{"id":379454,"date":"2021-12-11T02:30:00","date_gmt":"2021-12-10T23:30:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/altcoin-roundup-3-metrics-that-traders-can-use-to-effectively-analyze-defi-tokens\/"},"modified":"2021-12-11T02:30:00","modified_gmt":"2021-12-10T23:30:00","slug":"altcoin-roundup-3-metrics-that-traders-can-use-to-effectively-analyze-defi-tokens","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/altcoin-roundup-3-metrics-that-traders-can-use-to-effectively-analyze-defi-tokens\/","title":{"rendered":"# Altcoin Roundup: 3 metrics that traders can use to effectively analyze DeFi tokens"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3b59d6b2772\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3b59d6b2772\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/altcoin-roundup-3-metrics-that-traders-can-use-to-effectively-analyze-defi-tokens\/#Check_the_projects_community_and_developer_activity\" >Check the project\u2019s community and developer activity<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/altcoin-roundup-3-metrics-that-traders-can-use-to-effectively-analyze-defi-tokens\/#Look_for_steady_increases_in_total_value_locked\" >Look for steady increases in total value locked<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/altcoin-roundup-3-metrics-that-traders-can-use-to-effectively-analyze-defi-tokens\/#Identify_who_the_majority_token_holders_are\" >Identify who the majority token holders are<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/altcoin-roundup-3-metrics-that-traders-can-use-to-effectively-analyze-defi-tokens\/#Want_more_information_about_trading_and_investing_in_crypto_markets\" >Want more information about trading and investing in crypto markets?<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># Altcoin Roundup: 3 metrics that traders can use to effectively analyze DeFi tokens <\/strong>&#8221;<\/p>\n<div class=\"post-content\" data-v-128018ef>Much to the chagrin of cryptocurrency proponents who call for the im<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a>te mass adoption of blockchain <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a>, there are many \u201cdigital landmines\u201d 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.\u00a0<\/p>\n<p>There\u2019s 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 \u2014 or the lack thereof \u2014 a cryptocurrency project. <\/p>\n<p>Here are three key factors to take into consideration when evaluating whether an altcoin or decentralized finance (DeFi) project is a sound investment.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Check_the_projects_community_and_developer_activity\"><\/span>Check the project\u2019s community and developer activity<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>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\u2019s user base and developer community.<\/p>\n<p>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 <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/dune.xyz\/wasabinoodle\/OHM_daily_top_buyer\">showing<\/a> the daily new users on the Olympus protocol. <\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-12\/9e052dab-1353-4853-83cb-ca1d701119b9.png\"><figcaption style=\"text-align: center;\"><em>Olympus daily new users. Source: Dune Analytics<\/em><\/figcaption><\/figure>\n<p>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 that can help with gauging investors\u2019 sentiment about a particular project.<\/p>\n<p>Alert systems like Cointelegraph Markets Pro provide up-to-date notifications on a project\u2019s Twitter mention volumes and unusual changes in trading volume that can be an early sign that a cryptocurrency is turning bullish or bearish. <\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-12\/4a047979-fe1a-46a7-9c9d-a27912310776.png\"><figcaption style=\"text-align: center;\"><em>CT Markets Pro twitter and trading volume dashboard. Source: <\/em><em>Cointelegraph Markets Pro<\/em><\/figcaption><\/figure>\n<p>Regarding project development and developer activity, GitHub has been the go-to place for learning about upcoming upgrades, integrations and where the project is in its roadmap.<\/p>\n<p>If a protocol is boasting about \u201csoon to be released\u201d features but showing little ongoing development or commits being submitted, it might be a sign to steer clear until the activity is better aligned with the claims.<\/p>\n<p>On the other hand, spotting an under-the-radar project with steady development activity and a committed user base could be a positive sign. <\/p>\n<h2><span class=\"ez-toc-section\" id=\"Look_for_steady_increases_in_total_value_locked\"><\/span>Look for steady increases in total value locked<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>A second metric to look at when assessing the overall strength of a project is the sum of all assets deposited on the protocol, otherwise known as the total value locked (TVL). <\/p>\n<p>For example, data from Defi Llama shows that the total value locked on the DeFi protocol DeFiChain (DFI) has been <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/defillama.com\/protocol\/defichain\">rising<\/a> lately following a major protocol upgrade, with the TVL hitting new all-time highs on several days so far in December. This signals that momentum and interest in the project are increasing.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-12\/211b8540-ee44-4046-86e1-90aebdfec6d4.png\"><figcaption style=\"text-align: center;\"><em>Total value locked on DeFiChain. Source: Defi Llama<\/em><\/figcaption><\/figure>\n<p>DeFi aggregators like Defi Llama and D<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>Radar allow users to dive deeper into the data and look at the statistics for different blockchain networks such as the TVL on the Ethereum Network or Binance Smart Chain, as well as by individual projects like Curve and Trader Joe. <\/p>\n<p>Protocols with a higher TVL tend to be more secure and trusted by the community, while projects that rank lower on the list <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a>ly carry more risk and tend to have less active communities.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Point of no return? Crypto investment products could be key to mass adoption<\/em><\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Identify_who_the_majority_token_holders_are\"><\/span>Identify who the majority token holders are<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Other factors to take into consideration are the benefits that token hodlers receive for holding and being active in the community. Investors should also look into the manner in which the token was launched and who the dominant token holders currently are. <\/p>\n<p>For example, SushiSwap allows users to stake the native token SUSHI on the platform to receive a portion of the exchange fees generated, whereas Uniswap, the top decentralized exchange (DEX) in DeFi, currently offers no such feature. <\/p>\n<p>While other factors like trading volume and daily users have made Uniswap a legitimate investment for many holders, some traders prefer to hold SUSHI because of its revenue-sharing model and multichain trading capabilities. <\/p>\n<p>On the flip side, caution is warranted when excessive yields are offered for low liquidity, anonymously-run protocols with little community activity because this can be the perfect setup for catastrophic losses. In DeFi, these are called rug pulls, and typically they occur after a large amount of money has been deposited onto smart contracts controlled by a single anonymous party. <\/p>\n<p>Examining the token distribution for the protocol, as well as keeping an eye on the percentage of tokens allocated to the developers and founders vs. the tokens held by the community can give some useful signal on whether a platform could fall victim to a rug pull or the whimsy of mercenary capital.<\/p>\n<p>If most of the available supply is held by the creators and backers, there is always going to be a chance that these tokens will later be sold at market rate if or when early investors choose to exit their position.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Want_more_information_about_trading_and_investing_in_crypto_markets\"><\/span>Want more information about trading and investing in crypto markets?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>TerraUSD (UST) adoption backs LUNA\u2019s ascension to a new all-time high<\/li>\n<li>Binance CEO reveals one key factor for token listings<\/li>\n<li>DeFi: Who, what and how to regulate in a borderless, code-governed world?<\/li>\n<li>Animoca Brands&#8217; treasury increased in value by 5X over two months<\/li>\n<li>3 reasons why DeFiChain (DFI) price has gained 60% in December<\/li>\n<\/ul>\n<p class=\"post-content__disclaimer\">The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.\n<\/p>\n<p><template data-name=\"subscription_form\" data-type=\"markets_outlook\"><\/template>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/altcoin-roundup-3-metrics-that-traders-can-use-to-effectively-analyze-defi-tokens\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Altcoin Roundup: 3 metrics that traders can use to effectively analyze DeFi tokens &#8221; Much to the chagrin of cryptocurrency proponents who call for the immediate mass adoption of blockchain technology, there are many \u201cdigital landmines\u201d that exist in the crypto ecosystem such as rug pulls and protocol hacks that can give new users&#8230;<\/p>\n","protected":false},"author":1,"featured_media":379455,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMTIvOTA1YjM4MGMtNzNiMC00Mjc2LWFiYTQtYjZlYWQ5MGJkNzk4LmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74867,74894,74863,74868,110520,79248,73711,73785],"class_list":["post-379454","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-altcoin","tag-blockchain","tag-cryptocurrencies","tag-defi","tag-how-to-crypto","tag-trading101","tag-investments","tag-markets"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/379454","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=379454"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/379454\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/379455"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=379454"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=379454"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=379454"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}