> For the complete documentation index, see [llms.txt](https://docs.pearprotocol.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.pearprotocol.io/2.-fundamental-trading.md).

# 2. Fundamental trading

Fundamental approaches focus on exploiting market inefficiencies by identifying price discrepancies between related assets. For example, consider two Layer 1 blockchains with different market cap valuations. If Blockchain A has more users, higher total value locked (TVL), greater trading volume, and broader adoption than Blockchain B, yet Blockchain B has a higher market cap, this discrepancy could present an opportunity.

A pair trade in this scenario would involve betting on the growth of Blockchain A (long leg) relative to Blockchain B (short leg).

This approach relies heavily on data analysis and metrics to identify undervalued or overvalued assets within a similar category, making it ideal for traders who prefer a thesis-driven approach.