Denome has made a great video on how he does fundamental analysis on Crypto projects. We copied his methodology in analyzing Autofarm to see how another aggregated yield farmer called Beefy Finance (token name BIFI) weighs up.
To start off, LiveCoinWatch is a good platform to create your favorite list of tokens.
LiveCoinWatch shows Beefy has a market cap of $103 million (at time of writing). However go to Coingecko to get the fully diluted market cap, which shows $108 million. Binance Smart Chain Explorer also reflects a market cap of $108 million, with a token circulation of 79,502 bifi. Coingecko seems to right on the max supply of 80,000 tokens, and states that there is a circulating supply of 76,000 tokens.
Next step is to go the project site itself and see if the site is up and running. It is best to click out from LiveCoinWatch or Coingecko to ensure you don’t land on a scam site from a Google search. On the website, see if all the functionality is working. I managed to deposit some BNB into a yield farm and was successful.
Next stop is the wiki link on the website. For Beefy click on the docs link at the bottom of the screen. The wiki page gives more info on the project, what makes them unique as well as their roadmap. Of particular concern is their Tokenomics page, which provides information on how the initial tokens were distributed, how many were held back by the controlling body – all information that will give you an indication on the future inflationary behavior of the token.
Check that there is not a risk of someone sitting on a power block of tokens that can be dumped later to kill the price. In Beefy’s Case, only 8,000 from a pool of 80,000 were held back, so no big risk there. What seems to be missing is a section that explains what brings value to the token holder. To name another instance, Celsius network has dedicated page to explain how their tokens gain value.
Next we look at the project’s roadmap. We could not find a direct roadmap on the Beefy website. From a Google search we found informal plans as mentioned by various members of the development team in an article. On Telegram from some conversations I went through, there were mentions of an unpublicized roadmap.
As far as auditing is concerned, Beefy has been audited by two companies: DefiYield, who audited the $BIFI token, reward pool and token. Certik, one of the best crypto auditing firms have also audited their smart contracts and safety of funds. The results of both audits have been checked into GitHub.
If we head over to their Twitter channel, we see that they joined in September 2020, well ahead of their first day of trading at the end of December. If a Twitter account was created round about the same month as the Medium article or close to the first day of trade, one might start to question when the devs really started working on the project. We want to identify if this was not just a pump and dump with a promoted idea thrown out at the same time.
Beefy’s Telegram channel has a Twitter account link along with links to TG chat, TG announcements and the Discord link. To their credit they do have 83,000 Twitter followers, 13,000 members on Telegram and a Reddit channel with 775 members at time of writing this article. The Telegram channel is bustling with many questions asked with management actively involved to answer questions.
Welcome to Beefy Finance – yield farming optimizer on #BSC .
— Beefy.Finance (@beefyfinance) January 22, 2021
A good question to ask what niche is this project targeting, how many competitors are in the niche. What unique selling proposal are they bringing to the niche? Beefy’s main strength lies in the fact that, as opposed to PancakeSwap that promises an APR (Uncompounded annual percentage return), Beefy automatically reinvests profit into the client’s holdings to maximize the compounded profit. That is why an APY will be the yearly return plus the compounding effect.
Some of Beefy’s direct competitors include Autofarm and PancakeBuddy, who also aggregate yield. From my investigations it does not seem that Beefy offers much more than it’s two competitors, especially seeing that Autofarm has a published roadmap, but nothing for Beefy. It does not however mean that they do not have grand plans for the future, but it would have been good to see the plan.
A Youtube search for the project yields quite a few reviews on BIFI, however one needs to look out for people who either just make a video to push the coin they purchased or is looking for a coin name that they will help them gain many visits. Our hero and mentor Denone whose fundamental approach we’re borrowing has also done a BIFI analysis video. Have a look at what some the Youtubers are saying and try to filter out the hype.
Next head over to DappRadar, a platform providing insights into decentralized apps. For Beefy, it does show a decline in users transactions and activity, but we should also keep in mind that the price of Bitcoin corrected about a week prior to us completing this article and PancakeSwap was going through a platform upgrade. The drops could therefore be explained by investors heading for more solid ground. A better metric to look at is to look at BscScan for the number of holders. In the last month we have seen roughly a 10% increase in address holders from about 9,300 to 10,300 which is a good sign.
Finally, let’s check how old the domain is. By using Duplichecker you can see when the domain was registered. We want to catch out for developers who say they have been developing for 2 years, but the domain was only registered a couple of months back. With Beefy we have no promise of an old project – it looks like the domain was created at round about the same time as the Twitter account was created, so it does not really tell us a lot.
Finally, an important number to look at is the total TVL (Total Value Locked), or the funds under investment on the platform. On CoinGecko at time of writing this was our picture:
The ratio at the bottom, the Fully Diluted Valuation over TVL ratio gives an indication of how the platform is valued compared to the funds locked on the platform. A smaller number here indicates an undervalued company where there is room for value appreciation.
At time of our writing, Bifi comes out at 0.28. If we look at it’s main competitors, AutoFarm also comes in at exactly 0.26. Pancake Bunny boasts a ratio of 0.04, which seems to be criminally undervalued. More investigations into Pancake Bunny might be warranted.
Few platforms analyzed ever yield a perfect score sheet. Some good advice from Denome is to find the absolute best platform in your chosen niche and invest in that one. Very few companies make it to the first page on CoinMarketCap. A good fundamental analysis is the closest you’ll come to an investment crystal ball.
The author of this article holds BIFI tokens.