1. Learn about the project
To start a crypto investment journey, learning about the project is the first and most important step. Without a full understanding, you may fall into a situation of investing without due consideration, leading to unnecessary risks. To do this, you need to follow these steps:
Read the Whitepaper (a detailed description of the project) : The whitepaper is an indispensable document when learning about any crypto project. It is like a blueprint, clearly presenting the project's goals, how it works, the Token's mechanism, and the methods to solve the problem that the project aims to solve. A complete whitepaper will include information about the business model, the algorithms used, and how the project solves current market problems. You need to read each section of the whitepaper carefully so as not to miss any important details. If the project does not provide a complete whitepaper or there are signs of lack of transparency in this document, it can be a red flag.
Whitepaper is accessible from Coinmarketcap
XEM official communication channels : Crypto projects will often have communication channels such as a website, Twitter, Telegram, or Discord to stay in touch with the community and the public. This is where you will receive the latest information, from product updates, events, to important announcements. Participating in these channels will help you grasp not only information but also a sense of the interest, excitement, and level of involvement of the community towards the project. This is important because the community can be a strong driving force for the project to grow and maintain long-term interest.
Understand the project’s goals and mission : A crypto project needs to have a clear goal and mission. The project’s mission should demonstrate the value it brings to the market and the user community. You need to XEM what problem the project is solving in the blockchain or crypto space, and whether their goals are realistic and achievable. If the project fails to solve a specific problem or their goals are too vague, this may be a sign that the project is not strong enough and lacks long-term development potential.
2. Evaluate the development team
The development team is an equally important factor in determining the success or failure of a crypto project. The project may have a great idea, but without a strong founding and development team, the chances of success will be greatly reduced. To evaluate the development team, you need to XEM the following factors:
Experience and background : To evaluate the founding team, take a close look at the background and work experience of the team members. Pay particular attention to the main founders, core developers, and those who play leadership Vai in the project. A team with experience in blockchain, cryptocurrency, or technology in general is often able to handle complex issues and make important decisions for the development of the project. If the founding team has worked on major projects or has outstanding achievements in the industry, it is a good sign that the project has a high chance of success.
Reputation and Transparency : The development team needs to demonstrate transparency in all aspects of the project. Are they easy to communicate with and respond to questions from the community? Do they provide complete and accurate information about development plans, financial issues, and project progress? If the team is not transparent or shows signs of lack of accountability, this can seriously affect the project’s reputation and long-term development potential. You can search for information about them on crypto forums, articles, or interviews to assess their transparency.
Leadership and Vision : The success of a project largely depends on the leadership of the founder and the development team. A founder with a clear vision, strong leadership, and the ability to adapt to market changes will help the project grow sustainably and achieve important milestones. If the founder has a strategic vision and is able to build a team, develop a product, attract investors and the community, the project will have a higher chance of success. Learning about the founder’s activities, plans, and strategies will help you better understand the future prospects of the project.
A reputable team in the project's field of operation will be the decisive factor in determining the project's future success (photo: Sui Core Team)
3. Tokenomics Analysis
"Tokenomics" is a portmanteau of "Token" and "economics" and is a general term for the factors that create the value and appeal of a particular cryptocurrency to investors. This includes everything from the Token's supply, how it is issued, to the specific features of the Token.
Understanding tokenomics is important when investing, because a project with smartly designed Token buying and holding incentives will have a better chance of surviving and growing than a project that does not build an ecosystem around its Token . A well-built platform often leads to higher demand over time, as new investors pour into the project and push the price higher.
Similarly, when starting to develop a project, founders and developers need to carefully consider the tokenomics of their Token if they want to attract investment and succeed. This is especially important in today's cryptocurrency market.
Key Elements of a Complete Tokenomics
Token Token
Supply and demand are the two core factors that determine the value of any asset – and this is especially true for Token. Tokenomics determines the Max Supply a Token can achieve, which in turn directly affects its scarcity and value.
Important metrics to watch include:
Max Supply: The maximum number of Token that can exist.
Circulating Supply: The number of Token currently circulating in the market.
Initial Supply and Emission Schedule: How Token are released on a schedule, and at what rate.
A limited supply, combined with high demand, often leads to an increase in the value of the Token in the long run.
Token Token
Utility is what determines whether a Token has real use-case value. A Token with many practical use cases will have more potential for sustainable growth.
Some popular types of utilities:
Governance Token: Allows holders to vote on important decisions within the protocol.
Stablecoin: Designed to be a medium of exchange, with a stable value according to another asset such as the USD.
Security Token: Represents financial assets such as stocks, bonds. For example, a company can issue shares as Token in an ICO.
Utility Token: Used to access services, pay transaction fees or as rewards in the ecosystem.
Clearly assessing utility helps determine the necessity and longevity of a Token in the blockchain ecosystem.
Token Token
How Token are allocated to stakeholders is a factor that cannot be ignored. An unreasonable allocation can pose great risks to retail investors.
An example of a tokenomics that is Chia into multiple parts, serving different purposes of the project (Story Protocol)
Factors to analyze:
Allocation Ratio: What % is for the development team, early investors, community, Staking rewards, etc.
Vesting Schedule: How are Token unlocked? Is there a long-term vesting period to ensure stability?
Capital Rounds: Are Token sold early in Private Sales? If so, this could create Dump pressure when it comes time to unlock.
For example, when a large amount of Token from an early investment round are unlocked, investors may sell them to take profits, causing large price fluctuations. This is why investors should be especially careful with the "unlock" timing.
Token Token
Token burns – Some blockchains or protocols use “Token burns” – permanently removing a set amount of Token from circulation – to reduce the supply of coins circulating in the market.
According to the laws of supply and demand, a decrease in the supply of a Token will positively impact its price as the remaining Token in the circulating supply become scarcer. This is most evident in Ethereum's tokenomics after the EIP-1559 update.
Why is tokenomics important?
Blockchain technology allows projects to create micro-economies. In order to be self-sustaining, they need to figure out how Token should function within their ecosystem.
There may not be a one size fits all standard when it comes to Token. Blockchain has enabled a wide range of new use cases and implementations. Tokenomics allows development teams to create a new model or adapt an existing model that works with what the project wants to achieve. This can create a flexible yet stable platform, if done well.
4. Check out the community and development
Community is an indispensable factor in evaluating the potential of a crypto project. A strong and enthusiastic community will create sustainable development for the project, helping the project maintain the interest of investors and users throughout its operation. Below are the factors you need to pay attention to when checking the community and development of a project:
Community Activity : Crypto communities often communicate with each other through communication channels such as Telegram, Discord, Twitter, Reddit, and specialized forums. Following and participating in these channels will help you grasp the level of community interest in the project. If the community is active, with many people participating in discussions, updates, and information Chia , it shows that the project has attracted attention and is creating a strong connection with users. Active community participation not only helps the project grow, but can also be an important factor in building trust and loyalty from users.
A community with many active and supportive users will be the deciding factor for the future success of the project.
Updates and events : Does the project regularly update new information? Updates about new products, events, or partnerships are signs that the project is growing and progressing on schedule. Events such as product launches, strategic partnerships, or competitions, Airdrop are opportunities for the project to increase awareness and attract new users. The project should also make its future plans public so that investors and the community have a better understanding of its direction and long-term goals.
Community Reviews : To get a better understanding of a project, you need to find XEM what the community and users are saying about it. Join discussions on platforms like Reddit, Telegram, or Twitter to XEM what the community is saying. Is there strong support from users? You should also pay attention to negative comments and warnings about the project. A healthy community often reflects the transparency and credibility of the project. If you see a lot of criticism or lack of trust from the community, you should reconsider your investment decision.
5. Product and feature evaluation
Features and products are the core factors in evaluating a crypto project. The product or service that the project offers must not only meet the needs of users but also be easy to use and have the potential to grow in the future. A project without a viable product or simply an idea without real value will hardly be successful in the long term. Here are some points to note when evaluating a project’s features and products:
Check the product features : When researching a project, you need to determine whether the project’s product or service is complete and usable. Find out XEM the product solves real problems that users face. For example, if the project is developing a wallet, you need to check XEM the wallet is easy to use, has good security features, and is compatible with many coins. If the project is developing a DeFi (decentralized finance) platform, you need to check if features such as lending, borrowing, Staking, or yield farming are really easy and convenient for users.
Feasibility and growth potential : The project’s product should not only be useful at the time of launch, but also be scalable and upgradable in the future. This is especially important in the crypto market, where technology changes rapidly and user needs can change over time. You need to assess whether the project has a long-term product development plan, regularly updating new features and improvements to meet user needs. A successful product needs to be able to adapt and develop sustainably according to technology and market trends.
Check the usefulness and ease of use : The simplicity and utility of the product is a decisive factor in the success of attracting users. Even if a crypto product is technologically powerful, if it is difficult to use, complex and requires high knowledge of blockchain, it will be difficult to attract ordinary users. Therefore, the product needs to be easy to use and provide a great user experience. Check the user interface (UI/UX) of the product and XEM whether a new user can easily understand and use the product.
6. Competitor analysis
In the crypto world, projects often do not operate independently but have to compete with other projects with similar products. Analyzing competitors helps you better understand the position of the project and its competitiveness in the market. To analyze competitors in detail, you need to pay attention to the following factors:
Features and Technology : You need to compare the features your project offers with those that your competitors have developed. For example, if your project is a DeFi lending platform, you need to compare the lending conditions, interest rates, as well as the security features that your competitors offer. Does your project have any special or different features compared to your competitors? Can your project's technology outperform your competitors? This assessment will help you understand whether your project can gain a competitive advantage.
Development Team and Community : Another important factor is the development team and community of your competitors. Is your competitor’s development team stronger and more experienced? Is your competitor’s community more active and engaged? Sometimes, a strong community can help boost the growth of a project and attract investors. Find out how active and involved the community is on your competitors’ projects. Projects with quality development teams and engaged communities are more likely to sustain their growth.
Market Position : It is important to evaluate the position of the project in the market compared to competitors. Does your project have the potential to dominate the market and gain market share from competitors? Analyze factors such as total market Capital , current user base, growth rate, and market acceptance of the project. Sometimes, even if your product has good potential, but the market is oversaturated and the competitors are strong, your project may have difficulty gaining market share.
7. Risk and potential assessment
One of the most important factors in analyzing a crypto project is assessing the risk and profit potential. Although the crypto market offers great profit opportunities, it also comes with a lot of risks. To make a comprehensive assessment, you need to pay attention to the following factors:
Legal Risk : One of the important factors you need to XEM is the legal issue. The crypto market is still in its development stage and there is no clear legal framework in many countries. Therefore, you need to find out XEM the project complies with current legal regulations. The project may be affected by legal decisions from regulatory agencies in the future, which could negatively impact its development. This is especially important if the project operates in countries with strict regulations on cryptocurrencies.
Liquidation and price volatility : The liquidation of a Token is very important, especially when you need to trade or withdraw Capital. If the Token is not highly liquidation , you may have difficulty buying or Token Sale when needed. In addition, the price volatility of the Token also needs to be assessed. The crypto market is known for its high volatility, and you need to know whether the project's Token is affected by these fluctuations. Assessing the volatility will help you determine the level of risk you face when investing in the project.
Profit potential : Finally, you need to evaluate the profit potential of the project. Does the project have the potential to grow strongly in the future? Does the project have any unique solutions that solve problems in the market, and can those solutions bring large profits to investors? You also need to evaluate the level of market acceptance and the ability to attract investors in the future. A project with a useful product, a strong development team, and a clear development strategy will have great profit potential in the long term.
