{"id":903,"date":"2022-02-15T10:00:00","date_gmt":"2022-02-15T10:00:00","guid":{"rendered":"https:\/\/wordpress-665686-4207838.cloudwaysapps.coms\/?p=903"},"modified":"2022-07-14T12:15:53","modified_gmt":"2022-07-14T12:15:53","slug":"3-metrics-that-traders-can-use-to-analyze-defi-tokens","status":"publish","type":"post","link":"https:\/\/www.ixfi.com\/blog\/financial-wisdom\/3-metrics-that-traders-can-use-to-analyze-defi-tokens\/","title":{"rendered":"3 Metrics that Traders Can Use to Analyze DeFi Tokens"},"content":{"rendered":"
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Whatever be the case, there\u2019s a fair chance you might have struggled to look beyond options like Bitcoin and Ethereum.<\/p><\/blockquote>\n\n\n\n

Since the decade Bitcoin began to catch up, more than 8,000 cryptocurrencies have emerged into the digital world. Besides being good news for the crypto ecosystem, this also means ever-growing selections available on the IXFI platform.<\/p>\n\n\n\n

This count includes tokens as they are gaining popularity each day, so a significant number is coming from the DeFi world. But much to the calls of crypto supporters, demanding an \u201cimmediate mass adoption\u201d and the existing \u201cdigital landmines\u201d in the crypto ecosystem can make newbies feel like lost souls.<\/p>\n\n\n\n

There\u2019s certainly more about investing than just gut feelings or analysis. A handful of platforms have launched metrics dashboards to help users better understand the fundamentals backing a crypto project.<\/p>\n\n\n\n

If you\u2019re ready to work your way out with DeFi, below are the 3 metrics you can use to analyze DeFi tokens.<\/strong><\/p>\n\n\n\n

# 1: Look for the growth in Total Value Locked<\/strong><\/h2>\n\n\n\n

Otherwise, the overall strength of a project or just the sum of all assets deposited in DeFi protocols; TVL has become the key metric for estimating interest in a certain segment of the crypto industry.<\/p>\n\n\n\n

TVL encloses all the coins deposited in every function that DeFi protocols present, including Staking, Lending, and Liquidity pools.<\/p>\n\n\n\n

Importantly, it does not mirror the yield these deposits can earn.<\/p>\n\n\n\n

The value doesn\u2019t only change when users withdraw or make a new deposit, but it\u2019s constantly changing with those assets\u2019 inconsistent dollar value. Here a trader can leverage TVL while accessing if the DeFi project\u2019s native token value is measured suitably.<\/p>\n\n\n\n

DeFi aggregators can help the users dive deep and look at the stats of blockchain networks. Protocols with a high TVL tend to be reliable and secure, while those ranking at the bottom of the list have greater risks and a less active community.<\/strong><\/p>\n\n\n\n

# 2: Identify the major token holders<\/strong><\/h2>\n\n\n\n

Another key metric to consider is the advantages that holders get for holding or being an active community member.<\/p>\n\n\n\n

Look into the manners, \u201cHow token was launched,\u201d or \u201cWho are the present dominant token holders.\u201d This may signal whether the platform could fall prey to the whimsy of \u2018mercenary capital.\u2019<\/p>\n\n\n\n

Caution is warranted if excessive yields are available for low liquidity because these are the perfect ambiance for catastrophic losses. If the supply available is held by backers or creators, there\u2019s a great possibility these tokens will be later sold when early investors vacate their positions.<\/strong><\/p>\n\n\n\n

# 3: Check on developer & community activities<\/strong><\/h2>\n\n\n\n

The best way to read a project is to constantly check the stats depicting the activity levels from a platform\u2019s developer community or user base.<\/p>\n\n\n\n

Numerous protocols in the crypto space offer analytics to help traders track growth. If a protocol boasts of \u201csoon-to-be-launched\u201d but has little ongoing development, it\u2019s best to stay away until the activity matches the claims.<\/p>\n\n\n\n

Developer\u2019s time is certainly a pricey resource, and if developers are devoting their time and efforts on a given project, it\u2019s a sure-shot that:<\/strong><\/p>\n\n\n\n

\u00b7 Project will be successful
\u00b7 It\u2019s unlikely a fraudulent exit
\u00b7 The project is highly functional<\/strong><\/p>\n\n\n\n

Stepping into the DeFi space demands intellectual strategies. Knowing the different metrics for analyzing the DeFi tokens can ease your efforts of getting started in the segment.<\/strong><\/p><\/blockquote>\n\n\n\n

Want to delve further into the topic? Take it from the top about DeFi concepts, more financial wisdom and the latest developments of the industry on\u00a0<\/em>IXFI\u2019s Medium blog<\/em><\/a>. If you\u2019re more interested in the practical part, trade now with\u00a0<\/em>Your Friendly Crypto Exchange, IXFI<\/em><\/a>.<\/em><\/p>\n\n\n\n

Disclaimer:<\/em><\/strong> <\/strong>The content of this article is not investment advice and does not constitute an offer or solicitation to offer or recommendation of any investment product. It is for general purposes only and does not take into account your individual needs, investment objectives and specific financial and fiscal circumstances.<\/p>\n\n\n\n

Although the material contained in this article was prepared based on information from public and private sources that IXFI believes to be reliable, no representation, warranty or undertaking, stated or implied, is given as to the accuracy of the information contained herein, and IXFI expressly disclaims any liability for the accuracy and completeness of the information contained in this article.<\/p>\n\n\n\n

Investment involves risk; any ideas or strategies discussed herein should therefore not be undertaken by any individual without prior consultation with a financial professional for the purpose of assessing whether the ideas or strategies that are discussed are suitable to you based on your own personal financial and fiscal objectives, needs and risk tolerance. IXFI expressly disclaims any liability or loss incurred by any person who acts on the information, ideas or strategies discussed herein.<\/p>\n","protected":false},"excerpt":{"rendered":"

Have you just started your crypto journey or been trading for years?<\/p>\n","protected":false},"author":3,"featured_media":904,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[23],"tags":[],"class_list":["post-903","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-wisdom"],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"https:\/\/www.ixfi.com\/blog\/wp-content\/uploads\/2022\/06\/1_W7jrmpGhHMquUzgkhjc2vA-copy.jpg","_links":{"self":[{"href":"https:\/\/www.ixfi.com\/blog\/wp-json\/wp\/v2\/posts\/903","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ixfi.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ixfi.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ixfi.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ixfi.com\/blog\/wp-json\/wp\/v2\/comments?post=903"}],"version-history":[{"count":2,"href":"https:\/\/www.ixfi.com\/blog\/wp-json\/wp\/v2\/posts\/903\/revisions"}],"predecessor-version":[{"id":1404,"href":"https:\/\/www.ixfi.com\/blog\/wp-json\/wp\/v2\/posts\/903\/revisions\/1404"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.ixfi.com\/blog\/wp-json\/wp\/v2\/media\/904"}],"wp:attachment":[{"href":"https:\/\/www.ixfi.com\/blog\/wp-json\/wp\/v2\/media?parent=903"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ixfi.com\/blog\/wp-json\/wp\/v2\/categories?post=903"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ixfi.com\/blog\/wp-json\/wp\/v2\/tags?post=903"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}