6 Key Metrics for Evaluating Crypto Token Credibility

Spotting real crypto gems amid scams is hard.

The sheer volume of new token launches flooding decentralized exchanges (DEXes), coupled with the absence of standardized safety metrics, leaves investors vulnerable to rug pulls and fraudulent schemes.

This guide explores key token metrics on Birdeye – Honeypot warnings, Trading Volume, Fully Diluted Market Cap, Whale activities, Top Holders, and Social media presence. These indicators help assess a token’s trading activity, liquidity, future value, and overall credibility for more informed investment decisions.

1. Honeypot warning

Honeypot in crypto refers to a mechanism that locks the liquidity of a token, making it difficult or impossible for investors to sell their holding. This is a common tactic used in fraudulent projects.

Whenever you come across these types of tokens on Birdeye, you’ll see the following signs:

• A Honeypot warning label right above the token’s Overview;

• A Honeypot warning label in the ‘Swap’ panel on the right sidebar; and
• The ‘Swap’ button of the token being disabled and not lighting up.

If you encounter a potentially fraudulent project lacking the mentioned Honeypot signals on Birdeye, take these steps: 

• Conduct thorough research before investing. You could review the token’s smart contract via blockchain explorers like SolanaFM to detect potential honeypots. Alternatively, monitoring community discussions on platforms such as Twitter, Reddit, and Discord can offer valuable insights and warnings.
• Report that token to Birdeye for investigation. We take the issue of honeypots seriously, as they can significantly impact our users. Please reach out to our team via birdeye’s official Twitter DM, Telegram group, Discord, or our Feedback page if you encounter clear signs of a honeypot project.

2. Trading Volume

Trading Volume indicates how much of the token is being traded over a specific time period (such as daily or monthly). Unlike TVL, which measures the total value of assets locked within a decentralized finance (DeFi) protocol, Trading Volume directly captures the level of trading activity and liquidity for a token across various exchanges. 

On Birdeye, you can track Trading Volume changes over time in both USD and token currency charts in the ‘Technicals’ section below the TradingView chart.

Key signals to observe:

• Current volume compared to past. Higher volumes generally signify better liquidity, allowing for larger trades without significant price impact.
• Frequency of trades. Tokens traded daily since launch indicate healthier activity.
• Buy/sell ratio. Anomalies in buy/sell ratios over periods like a week or month may suggest manipulation. The ’24h Trading Volume’ metric above the token’s TradingView chart can help spot more recent anomalies.

3. Fully Diluted Market Cap (FDMC)

FDMC represents the total value of all tokens, assuming they were fully released into circulation. This metric offers insights into the token’s potential future value and market size, reflecting the project’s long-term vision and potential credibility beyond being speculative.

On a token’s page on Birdeye, you can find its FDMC in the Overview section, listed on the left sidebar. 

Comparing FDMC with Market Cap reveals potential market manipulation risks. For instance, if FDMC exceeds Market Cap by 10x, it suggests a concentration of unreleased coins among a few major holders, facilitating market manipulation.

4. Top Holders

Top Holders on Birdeye indicates the top 10 holders of a certain token and the % of the current total supply they own, collectively and individually. This metric helps you understand a token’s ownership structure better and, thus, potential market manipulation risks.

On a token’s page on Birdeye, look for the ‘Top 10 Holders’ section listed on the left sidebar of the TradingView chart.

Here are key figures to pay close attention to:

• The accumulated % of the current token supply owned by the top 10 holders. A higher percentage suggests a greater potential for market manipulation.
• The individual % of the current token supply owned by the top 3 holders. If a significant portion of the total % is concentrated with these three, it further intensifies the concern regarding potential manipulation.

Tracking changes in the number of holders over time, especially if the token hasn’t fully circulated its coins, may also help identify manipulation risks. You can find the visuals of this data in the ‘Technicals’ section under the token’s TradingView chart. An upward trend may signify increased accumulation by various traders, rather than concentration among a few holders.

5. Whale activities

Whales, referring to large token holders, possess considerable influence over token prices. Birdeye categorizes transactions (buy, sell, add liquidity, remove liquidity) exceeding US$10,000 as ‘whale trades.’ Keeping track of these crypto traders can provide valuable insights into the market sentiment and potential price movements, reflecting a token’s credibility.

To find whale traders on Birdeye:

• Navigate to the ‘Recent Trades’ section on a token’s page under its TradingView chart. 

• Filter for ‘whale’ value trades by choosing the whale 🐳 icon.

• Use the ‘By’ category filter to search a specific wallet address in the list of whales’ wallet addresses. You can also directly ‘Check Wallet’ you are seeing on the list for further investigation.

You’re now on a wallet address’ Trader Profile on Birdeye. Our Trader Profile feature helps you assess a whale’s impact on token sentiment and price movements. The dashboard displays historical trades, timestamps, values, and portfolio changes, providing valuable insights into their buying, selling, holding patterns and duration.

6. Social media presence

Social media presence signifies a project’s visibility on key platforms like Twitter, Discord, Telegram, and Reddit. This metric reflects its active online presence and genuine engagement of community members.

On a token’s page on Birdeye, you can find its social media and group information in the ‘Overview’ section on the left sidebar of the TradingView chart. 

Key aspects to consider on social media channels include:

• Project updates. Regular updates indicate active communication.
• Organic community engagement. You can assess the likes, comments, and reposts on their posts for genuine interaction.
• Reviews. Search the token’s ticker on platforms like Twitter for user feedback; ideally, most comments should be positive.

We also offer the Community Sentiment feature to bolster your confidence in assessing a project’s community and reliability. It can be found right under the token project’s social information. Community Sentiment offers additional insights into how fellow crypto traders perceive the token through direct voting on Birdeye.

Use Birdeye key metrics, protect your bag

Knowing how to differentiate between projects with real and no value is crucial for traders. Using Birdeye’s key metrics like Honeypot, Trading Volume, FDMC, Top Holders, Whale activities, and social media presence help you make safer crypto investment choices. With this knowledge, traders can confidently navigate the crypto market and protect their investments.

Start with any token on Birdeye now: https://birdeye.so/ !

Disclaimer

All screenshots and GIFs serve solely to illustrate the process of accessing metrics on Birdeye and should not be construed as investment advice or endorsement of any token. Their inclusion does not imply any recommendation or encouragement to invest in showcased tokens.