Updated: Nov 3, 2021
I was asked by the late ABE to share my thoughts on WEN MOON? I prepared these notes, sent them to him, and all of a sudden he was gone. Rest in peace Abe! Your tireless TA and analysis will be missed.
We were working on a project together. I saved these notes for further down the line, however I have now made the decision to publish them.
The 10x or even 100x token is a rare beast and I would say 99 tokens out of 100 are not worth the time or risk. While trading and trend analysis are "hard" skills I think picking moonshots is a soft skill. There is no one right formula to it and it is a human exercise above all else.
Moonshots come in very different shapes and forms. On one hand we have something like dogecoin which mooned purely on the face of an internet meme. On the other hand, Solana is a highly functional chain touted as a solution to the blockchain trilemma. There are NFTs, pump and dump shitters and many other options.
I think the starting point for picking moonshots is trying to figure out what the crypto crowd want. They have a certain mindset, and it is very different from the traditional finance mindset. My view is that too much education or experience in traditional finance is counter productive in crypto and that a bit of unlearning is required to be effective. For instance, many traditional finances types do not like anything that looks like a ponzi scheme. In my opinion, there is an element of ponzi finance to all of crypto and it's best to get comfortable with a bit of ponzification.
A great example is HEX. You could show HEX to your average traditional finance person and they would say HELL NO. Show it to your average retail crypto investor and the result has been a resounding HELL YES. We need the crypto massif to buy your bags.
Many of the best crypto traders and investors I know have not come from a financial education background. I see people like Jamie Dimon make comments about cryptocurrency. He is viewing things through the lens of traditional finance, which is not how the average crypto enthusiast thinks. "Utility" can be a complete meme, but it is like a bible in venture capital. The rules of the game can change very quickly. Up until very recently I thought crypto people wanted anon, freedom and decentralisation. Then memecoins started doing 100x.
I prefer to look longer term with moon-shots and not necessarily buy what people are apeing into right now. This lowers risk.
The great thing about the internet is that anyone can start a community on telegram and a big marketing budget is not really necessary. You can build a silly amount of hype in a telegram channel and on social media. For new projects I like to see at least 20k people in the telegram channel although beware, these numbers are often spoofed. I like to compare them to real volumes on coinmarketcap or reliable exchanges. I like to see hundreds or thousands of new messages overnight when I have left the computer. It shows real community engagement and enthusiasm. Check Twitter or Reddit or other social media for numbers of followers. 50k to 100k is a good number for twitter followers though there is no hard and fast rule. HEX was launched from word of mouth. I am watching RADIX (XRD) and I have decided to invest. I am not sure if their tech stacks up because I am not a blockchain engineer but they seem to have convinced a lot of people already. That is good enough for me. I like to have a larp in the telegram channel for a project I'm thinking of investing in just to get a feel for the community, how toxic, whether legitimate debate encouraged, etc.
You have to figure out how to get the good coins in front of your eyes in the first place and this is half the battle won. Hunting for good projects is just like looking for a needle in a haystack and just going through the top 100 or top 300 is extremely time consuming. You can also miss a lot of good projects this way relying on the crappy coinmarketcap blurb. Many things are not as they seem. I prefer to have a lot of internet groups or telegram channels going simultaneously and get to know a lot of people out in internet land. Some people follow good influencers too, like Nick Mertens (Datadash). People hate Richard Heart but he is extremely knowledgeable.
It helps to have a good group of friends that you trade with. It helps to spread the work. Your group will come from different walks of life and they will see things that you do not see. More heads are better than one and I have always bounced my ideas with other people, including with people less experienced than me. I like to keep people with certain skillsets in these groups too, including engineers, MBAs, lawyers, management types. The more areas of expertise the better.
I don't like paid groups for the reason that there is a conflict of interest in these arrangements. You are best off talking to people that are not paid to speak.
Do your due diligence on people, as well as the coins themselves. This can save time. If I have had a coin recommended by someone I know to be an insane coin picker I could just ape in and ask questions later. Anyone can shill a coin. What is their track record like? I really only listen seriously to a few people regarding coins but obviously I have exceptions to these rules too. I keep shortlists and go through the lists.
Use the coins! You will get a good idea about ease of use and pain points in the user experience. I am not that bullish on ETH or MATIC because in my view, Ethereum Virtual Machine is a horrible user experience. ETH and MATIC are very slow and frustrating under load. Contrast with SOL that has a brilliant, laser sharp intuitive interface. A lot of people buy Ethereum and leave it on exchanges and hence the problems with its user experience are masked.
Money flow is important. You need to have a good idea of where the money is headed. The crypto market is like a wedding cake. You pour the cream on the top and it eventually fills Bitcoin. The cream then flows down to Ethereum and to alts. The shitcoins are last. Money can be flowing towards a particular ecosystem, like Solana right now.
You need to have a good idea where in the 4 yr bitcoin cycle you are. During the recent SOL / AVAX run you would be wanting to buy SOL or AVAX ecosystem tokens right? During this period the money flowed out of BSC and those chains into the newer exciting L1 chains.
There are a lot of beta coins out there. I would avoid them. I see something like FTM as a beta coin. It doesn't really do anything that SOL can't do. It may have only 30 validators or so which makes a mockery out of security or decentralisation. AVAX I put in the same category as it is very centralised and still using EVM, an inferior user experience to SOL. My serious investments I only have the three alpha coins. BTC, SOL, HEX.
Lack of decentralisation hurts projects long term. EOS is ultimately a failed project due to centralisation. The crypto community is pretty in tune to bullshit and they want something they can trust.
We should examine coin holdings and how the coins are distributed between insiders. Unfortunately this is a big thing that coins are inevitably pre-mined and sold to early investors and developers. With the advent of proof of stake and pre-mine this results in an undesirable ponzi model where people who want the coin can only purchase from insiders. This is the trap of the VC model and another conflict of interest as the VC business model usually relies upon dumping on retail investors. It is centralisation by deception. Even my beloved SOL has fallen victim to this. Proof of work coins like bitcoin are far more decentralised by nature.
How many developers are working on the coin? How much funding do they have? These projects are all running a race to mainstream adoption. BCH had a shortage of developers at some point and it has sunken down the rankings. I suspect ADA also has problems with manpower and funding.
Picking mooncoins is difficult, so come on down to the Booyah channels where I am a regular contributor / shit talker!