Our Non-exhaustive overview of a token evaluation.
ARE THERE ANY INDUSTRY-WIDE CONCERNS?
While there are now many legitimate exchanges that operate fairly and ethically, certain exchange listings have been cause for consternation among crypto investors.
Technology
The source code should be publicly verifiable. The security of both the source code and the smart contract must be deemed safe. For any layer 1 token, transaction speed and transparency need to be acceptable.
People
Founders should be fit and proper, whilst also having appropriate expertise. A proven track record of delivery will also be viewed favourably
Market
Metrics around traded volume and turnover help prove investment interest. We also look at on-chain metrics to evaluate the number of active addresses and any
Sentiment
Social media data and trends help assess the popularity of a token. Additionally, for layer 1 tokens, public developer commits indicate the community’s interest in building on a blockchain.
Tokenomics
The Crypto Rating Council (CRC) provides guidance on whether a token may be deemed a security, employing an asset rating framework consistent with the Howey Test. Other areas of interest include token supply, initial allocation, and utility. These are ‘negative screening’ tools, to identify red flags.