# How to use the CAPED framework for surface DYOR

![](https://lh5.googleusercontent.com/pvg9NCM_0xJv7Sph3a4qZWU0_USo6qLUCCUgLQJPyrPr4uQoqCBxRVlx4lxs6gUdy8ixGWzmPY65MxY7IU8L_xgpB_vj526qVJL6dgp4lRxesqZMzmRMPhUPPrE8zK3KGUFL-edmq0bGhAyfgmSZGps)

To sort the researched projects by their potential for being alpha, use the CAPED approach. Analyze and score 4 factors:

1\. Capitalization of a project:

* 0 points: Under $1M
* 1 point: $1M - $10M
* 3 points: $10M - $100M
* 2 points: $100M - $1B
* 1 point: Over $1B

Small market cap projects have higher potential returns but also higher risk, hence the U-shaped scoring.

2\. Activity of traders:

* 0 points: Under $10K
* 1 point: $10K - $100K
* 3 points: $100K - $1M
* 2 points: $1M - $10M
* 1 point: Over $10M

Again, trading volume is U-shaped since both low and high volumes can be a sign of risk - low volume means potential illiquidity, while high volume could indicate pump-and-dump schemes.

3\. Price Performance:

* 0 points: Negative performance
* 2 points: 0% - 25%
* 3 points: 25% - 50%
* 4 points: 50% - 100%
* 1 point: Over 100% gain

A recent excessive price gain might indicate a recent pump, hence a lower score.

4\. Engagement inside the community (Twitter/Discord/Telegram users):

* 0 points: Under 1,000 users
* 2 points: 1,000 - 5,000 users
* 4 points: 5,000 - 10,000 users
* 3 points: 10,000 - 50,000 users
* 1 point: Over 50,000 users

A larger community might indicate a hype-driven project, hence the inverted U-shaped scoring.

5\. **Development** (Github commits in the last 30 days):

* 0 points: 0 commits
* 3 points: 1-10 commits
* 4 points: 11-50 commits
* 2 points: 51-100 commits
* 1 point: Over 100 commits

Continue your DYOR path in the next article: How to evaluate crypto projects.

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