Coin Score is a financial education site that performs a fundamental analysis on cryptocurrency projects using two analysis tools namely:
I. Analysis based on algorithms:
In this section, a multi-criteria analysis is carried out using a unique algorithm of calculation, in the cryptographic field, containing 7 general criteria, 22 secondary criteria and 167 variables associated with them, to which calculation coefficients are applied based on the importance of each parameter, to improve the quality of the decision to invest in a project. Following the analysis of a project, a general score of 1-10 and a related rating will be obtained.
II.Based on artificial intelligence:
After the multicriteria analysis based on the algorithm is carried out, the resulting data is entered in the form of a standardised text, well defined for each project, in the input section of Chat GPT 4, owned by Open AI, and the result is provided as a general conclusion about the project, the associated risks and investment opportunities.
Explanation of the analysed criteria
1. Social & Mass Media
In this criterion we look at projects regarding exposure to social media, interaction with members of social media communities or on chat platforms.
The Coin-Score team analyses the speed with which the community joins projects through chat and social media platforms, from the moment their accounts are created to the time of the analysis. Behind the analysis are complex criteria regarding the adoption of channels over certain time intervals, the evolution of adoption curves and analyses over certain periods of market cycles.
Since they are projects that artificially grow their communities without having real activity on accounts, the results are synthesized and the activity of community members and the interaction of administrators with members are evaluated.
The interest and interaction of project team posts by the community is measured by the number of comments, distributions and likes over certain reasonable and quantifiable time intervals.
Mass media is an important point in this chapter because media interest in a crypto space project is a qualitative indicator. The number of news reports over certain periods of time analyzed and websites mentioning projects within articles, the number of accesses on news platforms, constitutes an essential marketing indicator.
The more important news platforms in the world mention certain projects the more interest is generated around the cryptocurrency.
In conclusion, appearance on news and social media platforms is an important quantitative and qualitative criterion in Coin-Score analyses, and has a major importance for website users to receive an objective and true assessment.
2. Audits & Security
In the framework of the Audit and Security analyses, a number of subcriteria are evaluated objectively and subjectively as described below:
The first phase analyzes the compliance of the project from the point of view of exposing all the general data about the team, the tokenomics with all its aspects, the products offered, the whitepaper, the data on the blockchain and the web-site, all of which must have traceability to receive a good score.
Security audits of software developed under blockchain-registered smart contracts, posted by the project team on its own website, are verified by the Coin-score team. Depending on the auditors’ findings, the quality of auditors, their expertise and conclusions, and the resolution of auditing problems, the project receives an appropriate score. It also checks whether incidents are recorded on the platform and how to resolve them. If the project has not been audited, it will receive the minimum score in this case.
According to experts at Coin-score, a cryptocurrency that provides an audit and the audit findings are positive, represents a project of perspective, will receive a good score and deserve the attention of investors.
The project economy analysis is based on data provided by the team as well as other data identified on the blockchain.
There are 4 important pillars that deserve all attention when talking about tokenomics, namely:
– If it has the maximum supply and the inflation rate of the token;
– The distribution and proportion of currency amounts in the top 10 wallets;
– Previous price volatility.
– The duration until the acquisition of the rights to the coins (Vesting);
If a maximum supply is set through the smartcontract it brings a good score in the Coin-score analysis but it is not enough, it is very important and how many coins are in circulation and the annual rate of inflation of the currency. A project that inflates by more than 10% per year can affect the price substantially and investors will suffer, virtually devaluing their investment over time.
A cryptocurrency in which the amount of over 60-70% of the currency is centralized in less than 10 wallets, has vulnerabilities in terms of liquidity on exchanges, the possibility of creating pump and dump, high centralization, these criteria are thoroughly checked and properly noted.
The volatility caused by coin printing and substantial price impact generates a consistent drop in the Tokenomics score.
If no data on the duration until the acquisition of the rights on the coins (Vesting) is published, the score will be minimal. If we have published data, it analyzes how investors have access to their funds to sell them and the proportions of money released on time.
4. Ecosystem Development
In this chapter we pay attention to the roadmap, namely: past goals, if they were achieved in time as specified, whether new developments of the ecosystem are proposed or improvement of existing ones. A project cannot grow unless software development developments can be checked on the profile sites. Also, the degree of participation in community project governance is an important indicator in the development of the ecosystem because they are centralized projects and decisions are made by a very small number of people.
Low scores are awarded to projects that did not comply with the roadmap and the development of the ecosystem has not been as expected, but if we have projects that delivered achievements ahead of their planned, the projects will receive high scores.
If the proposed development areas are multiple and keep up with the competition, the Coin-score team will score the project with a high score.
5. Team & Developers
The publication of the founding team that is at the time of the analysis in the leadership of the project, the training and experience of the team and the number of software developers that are part of the group are important criteria in determining the quality of a project in the crypto space, so Coin-score analyzes according to the following sub-criteria:
Experience of the team and advisors in the fields of finance, software development, cryptography, blockchain, development of similar projects and past success;
If the team is public and data can be found on the profile sites and social networks;
the number of developers working on the development of the ecosystem;
The number of team members and the existence of important departments within the company (example: marketing, operational, design, etc.)
6. Product & Utility
There are two main aspects that Coin-score evaluates within this chapter, namely:
If there is a finished product that brings revenue within the company, the number of products and what is the company’s annual revenue;
If the token or cryptocurrency has an utility within the functioning of the ecosystem;
If a project has developed products that bring constant revenue to the company, it means that the project is sustainable and healthy in the long run, which significantly reduces the chances of the project failing. Examples of revenue-generating products are: smart-contract blockchain, wallet, CEX, DEX, Dapps, Liquidity pool, Marketplace, etc.
The usefulness of the token or cryptocurrency within the ecosystem is vital in rising prices, as users are encouraged to buy the currency and keep it in stake, which can bring considerable benefits to the project.
7. Partners & Investors
Partners and associates of projects in the crypto space can give important clues about the quality and future of the company.
Coin-score analyzes partners, their level of engagement in the business, their number and quality. If there are no partners, the project will get a low score, and if there are important partners within it, the Project will receive a high score.
Last but not least, large investors or large investment funds present on the list of token buyers and holders represent an important aspect about future development capabilities.
Explanation of the general score and rating
1. Score from 9.00-10.00 – Excellent
The project is excellent and the risk level is extremely low. It is based on exceptional technology and the ecosystem is stable. The token within the project respects the basic principles of the crypto space and has an important adoption in society as well as extremely high utility for most cryptocurrency investors;
2. Score 8.00-8.99 – Excellent
The project is stable and the risk level is very low. The end products of the project are functional, the technology is safe and the ecosystem is strengthened; the token within the project has a high adoption for most cryptocurrency investors.
3. Score 7.00-7.99 – Good
The project is under development and the level of risk is limited. It has functional products or is about to have and the technology used is largely stable, the token is useful within the ecosystem; the Token within the project has a good probability of being adopted by most cryptocurrency investors.
4. Score 6.00 to 6.99 – Good
The project is promising and the level of risk is acceptable. The project is in an early stage of development but can have very good results if it complies with the roadmap and auditors’ guidelines; the token within the project has an increasing adoption by most cryptocurrency investors.
5. Score 5.00 to 5.99 – Average
The project is reasonable with a moderate level of risk associated with it. The project is mediocre but the development stage in which the project is is really early the technology provided is in testing and has not been used by the general public; the token within the project has average adoption by most cryptocurrency investors.
6. Score of 4.00-4.99 – Average
The project is unpromising with the level of risk being slightly increased. The idea of the project in society has little chance of being implemented and can sometimes be considered unnecessary or without the means to be put into practice, the team does not seem ready to lead the project to the end. The token within the project has a small adoption among cryptocurrency investors.
7. Score 3.00-3.99 – Fragile
The project is extremely limited with an increased level of risk. The progress of the project is small compared to those proposed in the road map, team members no longer respond to community requests, the idea cannot be put into practice. The token within the project has no adoption in among cryptocurrency investors.
8. Score 2.00-2.99 – Fragile
The project does not propose a solution to a problem or does not aim to produce a final product, the team is not public, has no road map, the level of risk is high; the token within the project has no adoption in among cryptocurrency investors.
9. Score 1.00 to 1.99 – Danger
The project has very high chances of closing in the coming period due to the lack of activity around the project and very low trading volumes; the token within the project has no adoption in among cryptocurrency investors.
10.Under the score of 1.00 – Danger
The project presents an extremely high level of risk, the team is not public, there is no activity within the project. The token within the project has no adoption in among cryptocurrency investors.