Author: The DeFi Investor

Translated by: Tim, PANews

The atmosphere of the crypto bull market is back, at least for now.

The question is: which altcoins will deliver excess returns?

During the bull market of 2021, almost any altcoin was skyrocketing. But since then, the situation has changed.

Currently, there are millions of new altcoins on the market, and to achieve excess returns, careful selection of investment targets is essential.

In this article, I want to share my list of crypto projects and the key points to consider when screening projects.

Let's get started.

1. Narrative Heat and User Mindshare

Think about the best-performing tokens over the past 12 months.

The first ones that come to mind are HYPE, VIRTUAL, and memecoins.

Do they all have strong fundamentals? Platforms like HYPE do, but the vast majority on the list of best performers certainly do not.

Source: Coingecko’s Top Crypto Gainers in 2024 article

They all share a common trait: a very high user mindshare on social media, with a dedicated group of loyal fans tirelessly promoting them on the X platform.

In addition, the success of most top performers is also related to strong narratives.

• Virtual has continued to surge as the AI concept heats up.
• Meme coins have risen due to the popularity of internet memes from Q4 2024 to early Q1 2025.

My advice is to look for currently popular narratives, do some research, and select tokens that have highly active communities on Twitter.

2. Growth Metrics

In a bull market, market hype (unfortunately) is far more important than fundamentals, but the good news is: some projects can achieve high attention while also having a strong product-market fit.

If a project can possess both of these points, it could be a great investment, especially when its key metrics have shown explosive growth recently.

Let me give you an example: the stablecoin protocol Ethena saw its TVL soar by 50% in the past 30 days. Meanwhile, many users and analysts on Twitter have been paying attention to and analyzing the project.

The result? Ethena's token ENA has risen by 154% in the past month.

By betting on those projects that are in their early stages and have continuously growing data metrics (such as TVL, revenue, and transaction fees) while also having a certain level of community heat, you can make a significant profit.

I often use DeFiLlama to discover the fastest-growing projects.

3. Reasonable Token Economics

If you plan to buy a token and hold it for just a few days, token economics may not matter much; however, if you have a medium to long-term investment plan, the situation is entirely different.

For example, the TIA token has plummeted over 90% in the past 17 months due to massive sell-offs by early investors after each token unlock.

This is why it is crucial to understand token economics before purchasing a token.

Here are a few key points I focus on when researching a token:

Token Unlock Schedule

Tokenomist can provide information on the token economics and unlock schedules of many popular tokens.

Generally speaking, I prefer the circulating supply to be at least 30%, and the annual token release rate (i.e., inflation rate) should not exceed 20%—35%.

Additionally, if there is a large-scale token unlock coming up (for example, an unlock amount that is more than 20% of the current circulating supply), I would rather not buy that token.

Token Utility

I always ask myself two questions:

Will the token I want to purchase benefit from the success of the protocol? Why would someone be willing to buy it at a higher price than I would?

Dividend mechanisms or token buyback plans are the best solutions I can think of.

Indeed, while strong token utility is a significant advantage, it is not a necessary condition. I have witnessed many tokens with almost no utility still perform exceptionally well.

4. Community First

Currently, a community-first project is more important than ever.

More and more people are unwilling to invest in vague and uninteresting projects; they prefer to support teams that care about the community.

This is also one of the reasons I believe tokens like HYPE and PENGU have performed so well recently.

Some characteristics of crypto projects that prioritize community:

• Conducted large-scale airdrops
• Their team always under-promises and over-delivers.
• Team-led marketing: their team is very active on the X platform and continuously interacts with the community.
• A significant portion of the token supply is allocated to the community.

These are some of the main factors I consider when selecting tokens.

Another important factor that may drive token prices up is the upcoming major catalysts that have not yet been factored into the current price.

Possible positive developments include: upcoming protocol upgrades, improvements to the token economic model, or the release of new products that can significantly increase project revenue.

No matter how good an asset is, buying it at a high price is still a bad investment.

Wait for the right opportunity to act, and avoid rushing in due to FOMO.

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