I've been in the blockchain business for a year and a half now. I started as an Initial Coin Offering (ICO) marketer, but the rush to invest and acquire potential quickly became contagious.
Thus, I immersed myself deeply in learning it and was on the inexorable path of discovering all those new and exciting cryptographic resources. At one point things became crazy and, as a great fan of diversification, I became happy owner of over 300 different tokens.
Of course, many of my decisions were scarce. But all these errors allowed me to develop a clear and direct framework to analyze the resources with tokens more efficiently and finally manage my risks correctly.
For some time, at the start of this year, I have also worked on a venture capital fund as a cryptographic asset analyst using this same approach that I am about to share with all Block Explorer readers.
Do not get me wrong, even the smartest people on Earth, including the most influential investors in Silicon Valley, have made mistakes. Think of those who have spent on Airbnb or Uber or those who have paid money in Theranos.
Fasten the seat belts. And we present our approach to the rapid evaluation of cryptographic resources GGECTRA.
GGECTRA it's an abbreviation and stands for:
Now, let's break the concept into smaller pieces.
1. What is the potential for growth?
The first question to ask is: can this project scale? Does it have the potential to be used by millions of people or companies? Can it grow from a small experimental idea to a real case of use?
The next question is about the competition. Are there any similar projects out there that are successful? If so, what does it do This does the cryptographic resource do otherwise that could draw on that growth?
Finally, ask yourself how much revenue and profits can generate this project. Many start-ups have not earned a penny in profit for years, but is there a clear business plan for growth and revenue?
Evaluate the potential growth opportunity from 1 to 5, where one is poor and five is excellent.
2. The Github activities of the project
Many of the blockchain-based projects should be transparent and open source. And they should be. As this new way of investing is open to thousands of amateur investors around the world, the least they deserve is some transparency to track what is happening with their funds.
Fortunately, many of the field projects are on board and the source codes are available for free on GitHub. One of the best ways to monitor GitHub's cryptographic projects is Cryptomiso.
Rank the most active projects and provide visitors with important statistics (such as source code, programming language, number of contributors, etc.) And, of course, direct directly to the Github of the project.
Let's say that we want to estimate what is happening with Aion, the project that is building a product to solve the famous problems of scalability and interoperability of the blockchain. By examining the team's Github account, we can see that there is a lot of action going on and new changes are being made even while I'm writing these words. This is an excellent sign.
On the contrary, if you came across the project with little or no Github activity, you can evaluate it as "poor" without any problem.
3. The execution of the Crypto project
I evaluate this metric based on the milestones reached and judging from the execution of the company roadmap. Following social media accounts and corporate blog updates is a great help in this case.
If you're out of time, check the Twitter feed briefly and see what kind of updates are posted.
If you see tweets mentioning development reports, awesome new collaborations and still providing another milestone from the roadmap, this is a bold "yes!"
But if there are simply "thank you to be with us" messages, new ad exchanges, or quotes and relocations very far from the big Twitter accounts, it's not a good sign.
4. How to evaluate the Crypto project community
I discussed the importance of cryptographic communities in a previous post. A good community can create or destroy the success of a particular resource or project.
The evaluation of this metric is rather simple. Browse the social media accounts of the project and check the followers. Some things to be aware of: the project could have a pretty decent following, but not much effort. This is not good.
Also, the large volume of retweets and I like it could indicate that the company has generous generosity bonuses. So, while you do your research, do not forget to scroll through the comments and see if they make sense. Do not be too excited for the bare numbers.
For example, the Aion's Twitter account has almost 71,000 followers, but the rates of involvement are not very high. So, I will evaluate as "good", not "excellent".
5. How to evaluate a Crypto Project team
In evaluating the team, I look first of all at Chief (C) employees and their skills: Chief Executive Officer (CEO), Chief Operating Officer (COO), Chief Technology Officer (CTO), etc.
I browse their LinkedIn profiles and see if they have relevant experience and connections in the industry they are trying to stop.
Since I have traveled to some field conferences, it is relatively easy for me to assess how well connected the person is. And, in some cases, also the work ethic of the individual in particular. I examine the list of shared connections and express my judgments.
If you do not have that luxury yet, you can browse the person's advice. Let's say Andreas Antonopoulos he caresses someone's shoulder because of his bitcoin knowledge, so he's a winner.
Let's take a look at the PILA! project. The company is trying to build another cryptocurrency with the goal of mass adoption, with an excellent portfolio and easy cryptographic payments directly from someone's smartphone. Not a single aspiration, but the CEO of STACK! He has immense experience in the industry.
And a lot of quality connections in the blockchain department. Get the logic.
One thing to remember when evaluating the team: as for social media, quantity does not mean quality. On numerous occasions, I came across profiles that blinded me with an impressive number of testimonials, just like the profile in the picture below (and we keep the name and the project a secret).
However, by digging deeper into the list of supporters it is obvious that those are not real. In some cases, if I have doubts about the team member, I would also like to contact former colleagues to clarify my reservations.
6. How to measure the investment risk in cryptocurrency
Regarding risk assessment, it is a mix of various factors to keep in mind, and this list could be adjustable. For example, I analyze tokenomics, in particular for token supply and distribution.
A huge offer often means less room for growth. And if a big chunk of all the reserved tokens are for the team without mention of the maturation period (how long the team has to wait for the programmed token distributions) – it's a huge red flag. Anything over 10% raises some serious question marks for me.
Then there is the legal structure and the licenses. C & # 39; is zero clarity? More questions.
Overall it is a very important, but rather subjective, metric. And there's a lot to be worked out, based on your risk appetite and investment strategy.
Jump into the project with the sketched team? Risky!
Investing even if there was no development activity? Risky!
And so on, you understood the reasoning.
7. How to calculate the average score?
The average score is practically self-explanatory: sum the values of all the metrics and divide by six the number of parameters evaluated.
You will end up with a number that you can use to compare with other projects. Yes, it will be somehow subjective. But you still have the logic behind it rather than buying assets based on a feeling. Basing your judgments on these numbers will prevent you from making hasty decisions. Just stick to the process and try to be less emotional.
Do you have any special trick to identify great investment opportunities in evaluating a cryptographic project? Go ahead and share it in the comments section below.
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