Top Crypto Projects

A note for the people who skipped right to this page 🙃

Please make sure you’ve reviewed all the content leading up to this page, especially Understanding Risks and Market Manipulation. Investing is fairly straightforward, but there are many traps laid for you along the way.

Finally: This summary is accurate as of November 2021. However, the world will be a different place in a few years and you should periodically reevaluate your holdings as the space matures. Nothing here, or in life is a “sure thing”. The summaries here are a starting point for you, not a comprehensive analysis. Please do your own research before purchasing anything, and never buy anything that you do not understand, and do not have personal confidence in. 95% or more of the current projects in crypto will almost certainly fail long term… but the ones that succeed will change the world. I’d approach risk management from that perspective as you research and invest!

If you’re looking to research more, but don’t know where to start, I’d recommend checking out the Coin Bureau’s video on How to Do Your Own Research.

Please revisit the “How to build sustainable wealth in crypto” page for the overview on the investment thesis for Layer 1 cryptos

Top Crypto Projects

Bitcoin: 1st Generation. “Digital Gold” is an appropriate metaphor, it is the reserve currency of the digital world. Bitcoin is largely a commodity, a store of value, and a payment network. It is only valuable because other people believe in it, and should be the only “unproductive asset” in crypto that gets a pass. Much of the near term growth will likely come from institutional adoption fleeing currency devaluation, and from the developing world fleeing dollar dependency, especially LATAM. 

Cashflow: Not generated by the platform itself.

Ethereum: 2nd Generation. A world computer and smart contract platform. The current home of most of DeFi and NFTs, and likely the next platform to gain major adoption by institutional investors. The transition to Proof of Stake in 2022 will give ETH a claim on network fees and strongly increase its value prop and scalability. That said, there are significant technical challenges in its future, and without on-chain governance to quickly implement future upgrades, there is a real opportunity in the longer term for 3rd generation platforms to gain market share and capitalize on additional use cases. 

Cashflow: Staking not fully live, but will be available after the ETH2.0 merge (~4-7% APR expected)

Cardano: 3rd Generation. Led by Ethereum co-founder Charles Hoskinson, Cardano aims to be effectively a faster, cheaper, and more scalable version of Ethereum, with additional capabilities around governance, voting, and identity. They put a premium on academic research and formal proofs, partnerships with nations in the developing world (especially Africa), and large institutions and Fortune 500 companies. Cardano is an exceptionally well engineered project, my personal favorite long term hold in all of Crypto, and I would highly recommend watching Charles’ 2017 Whiteboard video to understand more. 

Cashflow: Staking rewards available (5% APR)

Polkadot: 3rd Generation. Led by Ethereum co-founder Gavin Wood, Polkadot aims to be a “league of blockchains”, essentially a network of blockchains all connected by an underlying architecture. It’s technically more like a Layer 0, rather than a Layer 1 blockchain. While this can take a while to really understand, I conceptualize this as a giant corporate office building that businesses can lease out space from to run their business, benefit from Polkadot’s security, and access both capital and users in other projects running on the network. Polkadot is an extremely ambitious project that may become one of the giants of tomorrow, and I’d recommend watching this overview for the basics of what the platform is aiming to accomplish.

Cashflow: Staking rewards available (12% APR)

Solana: 3rd Generation. Backed by billionaire Sam Bankman-Fried of the FTX exchange, Solana is currently the fastest blockchain on the market, with massive capital backing the project. The project is highly centralized, both in how the platform is run, and who owns the capital in the network. However, while this introduces certain risks, this is not strictly a negative, as the success of the project is becoming highly correlated with FTX and the venture capital firms associated with them. While I’ve had far more concerns personally about Solana than the others listed here over the years due to the centralization, and frankly… some flat out shady behavior on a few occasions, I’ve included Solana in the top 5 because they are simply too big and moving too fast to ignore. Unless they have a large technical failure and melt down, Solana is one of the few blockchains with a real shot to become one of the dominant players of tomorrow. They have been incredibly impressive at how quickly they’ve grown their ecosystem and taken market share, and should definitely not be ignored.

P.S. While there’s a lot to like with Solana’s growth, partnerships and future potential, I’d recommend being hyper-aware of the risks and a few red flags before investing. Candidly, if any project on this list completely collapses at some point… it would probably be Solana. Just a word of warning, and Justin Bons has a great interview about many of the risks here.

Cashflow: Staking rewards available (7% APR)

This is certainly not an exhaustive list, and there are several other promising projects that are worth of consideration. While beginners should typically stick with the established, and highest quality projects, if you’re a more advanced crypto investor, some additional projects may also deserve a spot in your portfolio.

However, since many of these other projects and their details change frequently, I’ve opted to only list and summarize the projects that are the most well established, well funded, well led, and have the highest likelihood of still being around in the next 5 years.

How to Value a Crypto Project

Candidly, no one really knows how to value crypto projects (i.e. Digital Assets) right now, as traditional valuation models (Price to Earnings, Discounted Cash Flows, etc), don’t really fit, and no one really knows what the Web3 world is going to look like. Crypto tokens like Layer 1 Proof of Stake coins even have elements of three other asset classes: currencies, commodities, and capital assets, which further complicates the equation.

However, while specifics are still developing, what is clear is that crypto value is all about Network Effects. This is not dissimilar to the value network effects drive for the FAAMNG Web 2.0 giants. 

       → Metcalfe's Law: the value of a network is proportional to the number of users on a network, and the number of connections between them. 

There are models being developed to “objectively” determine a value for crypto networks, but they are overall in their very early stages and should be taken with a grain of salt (this would be like trying to value Amazon when it was founded, before the eCommerce market really existed). If you do need more of a traditional financial framework to feel comfortable, some of the best work being done here is by the ARK team.

Side note on Prices & Market Caps

The price of a coin means nothing by itself! Just like a stock, the price by itself is irrelevant, unless you know how many shares in total there are. If I cut a pizza into 150 slices, each piece would be tiny, and would be worth a lot less than if I cut it into just 4 slices. Here is a great primer on the subject from Coinbase.

You want to look at the total valuation of all the shares of a project, i.e. its Market Cap if you want to understand its price potential. People compare prices to Bitcoin all the time without taking this into account. I.E. Just because Bitcoin, with a very small number of coins in circulation, is now valued at $60k, has zero relevance to the “coin price” of anything else.

Example: If a memecoin with tons of coins in circulation, like Dogecoin for example, went from $.25 to just $100, it would have a market cap of $14 Trillion dollars, worth more than Apple, Amazon, Microsoft, and Google combined. So, the person who says “Bitcoin is $60k, so my favorite coin can at least go to $100!” likely has no idea what a Market Cap is, and is probably not someone you should take investment advice from. 🙂

Understanding the Market Cap of a crypto project is a very valuable tool for comparison. You can see all the largest crypto projects ranked by total size on CoinMarketCap. Even if no one is sure how to value a crypto on its own, comparing the relative valuations of different projects is incredibly useful in determining if something is “overvalued or undervalued”.

Example: If Cardano were valued at a $100B market cap, and Polkadot was valued at a $50B market cap, and you thought the projects were comparable in quality and value, it would be valid to assume that Polkadot was probably undervalued, and a better buy for the money at that point in time.

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Now looking past the financial metrics, here are a few fundamental things to help you make judgement calls on which projects deserve your attention and/or investment.

Things to look for

Strong leadership that is committed to the project

A strong community that is committed and believes in the project long term

Taps into something bigger than money (i.e. people’s beliefs or identity)

Strong history of technical development and innovation

Focus on fundamental development vs marketing/hype

Strong support from developers

Strong partnerships with others in the industry

History of honest and transparent behavior

Technology that is unlikely to be made obsolete in the coming years

A real economic moat: i.e. something they do uniquely that cannot be easily copied long term

A real roadmap and plan to address current shortcomings and future growth

Projects that are tackling unique problems, or tackling valuable problems in unique ways

Plenty of funding and financial support

Multiple entities invested in building the project

A plan to fundamentally change how the world works, rather than just “make money”

Projects that other crypto leaders think highly of

I would also recommend reviewing the How to lose all your money page from Section 2 to brush up on some things to avoid.

Side note: For intermediate readers who know what Total Value Locked (TVL) is

If you’re a beginner, you probably don’t need to worry about this yet, and can skip this section.

I call this out, since it’s become a popular way to “value” a blockchain without putting much actual thought into it. TVL means the value of assets currently locked in a blockchain for use in DeFi. TVL is a valid indicator of what is happening right now. It is NOT a proxy for what is going to happen in the future. It should be a factor in your calculations, but not your only factor! TVL is a lagging indicator for quality projects, and liquidity is notoriously fickle and easy to entice temporarily if you hand enough money to liquidity providers. A high quality project that has yet to fully roll out their DeFi suite may have $0 TVL, that does not make them a bad bet! Likewise, a scammy project with short term incentives could entice a lot of liquidity temporarily, spike their TVL, only to have the “liquidity locusts” leave once they’ve taken all the rewards. In short, there is no “one metric” to invest based on, and you should take a holistic view to each project.