Anyone interested in crypto investing has likely heard of Ethereum and Bitcoin. However, those two coins barely scrape the surface of investing opportunities in this space.
How can you find quality projects in a world full of *cough* Shiba *cough* pump-and-dump schemes?
Keep reading. Today, I’m going to go through my current process. You can use it to help build out your own way of choosing the right investments for you.
Table of contents
I Learned from My Mistakes
I honestly started on the right path. The first thing I wanted to know more about was the technology that’s powering cryptocurrency.
So I watched YouTube videos from Coin Bureau, Whiteboard Crypto, and 99 Bitcoins. At first, the information was overwhelming, and I had some trouble retaining it. But after a couple of months of watching various content, it finally started to stick.
Then, I veered off the proper path. Videos talking about super high APRs started popping up on my feed. I was like, “Oh wow, so this is what crypto is all about”.
On one hand, I lost quite a bit of money early on. But on the other side, these high APR Ohm-forks finally convinced me to take the plunge and get some skin in the game. Getting in on this action finally convinced me to figure out how to set up a MetaMask account, get money from my bank to my wallet, the importance of having a cold wallet, etc.
While I was down early on, it was a learning experience, and a part of me thinks we all need to have some of these problems so we can start looking for the solutions on our own. That’s part of maturing as an investor.
How to Find Awesome Crypto Projects
You can’t find the perfect blockchain and projects for you if you have no idea how to find them. This is difficult for folks who are just getting into crypto and haven’t made many friends in the space.
Step One - Find the Right Blockchains
Dive into the technology that’s powering crypto. And I mean dive deep. The first blockchain that ever caught my eye was Fantom. It’s a Layer 1 solution that runs on the Ethereum Virtual Machine.
It’s also not a true blockchain. It’s a DAG. The fees are cheap and the network is fast. Some of the best and brightest minds came to this ecosystem because, unlike other blockchains, The Fantom Foundation wasn’t paying people to stake; it was paying developers to build.
The final kicker for me is energy usage. The entire network runs on the electricity it takes to power a medium-sized house in the US.
The more I researched this tech, the more interested I became. Then my Google and YouTube searches went from “How to invest in crypto” and “How does Bitcoin work” to “The best defi projects on Fantom” and “Spookyswap tutorial”.
Step Two - Find the Right Projects
I wish I had known about this from the jump. It would have made my research so much easier. So for all of you new investors out there who aren’t in the know, Defi Llama is one of the best exploration tools you can have in crypto. Since discovering this site, I use it multiple times a week.
Many inexperienced people try to get into a pre-sale or new defi project because they want to ride a possible pump to make a nice early profit. The problem here is the majority of people are just going to be exit liquidity. By the time you hear about the latest big APR trend, it’s too late.
Instead, focus on projects that have been around a while, have great teams, and have great communities. Here’s how to find them.
YouTube and Twitter
Twitter and YouTube are chock full of influencers shilling their favorite projects. Try not to buy into any of this hype.
Focus on finding educators. These are people who are trying to teach people how to get into crypto, how to stay safe, and how to use these protocols as intended. They don’t take a lot of direct money for ethical reasons.
Educators know their content has the power to bring fresh money into the space and that alone will pump their own bags more than shilling sketchy projects and possibly ruining people’s lives.
Spend your time finding these people. Watch and read their content. The difference between an educator and an influencer can sometimes be a blurry line. But the longer you hang out and watch closely, the more the differences will stand out.
Make a List
Come up with a shortlist of your favorite blockchains and their projects. It’s way too easy to go down the research rabbit hole and get lost forever. I pick a chain I want to learn more about and then 3-5 projects on that chain to give me an idea of what I’ll find and how everything runs.
From there, I can hone things down to the best 1-3 projects. Sometimes, I’ll take a hard pass because what I researched isn’t what I’m looking for at the time.
Then months later, I’ll circle back around and realize that certain chains and projects are undervalued, and I now have a better understanding of what they’re trying to do. Essentially, I’ve gained experience and have more knowledge.
When coming up with your list, stick to stuff you can understand. Ask yourself the following:
- Why am I interested?
- What problems are these chains and projects trying to solve?
- How are they funded?
- What are their rewards sources?
Add this information to your list, and soon you’ll understand what you really are getting and what you only think you’re getting.
Start with DEXs
Decentralized exchanges have more potential than most people realize. A decentralized exchange is a platform where people can swap one token for another.
To do this, they need users’ liquidity. So you provide funds for other users to swap tokens, and in exchange, you receive a reward.
Many new investors aren’t aware that getting involved with a DEX and providing some liquidity will give you better exposure and understanding of other projects on that particular blockchain.
Join the Discord and follow the DEX on social media. You’ll soon start to hear about new projects coming out, new partnerships, and make new friends with similar investing philosophies.
I’ve heard about most of the non-DEX projects I’m in or currently researching from people I met in a DEX Discord.
Read the Docs
Documents and whitepapers are the backbones of a crypto project or blockchain. These texts lay down the goals, the problems, and the solutions. Some of this can get a bit technical, but if you can’t understand anything the docs are saying, then don’t invest.
Look for other red flags as well. If the chain or project can’t pinpoint exactly what they’re trying to do, then the team either doesn’t have a great direction, or plans could be more nefarious.
Any project or developer team that’s worth its salt will have a Medium page with a decent flow of articles depicting what’s going on with their individual project and what’s happening on-chain. These articles are usually a little easier to understand than whitepapers and other docs, so you may start there to get a firm grasp on the material.
Join the Community
Discord and Telegram are the best ways to join a crypto community. These are great places to learn about projects, receive information for new and experienced investors, make friends, and look for red flags.
When you first join a Discord, you’ll likely be directed to a FAQ or new investors page with questions newcomers frequently ask. The moderator teams usually have their hands full, and it’s easier to require people to learn the basics before coming into a general chat and asking a question that’s been asked a million times.
However, if you can’t find the answer you’re looking for and no one in the chat has the answer or is willing to talk to you, that’s a bad sign. If people are downright mean or you see a lot of constant FUD in the chat, that’s another red flag.
These chats are a good way to get an overall gist of the current sentiment around a project. If that sentiment is negative, the project could be a scam or simply not strong enough to make it in crypto, which is known for having a pretty volatile and vicious market.
Wrapping It Up
Research is the most crucial part of crypto investing. It’s the difference between finding a solid long-term investment and being rugged.
If you aren’t willing to put in the time, keep your money in a bank. But if you’re ready to grind out some reading, this could be the space for you and you can potentially make a lot of money.
Thanks for stopping by and reading today’s post. If you have anything to add, drop a comment below.
