Say Goodbye to Blind Following!
Written by: le.hl
Translated by: Luffy, Foresight News
As an investor, the easiest way to lose money is to blindly follow trends, entering projects without any knowledge, solely based on others' suggestions. I have had such experiences, so I would like to share my project research experience.
If you are a cryptocurrency novice looking for reliable practical methods, this article is for you.
Clarify Project Narrative
Narrative is one of the core elements of the cryptocurrency industry, and market trends often revolve around narratives. If you want to invest in a project, you must first understand the narrative logic behind it. If a project is still stuck in outdated narratives like the metaverse or GameFi, it is unlikely to succeed.
I usually check project narratives on CoinMarketCap and CoinGecko platforms.
Steps:
Visit the website: https://coinmarketcap.com/cryptocurrency-category/
Enter the project name;
Scroll down to the "Tags" section to view the project's narrative.
After understanding the narrative, the next step is to identify the leading projects in that sector. Observe the recent changes in trading volume to assess dynamics; at the same time, evaluate whether the project you are interested in has the capability to compete with the leaders. Remember, investing in competitors of the leaders often has better opportunities than chasing already skyrocketed leaders.
Choosing currently popular narratives (such as AI, prediction markets, InfoFi, etc.) is the best path to profit.
Verify Project Investors
Many people today dislike the term "venture capital" and prefer self-funded projects, but the fact is: if a project's product is not excellent, the team is average, and it is not a leader in any narrative, it needs reliable investors to drive its development.
The platform I most often use to check project investors is CryptoFundraising, which can display all key information about the project's investors, team, social accounts, official website, etc., and it is completely free.
Steps:
Visit the website: https://crypto-fundraising.info/
Search for the target project;
Check the funding amount and venture capital level.
I have found that projects with less funding and only 2-3 venture capitalists supporting them usually perform better than those with over 20 venture capitalists involved. It's like a cake being divided among too many people; the team needs to get approval from all venture capitalists when making decisions, which can be restrictive.
The level of venture capital is also crucial. I personally prefer projects supported by these venture capitalists: Coinbase VC, a16z, Polychain Capital, Paradigm, GSR.
Examine Project Social Dynamics
This step is very critical. If a project disables comments or frequently changes its social account names, avoid it directly. To check the project's previous names, you can use the Rick bot on Telegram:
Log in to Telegram;
Send a message to Rickburpbot;
Enter the command: /twit [current project name] to check historical names.
The "number of well-known individuals who follow each other" is also worth considering: if more than 20 industry figures follow the project, it is usually a positive signal.
To verify the project's legitimacy, you can also use Ethos Network:
Visit the website: https://app.ethos.network/
Install the Chrome browser extension;
Set it up as follows: if the project has negative reviews, block it to avoid seeing related distracting information on X.
You can use this extension for free without an Ethos invitation code.
In-Depth Research Core Dimensions
Founder
I prefer to invest in projects where the founder is active in the cryptocurrency community every day and interacts with the community. Excellent founders believe in their projects and are willing to admit mistakes.
Avoid founders who claim that the community is everything but act aloof and detached from users, or anonymous founders.
The behavior of the founder often determines the direction of the project's development after launch.
Product
Usability is the most important metric for me. Only simple, user-friendly products can gain real user adoption and generate revenue.
No matter how cool the concept (like "quantum blockchain solving global hunger") is, if it is complex and difficult to use, no one will pay attention.
Token Economic Model
For projects with issued tokens, be cautious if the following situations occur: distributing tokens to unrelated groups (for example, allocating tokens to platforms like Binance Alpha for short-term speculation without any substantial support). Such behavior often leads to TGE failure and poor subsequent price performance.
The token economic model does not need to allocate all tokens to the community, but it must establish a clear and transparent unlocking schedule for all stakeholders (including the team). Transparency of the team is always paramount.
To check the token economic model and unlocking plan, you can use Dropstab:
Visit the website: https://dropstab.com/vesting
Search for the target project;
View the price trends after the last round of token unlocking to assess the impact of unlocking on the price.
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