide” as such as that is impossible, what is true today writing this might not be true 30 minutes from now, things change too rapidly in the crypto space. This is meant to be as more of a guide for things to look out for that I’ve seen on my crypto adventures.
Remember to be careful and not get taxed on your gains if you can avoid it 😉, remember that tax avoidance is legal, tax evasion is not.
As an aside, despite mentioning Gods Unchained as a good project showing all the signs of a good project to get involved with I do not own any $GODS and I also don’t play the game outside of the brief time checking it out.