The research head of an $800 million crypto asset manager explains how he studies altcoin projects before choosing winning bets and shares the 3 altcoins on his bull trending radar.
The story of getting down the crypto rabbit hole
Katie Talati was working with venture capital investors and early-stage fintech startups when she first learned about cryptocurrencies and digital assets in 2014. But it wasn’t until the furious bull market of 2017 that crypto fell deep into the rabbit hole. She suddenly said that every fintech company she worked with wanted to add a token strategy to their line of business. In an interview, Talati says:
I’ve helped several companies with their token strategy or designed how to apply the token strategy to their overall business. That’s when I went down the rabbit hole and started to learn more deeply about digital assets.
Through fintech advisory work, Talati met the founders of Arca, another startup working to create enterprise-grade digital asset investment products. Today, he leads a team of four analysts as head of research for the crypto asset manager, which has raised over $800 million since its launch in 2018.
How to review and select winning altcoin projects?
To identify and analyze investment opportunities in the digital asset space for Arca’s four active funds, Talati and his team evaluate both qualitative factors and quantitative metrics of any altcoin project on their radar.
But the first step always starts with testing the usability of a product. At this stage, Talati aims to find out if the product is easy to use, whether it requires bridging tokens to another Blockchain or setting up another wallet, and whether the approval period is delayed.
Next, it examines the project’s tokens that could shed light on how the altcoin might perform in the future. A project’s tokens typically include the token’s total supply, circulating supply, issuance, ownership, and distribution.
In addition to the product and token, Talati is definitely researching the background of the team behind the project. “I try to communicate with them and ask questions to understand what kind of team they are, what kind of builders they are and what projects they have worked on before,” he says. He adds that he also analyzed the existence of a project on social media platforms, including Twitter and Discord.
Depending on the fund strategy, Talati and his team identify tokens with potential long-term or short-term catalysts such as conferences, airdrop announcements, new product launches, as well as mergers and acquisitions. In order to select the winning tokens for the funds, it tries to focus on hidden gem projects amongst early-stage agreements and established protocols.
The 3 altcoin projects on Katie Talati’s radar
Talati personally, the until recently overlooked Lido Finance (LDO), Maple Finance (MPL) and Interested in Trader Joe (JOE).
Lido finance is a liquid staking protocol where users can stake Ethereum (ETH) to earn rewards without having to sell their ETH tokens. Lido Finance offers ETH stakers a token called stETH on top of their stake rewards. Lido users can then distribute stETH pegged one-to-one to their initial stake to consolidate returns across the decentralized finance (DeFi) ecosystem, whether through yield farming or decentralized lending.
However, some analysts argue that if Ethereum’s Proof of Stake (PoS) transition is delayed or users lose trust in ‘The Merge’, stETH will leave Ethereum or underlines the risk of falling in value. According to Bloomberg, Lido says the liquidity of the token will help it withstand any selling pressure for a long time.
Talati is also positive about Maple Finance (MPL), a decentralized lender that counts quantitative trade shop Alameda Research, Amber Group, and venture capital firm Framework Ventures among institutional borrowers on the platform. As we reported in
Kriptokoin.com news, Maple Finance is raising capital from hundreds of lenders who invest their cryptos in a diversified pool to earn interest on the pool’s liquidity asset. Before borrowers get their loans, they go through a specific underwriting process to the pool specified in the USD stablecoin (USDC).
Also on Talati’s radar is Trader Joe (JOE), the main decentralized exchange in Avalanche (AVAX). According to DeFi Llama, the one-stop decentralized trading protocol has grown rapidly since its launch in June last year, with a total locked value of $1.24 billion. Talati highlights two tokenomic changes implemented by Trader Joe’s as positive catalysts.
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