Criteria for coin purchase

20 May 2023

Before purchasing a new coin, there are several criteria to consider:
1. Project Purpose and Utility: Understand the coin's underlying project, its purpose, and how it aims to solve real-world problems. Assess the utility of the coin within its ecosystem.
2. Team and Development: Research the team behind the coin, their experience, and track record. Look for active development and regular updates to ensure the project is being actively maintained.
3. Market Demand and Adoption: Evaluate the coin's market demand and adoption. Consider factors such as the size of the community, partnerships, and whether it has gained traction among users or businesses.
4. Technology and Innovation: Assess the technology behind the coin, such as its scalability, security, and any unique features or innovations it offers compared to existing solutions.
5. Tokenomics and Supply: Examine the coin's tokenomics, including its total supply, distribution, and inflation/deflation mechanisms. Understand how the coin's supply and demand dynamics may affect its value over time.
6. Market Liquidity and Exchanges: Consider the coin's liquidity, trading volume, and availability on reputable exchanges. Higher liquidity generally allows for easier buying, selling, and price discovery.
7. Regulatory Compliance: Determine whether the coin and its associated project comply with relevant regulations and legal requirements in the jurisdictions where it operates.
8. Risk Assessment: Evaluate the risks associated with the coin, such as market volatility, competition, regulatory uncertainty, and potential security vulnerabilities.
9. Research and Due Diligence: Conduct thorough research using reputable sources, including whitepapers, project websites, community discussions, and independent reviews. Seek diverse opinions to form a balanced understanding.
10. Personal Financial Situation and Risk Tolerance: Consider your own financial situation, investment goals, and risk tolerance. Only invest what you can afford to lose and diversify your portfolio to manage risk effectively. By considering these criteria, you can make a more informed decision when purchasing a new coin.

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Defi Llama, CoinMarketCap, Coingecko and Token Terminal are all excellent places to start when evaluating token. If you can't see volume metrics on Token Terminal or Defi Llama be wary. Use a DEX to find the LPs the swaps are going through and go and check them out. If there's no volume there then that's bad, no volume = no usage. If a coin is on BNB chain, probably don't invest. There are a lot of scam coins but the vast majority are on BNB chain. There's a couple of scammers on BULB pushing scam tokens. Make sure to report their posts to the mods.
Doing your Own Research helps a lot and the one place you should get this is on Coinmarketcap as it over a variety of sources to research at.