In Lesson 11, we covered how to assess a project’s competitors. Now, we’ll bring everything together with a full fundamental analysis, walking you through each key step.

How to Conduct a Full Fundamental Analysis

Now that we’ve covered the various components of fundamental analysis (FA), it’s time to put everything together. A comprehensive FA involves combining insights from on-chain metrics, team analysis, tokenomics, competitor evaluation, and more to create a holistic view of a project’s potential.

Conducting a full FA means understanding not just individual metrics but how they interrelate. A project might have excellent tokenomics, but if its adoption rate is low or its team lacks experience, it might struggle. Conversely, a well-backed project with strong partnerships and rapid adoption may be more forgiving even if its tokenomics aren’t perfect.

Step-by-Step Guide to Fundamental Analysis

  1. Start with the Whitepaper: Review the whitepaper to understand the project’s vision, technical details, and roadmap. Focus on the problem the project is solving and how it plans to do so.
  2. Evaluate the Team: Research the team’s background, including previous projects, industry expertise, and transparency. A strong team is crucial for execution.
  3. Analyse Tokenomics: Look at the token’s distribution model, inflation rate, and use cases. Ensure that the tokenomics support long-term value.
  4. Assess On-Chain Metrics: Dive into the project’s active addresses, transaction volume, and network security. These metrics provide insights into adoption and engagement.
  5. Compare Competitors: Benchmark the project against similar ones in the space. Consider which has the better technology, partnerships, and user base.
  6. Review Partnerships and Backers: Identify key partnerships and backers. Strong, well-known partners or VCs can greatly enhance a project’s credibility.

By following this step-by-step approach, investors can systematically evaluate the strengths and weaknesses of a project, providing a more informed perspective on its long-term viability.

The Importance of Cross-Referencing

While reviewing individual components of a project, it’s essential to cross-reference them. For instance, does the team have the expertise to implement the vision outlined in the whitepaper? Does the tokenomics model support the scaling goals outlined in the roadmap? By cross-referencing different parts of the analysis, investors can avoid blind spots and make more balanced decisions.

2024 Example: Full FA on $PYTH

Let’s apply a full FA on $PYTH, a decentralised oracle network. The whitepaper outlines a clear solution for improving data reliability in DeFi, with a focus on scalability. The team behind $PYTH has strong experience in both blockchain and data analytics, backed by partnerships with key DeFi players.

$PYTH’s tokenomics model is deflationary, with a gradual release of tokens to prevent market flooding. On-chain metrics show steady adoption, with increasing transaction volumes and strong staking participation. Competitor analysis reveals that $PYTH outperforms other oracles in terms of speed and scalability, making it a strong contender in the decentralised data space.

Key Takeaways

  • A comprehensive fundamental analysis involves evaluating all aspects of a project, from its team and tokenomics to on-chain metrics and competitors.
  • Cross-referencing different components ensures a balanced view and helps investors avoid potential pitfalls.
  • Conducting a full FA provides a holistic understanding of a project’s long-term potential.

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