The world of cryptocurrency has already created millionaires, and cost others their life savings and then some, in the past decade. Some estimate adoption worldwide is at approximately 5% with some claiming up to a 30% rate of adoption in the US. For a market only 13 years old, this adoption rate is a mere fraction of the potential it has. The projects that change people’s fortunes are lovingly referred to in the industry as “hidden gems”. Finding a gem in the early stages is how to find those big gains, but how do you tell the good from the bad to the mediocre? How do you invest in an IDO, and then gain? Well, as the term gem would indicate, you have to dig, and do your own research (DYOR).
The total crypto market right now is valued at just over $2 Trillion and already brushed against $3 Trillion earlier this year. Social media is filled with both success stories, and horror stories of people that made or lost tremendous amounts of money. Sometimes the gains recorded could be 1000x in a matter of days, and some people lost it all in a matter of moments, like when Titan crashed.
So, how in the world does a new investor hope to have a chance of identifying the next big gainer or hidden gem? So many people believe they are too late to the Bitcoin party and are looking for the next big investment that could have the kind of gains that could be life changing. With 15,000+ projects currently known and more being added every day, DPAD has decided it’s time to share their comprehensive checklist every investor needs to analyze a project before deciding whether to invest in that project’s IDO or Initial DEX Offering.
DPAD’s 9 Parameters for an IDO Project Investment
For a crypto portfolio management strategy that is active, and aligns with an elevated risk tolerance IDO investments are an excellent choice. The biggest risks are accompanied by the biggest rewards and investing in a project at an early stage gives investors the best chance at higher returns. However, the downside of this strategy is that you can and usually will lose everything on some projects. In business as a rule 90% fail in the first year, crypto is no different, and some argue the numbers are worse in an industry that moves as fast as blockchain.
Investing takes research, and that takes time. Information is spread out across the web, and when you need to look at various criteria the task can seem overwhelming. DPAD has a team that looks at 9 criteria. We begin with the most obvious, is it innovative? Then, we evaluate the website, and go deeper into evaluating the project’s professionalism across all public channels. Next is one of the most crucial aspects, the token visibility metric. Which is simply one question, “should this token exist or not?” Next the market fit is evaluated, is it possibly ahead of its time? Who is behind this madness, and what is the team like? Who does the team partner with, and how do they work together? The whitepaper will be checked for a myriad of sub points, and the final point analyzed is the project’s marketing efforts.
Is the project innovative? In what way? Take a look at what real world problem the project is solving and research to find out if the solution is truly a breakthrough. Examine their claims and technology, and look for competitors with similar solutions. Is this really new? Or is this an old solution repackaged with new marketing? Be diligent.
The Project Website
Anyone should be able to tell what a website is for and who in the first 5 seconds, and in crypto most projects miss the mark. The highest score team DPAD has ever awarded was to Solchicks and they have a team of 50, so it takes a lot to get a perfect score in this category as there are so many things to consider. But, you don’t get a second chance to make a first impression, so make sure the website is up to par. If the project doesn’t care about their first impression, chances are other things are lacking as well.
Once we have checked the website thoroughly we then expand our research to all social media, press releases, and other public communication sources. We check for consistency in messaging, grammar, spelling, and overall tone whether it’s in their blog articles, website content, or social media profiles. We also look at the quality of graphics used, color, and analyze this deeper in the marketing section below. An excellent example can be found in Solchicks. If the website is lacking proper UX or design it will score average or below, as was the case with Starchi.
This is a very direct question, and not all projects like that DPAD exposes this metric. The question is simple, “Should the token exist or not?” Just because it can go on the blockchain, doesn’t mean it should. Investors need to be able to determine whether or not this project is a legitimate use case in blockchain, or if this is simply a company exploiting the fundraising possibilities with an unregulated market and new investors. Start learning about what utilities are relevant, so you don’t get caught up investing in a project that is doing nothing more than leveraging the hype of the industry.
Many investors lose money in this section. The website looks great, it’s professional, it’s consistent, but it’s useless. There is absolutely no need for it to be tokenized. This is a red flag that can be masked among the other parameters. Dig deep!
So, we have made it this far. The website looks good, everything is professional, and we have determined there is a need for the token, but will the market accept it? Just because the tech is there, and people like it, doesn’t always mean people will buy. Take VR devices. They first hit the market 6–7 years ago, but they have yet to take off on a mass scale. The device was there, but the lack of apps developed and infrastructure prevented the adoption of the device. Just because it’s a great idea, that will take off eventually, does not always mean that now is a good market fit for the product. Timing is everything, and one must objectively analyze whether or not the project is indeed a good market fit, or it just plays on your emotions so badly you want it to be.
Sometimes, being a bit early can be a huge advantage. For a team that has the residency to allow the market to mature and can ride out a year or two, a poor market fit can sometimes strategically be the best time to enter, but this is a gamble. The host of a little late in crypto did this with a travel project during the pandemic, hoping for recovery benefits of both a rising crypto market, and a rebounding travel market that was brought to its knees. Only time will tell us if that saga was a good move or not, but the logic sounds reasonable, and the risk is tolerable.
Is the team anon on Doxxed? If they are Doxxed, do they have relevant experience? How many projects have they worked on? What is their network like? What can you find on social media and other media? Ideas are great, but who will execute the idea. Sometimes the team can make or break an investment decision. Don’t be afraid to dig deep, and if the team resonates with you, then maybe they have earned your trust. Do they communicate with investors? How do they handle bad days? This can be huge.
Who has the project partnered with? What is the reputation of the partner? How are they working together? Does the partnership make sense? Or does it appear to be just another filler for marketing? What value does it add to the project overall?
If you want to get involved in Private Sales, or any stages prior to the IDO then you will need to get good at reading and understanding whitepapers. You are lucky that in today’s terms the whitepapers are much easier to read. In the 2017 bull run days the whitepapers were very technical documents with the mathematical formulas shown so that developers could speak to one another. Now the whitepapers of the 2021 bull run resemble more complex business plans and full ecosystems, with the math turned into fancy graphics and charts, now that more than just super nerds are in the space.
A quick checklist to evaluate a whitepaper would look something like this:
- Whitepaper check
- Quality of the WP
- Focus of the project is clear
- The language and attitude of the people behind the project
Every project needs marketing. Some projects have terrible websites, but great marketing because they tap into their communities despite a poor web presence. Others may have a great website but lack marketing expertise. In some cases the product is so good that all it takes is a low key launch and then word of mouth will carry the project, but that is one in a million chances, the rest have to use marketing methods, and in the crypto space the three main forces are social media, press releases, and influencer marketing. To see how a project is doing in marketing, check their socials, check news publications, and of course check out what influencers are saying about them.
HYPE Meter — The DPAD Final Parameter
The DPAD Hype Meter is a home grown metric we came up with to measure the hype surrounding a project. It’s a proprietary mix of social media sentiment, traffic, and overall buzz surrounding the project and certain keywords, and the vertical industry can sometimes have a heavy effect on the hype meter. Some points to consider, how much growth happens post IDO announcement. What are the groups talking about when this project comes up, what are the bid/ask allocations for the presale rounds, and are there signs of FOMO? Is there social media gaining traction, compare engagement metrics on older posts to newer posts to gauge how much traction. What is the market condition during the IDO? Did the project perform better or worse than the market overall, and why or why not?
These are nine basic parameters team DPAD uses when evaluating whether or not an IDO project may or may not be a solid investment. This is a deep dive into fundamental research and how to evaluate the strength of a blockchain project.
What else do you look for when analyzing whether or not you will invest in an IDO? Let us know in the comments.
DPAD is building a decentralized protocol for crypto launchpad where anyone can raise funds for their business idea. The whole process on DPAD is decentralized and user controlled. DPAD supports the decentralization of crypto, true ownership of crypto assets. Learn more about DPAD on the following links: