Hundreds, if not thousands, of tokens, are released every single day on various blockchain networks, such as Ethereum or Binance Smart Chain (BSC). The majority of these tokens are either shitcoins created by newbies looking to cash in on the cryptocurrency hype or scams created by rogue developers looking to defraud unsuspecting investors. However, hidden among this sea of shitcoins and scamcoins are a few gems that would reward early investors 100x or even 1000x.
The cryptocurrency world is a modern-day "gold rush," where a prudent selection can instantly make an individual wealthy.
How do you discover these crypto gems?
There are only two things you must do:
- Spotting a potential crypto gem ahead of the competition
- Conduct immediate research and confirm its growth potential.
Sighting a crypto gem:
Being the first to notice a potential 100x coin is critical. In traditional financial assets, friends and family of business owners frequently benefited from "insider trading," as they were the first to learn about a company's launch. The beauty of blockchain's transparency is that you do not need to be pals with the token creators. Every transaction is recorded on the blockchain.
The question is what should you be on the lookout for? Consider the journey of an early-stage cryptocurrency. Tokens must first be deployed on the blockchain, and then liquidity added to a decentralized exchange (DEX) such as Uniswap for Ethereum or PancakeSwap for BSC. Next, the token creators would implement the necessary controls, such as locking liquidity, to protect the investor's interest and instill the necessary trust and confidence in them to purchase the token. This is followed by marketing and exchange listing.
At this stage of promotion, you will typically learn about such gems, but you are already late and there will be a large number of competing investors. However, is there a way to learn about a crypto gem even before marketing begins? It is indeed possible; all of these events, including token deployment, liquidity addition, and control mechanisms such as liquidity locking, are recorded in blockchain transactions. You can indeed unearth a gem before anyone else if you look for such transactions. However, the issue is sifting through this huge blockchain haystack in search of the needle of the right transactions. It is humanely impossible to constantly monitor blockchain explorers and analyze transactions in real-time.
Not to worry, a dapp has been launched that makes it possible to find crypto gems for the very first time. Mudra Discover for the BSC network keeps track of the BEP-20 tokens when they lock liquidity in real-time. It also displays the liquidity value and liquidity lock period directly from blockchain transactions and smart contracts. The tokens with a decent liquidity value locked for a year or more are the ones that really have a chance of becoming the next dogecoin.
Researching and validating a crypto gem:
So you've discovered a potential crypto gem, but should you dive in and invest? Not yet; you must conduct in-depth research to determine whether there is indeed a gem potential. This again necessitates an examination of the fundamentals of the token, which are all available on Blockchain, but extremely time-consuming manually. T here is a dapp for this purpose as well: Mudra Research is the most advanced and comprehensive token scan tool available. In a matter of seconds, you can learn all of the critical parameters associated with any BSC token such as:
This indicates whether the token has an owner with special privileges or whether it has been renounced by contract ownership being assigned to a burn address. Privileged access of the owner can be used to pull off scams like restricting selling once there are enough investors on board.
This is the percentage decrease in the total supply of available tokens caused by a transfer to a burn address (typically 0x00..0 or 0x00..dead addresses which have no keys and cannot swap tokens). When developers burn a portion of their tokens (30-50 percent is ideal), they reduce their share and minimize the likelihood of a dump.
Verified Contract Source code available on a blockchain explorer provides transparency for users interacting with smart contracts.
A mintable token has an infinite supply, which enables the owner to create and dump tokens at will. Mudra Research analyses the smart contract code to determine whether the token can be minted.
Non-privileged users are not permitted to transfer or sell honeypot tokens. Mudra Research conducts an analysis of smart contract code in order to identify this malicious mechanism.
Liquidity Pool Value
The value of liquidity pools (LP) in USD dollars. This is a critical metric for a newly launched coin. To enable trading on an exchange such as PancakeSwap, developers must establish a liquidity pool (LP). Because LPs are formed by pooling BNB or other valuable tokens, they represent an investment and commitment on the part of the developers. A 100K worth of BNB tokens added to form an LP pool is a positive sign.
Liquidity Pool Token Allocation
The refers to the portion of the "tradable" token supply that has been allocated to liquidity pools. This is easily the most overlooked metric when it comes to evaluating a new token. After releasing a token, developers acquire ownership of the entire supply. They may burn some, airdrop others, or sell a few in pre-sales. They would, however, typically retain the majority of the "tradable" supply. They may distribute it across multiple wallets with no whale visible in the holder’s list to improve optics. If a significant portion of the "tradable" token supply is allocated to LPs (which, by the way, should be locked; more on that later), the developer's share is reduced, and they are unable to profit from dumping their share. Otherwise, they can benefit from dumping their share only if the token price appreciates slightly. To illustrate, if developers own 90% of the "tradable" supply of a token and have created a high-value LP with 10% supply, they will recover 90% (actually more than that) of their LP investments when they dump all their tokens, even if no one else ever traded their tokens. And if they can convince a small number of people to buy and drive up token prices, developers can earn a tidy profit even with a locked LP. For newly released tokens, the LP Token allocation percentage should be as high as possible; while 100 percent is ideal, a figure of around 20% is a good starting point.
This is the percentage of liquidity that is currently locked in order to prevent developers from "rugpulling" or withdrawing liquidity from PancakeSwap and fleeing with the money. By locking their LP tokens in a timed locker, developers would renounce their right to withdraw liquidity. By and large, reputable third-party lockers inspire more confidence than a custom locker contract.
Mudra Research searches all well-known BSC LP lockers automatically, so you don't have to take token creators’ word for it. If Mudra Research is able to locate a locker for token liquidity, it will report the percentage of token liquidity that is locked and will provide links to all available lockers.
Locked Liquidity Time
This metric indicates the percentage of liquidity that will be locked up even after a year's time. This, arguably, is the most critical insight. Devs may have secured liquidity for several months, which means they will simply have to wait it out before rug pulling.
With these two dapps, you can identify and research crypto gems ahead of the competition, and who knows, you might become the next poster boy for the crypto rags to riches story.