How To Analyze And Determine The Potential Of A Project

How To Analyze And Determine The Potential Of A Project

Currently, many investors are still looking at Crypto as a risk asset compared to other traditional forms such as real estate or gold, which are tangible and highly pragmatic assets. However, since the birth of Bitcoin in 2009, the impact of digital currency on financial markets is undeniable. The proof is that more and more people decide to invest in Crypto. It can be seen that investing in Crypto is investing in things that will change the world in the future.

When investing in the cryptocurrency market, there are two main directions:

  • Invest in platform coins: These coins usually come from Layer1, Layer2 projects, exchanges,... these projects are the development platform for other projects. So the growth of these coins is inevitable in the long term.
  • Investing in the direction/trend of the market: This direction is more of a short-term perspective, depending on the sudden needs of the market. Most projects are trending projects that bring new experiences, satisfying the spirit of users.

Regardless of the direction of investment, projects should be evaluated based on the following factors:

Project valuation

The first important thing in financial investing is the valuation. Valuation is like the story of water flowing from highland to lower, the water here is the money flow. When something is overvalued, money flows out and goes where it's undervalued.

Before investing, it is always necessary to focus on pricing, calculating and considering whether this project is cheap compared to other projects in the same industry.

Backer and liquidity of the project

Next is about the backer and liquidity of the project. This is a very important issue. High liquidity projects correspond to the needs of large investors, which will make it easier for the coin to increase in price. Liquidity is calculated by the easiest way is:

Current liquidity/total capitalization.


Community is also a contributing factor in the upside potential of a coin, in order to evaluate the community it is necessary to consider the following factors:

  • The actual number of members in the community.
  • Community growth rate
  • Member on social channels
  • The rate of interaction, the rate of articles written about the project

This is important, because it demonstrates the user's trust in the project. But you should also filter out that depending on the industry, there will be different interactions, the more popular the project is, the larger the community will be.

Project Team and Tokenomics

Currently, there are countless projects born, so investors need to carefully select the projects that they will invest in.

A team with a good background is not necessarily reputable, investors can consider the level of interaction of the project team with the community, a good team will interact a lot with their user community, as well as regularly update the project's development information and be praised by people in the industry or in the same industry.

For projects with tokens, when investors learn and research projects, the price chart of the token is the thing that gets the most attention, the token price will act as an unorthodox measure of health, potential. development of the project and at the same time show the investor's interest in the project. Along with that is the logical tokenomic with elements.

  • How many coins are in circulation?
  • How much does the team hold?
  • Does the token inflation indiscriminately or not?
  • Is the token practically applicable?

The project's on-chain interaction rate

To be able to research and analyze a project, investors can look at the on-chain interaction of that particular project. On-chain engagement can be measured and looked at through specific factors such as:

  • The project's token/coin accumulation rate
  • Total number of investors holding tokens/coins of the project
  • Trading volume of tokens/coins of the project
  • Analysis of the top 100 wallets holding how many tokens/coins the project currently owns
  • Social network trends of the project (Twitter, Telegram, ...)

Market Makers, angel investors who own a large amount of tokens also play important roles in the project. Often investors will have a bad impression of projects whose total supply falls into the hands of a certain "shark" when they can easily "pump up" and dominate. However, this makes it easier for the market to look in the same direction to be able to develop, especially in case the project has not had any growth waves in the past, they will also have to "drive" the price. to sell tokens for profit. Taking advantage of that, investors can also create "swim with the sharks" strategies for their own benefit.

The study and analysis of the on-chain interaction rate of a particular crypto project shows that the project has many investors more or less interested in the project. From there, it can be concluded whether the cash flow is flowing to the project or not.

The mechanism of operation of the project

The project needs to solve the user's needs to benefit the project itself and its users, as well as compete with competitors to attract and attract more users. Thereby promoting the use cases of coin/token to bring practical value.

For example, Ethereum ($ETH) is burning $30 million in fees a day so the price of ETH goes up because of deflation.

Project innovation

Not only stopping at the present, a crypto project needs to have innovation and improvement every day and look to the future. Since innovation is the backbone of a crypto project, more innovation with more features and services for users will generate revenue, profit and also attract new users for the project. judgment.

Investor's preferences

Investment taste is also an important factor in analyzing a project as well as measuring its potential. We can dig into the investment preferences of large venture capital funds or angel investors. Investment preferences may or may not be related to FOMO psychology, mainly investment taste may be based on the field, investment maxim investors are pursuing. For example, Cathie Wood is interested in innovation and Web3, so Cathie Wood's ARK Invest will focus on projects that have a lot of innovation and work on Web3. Next, the Animoca Brands fund has a taste for investing in blockchain games and Web3, so the fund's cash flow into blockchain game/Web3 accounts for the highest proportion in the fund's portfolio.

Through that, investors can research and analyze learning according to the interests of large funds to make investment decisions according to their own preferences.


During the market euphoria, investors can evaluate and analyze a project based on at least two of the eight factors above. However, in a gloomy market period, investors need to consider 6 or more factors to be able to make the right investment decision.

Hopefully the information of HoldStation given above can bring value to your research and investment in the future.

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