🔎What to look for in altcoins?
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🔎What to look for in altcoins?
📊 On-chain alpha
😂 Crypto meme of the week
🗞️ The latest DeFi news
🔎What to look for in altcoins?
Bullish market conditions are back. (at least for now)
But the question is, what are the altcoins that are most likely to be top performers?
During the 2021 bull market, almost every single random coin was pumping. Since then, though, things have changed.
Millions of new altcoins have been launched, and it’s now crucial to be very selective with what you buy to make money.
In this issue, I wanted to share my crypto checklist and what I look for in projects.
Let’s dive in👇
1. Narrative-market fit and high mindshare
Think about the top-performing tokens in the past 12 months.
A few that come to mind are HYPE, VIRTUAL, and memecoins.
Did they all have strong fundamentals? Some of them like HYPE, yes, but the vast majority of the best performers from the list below certainly didn’t.
But they all had one thing in common: A high social media mindshare and a community of die-hard believers who were constantly shilling them on X.
On top of that, most top performers were also related to a strong narrative:
VIRTUAL - pumped when the AI narrative was gaining traction
Memecoins - rallied during Q4 ‘24 and early Q1 ‘25 when memes were trending
My advice is to find what narrative is trending right now, and search for the tokens related to it that have the most active X communities.
2. Growing metrics
While minshare is (unfortunately) way more important than fundamentals in a bull market, the good news is that some projects have both high mindshare and PMF.
And if you can find a project with both, that one can be a great investment. Especially if its products have recently seen explosive growth across most metrics.
I’ll give you an example: Ethena, the stablecoin protocol, saw a 50% TVL increase in the last 30 days. At the same time, it also had quite a few people covering it on X.
The result? Ethena’s token, called $ENA, is up 154% in the past month.
By betting on projects with growing metrics (e.g. growing TVL/revenue/fees) and decent X mindshare that you spot early on, you can make a lot of money.
The main tool I use to discover the fastest-growing projects is DeFiLlama.
3. Decent tokenomics
If you plan to buy a token and hold it only for a few days, tokenomics don’t matter much. But the situation is completely different for mid-long term investments.
TIA, for instance, is down over 90% in the last 17 months because of the huge selling pressure from early investors after every token unlock.
That’s why it’s important to review tokenomics before buying a token.
A few things I’m looking at when researching a token:
upcoming unlocks
You can check the tokenomics and upcoming unlocks of many popular tokens using Tokenomist.
Generally, I want the circulating supply to be at least 30%, and the annual token emissions (aka inflation rate) to be at most up to 20-35%.
Also, in case there’s a major token unlock in the near future (let’s say equivalent to over 20% of the current circulating supply), I’d rather not buy that token.
token utility
I always ask myself two things:
Does the token I want to buy benefit in any way from the protocol’s success? And why would someone buy it at a higher price than me?
A revenue-sharing mechanism or token buybacks are the best utilities I can think of.
With that being said, while a strong token utility is a big plus, it’s not a must. I’ve seen many tokens with almost no utility that still performed very well.
4. Community-first approach
A project having a community-first approach is now more important than ever.
More and more people no longer want to invest in boring faceless brands - they want to back teams that deeply care about their community.
That’s one of the reasons why I think tokens like HYPE and PENGU performed so well lately.
A few signs that a crypto project has a community-first approach:
It did a big airdrop
Its team is constantly underpromising and overdelivering
Team-led marketing - Its team is very active on X and is constantly interacting with their community
A very big part of the token supply is allocated to the community
Those are the main things I’m looking for in tokens.
One more important thing that could help the token price go up is having a major catalyst on the horizon that isn’t priced in yet.
This could include an upcoming protocol upgrade, a tokenomics upgrade, or the launch of a new product that could significantly grow the project’s revenue.
All of this being said, make sure you remember this: A good asset at a bad price is still a bad investment.
Wait for the right opportunities to come to you and don’t FOMO.
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On-chain Alpha🔎
Resolv TVL surged 72% since its July lows
Crypto Meme😂
The latest developments in DeFi
Pendle has expanded to HyperEVM
MetaMask chose AAVE as its DeFi partner for its new Earn product
Circle announced that native USDC is coming to Hyperliquid
PayPal launches crypto payments, reducing costs up to 90%
Injective’s Ethernia Upgrade will launch today, turning Injective into an EVM chain
Defi App announced a 10% HOME token airdrop for Season 2. You can earn DeFi App XP points by swapping or trading perps using it
Linea announced it will burn 20% of the ETH from its transaction fees. It also allocated 9% of its token supply to its airdrop
Resolv activated its fee switch and increased its S2 airdrop allocation to 5%
Avalanche is being used by Grove to launch a $250M RWA strategy
INFINIT introduced INFINIT V2 - an AI-powered platform that will package complex DeFi strategies into one-click transactions
Huma Finance 2.0 opened again for deposits. By depositing USDC in exchange for PST, you can earn 10% APR and Huma Feathers
AAVE token emmisions have been reduced by 25%
Coinshift announced a 5% token airdrop for its users
Ethena Foundation completed an 83 million ENA buyback
Turtle Club announced plans to release Turtle Vaults - a set of automated DeFi yield strategies
Infinex wallet has integrated Hyperliquid’s HyperEVM. At the start, only Infinex Patrons are able to access it
Maple’s proposal to increase SYRUP token buybacks passed
That’s all for this week!
Until next time,
The DeFi Investor
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