You may come across the acronym DYOR frequently in the blockchain industry. It’s commonly featured in news publications, and enthusiasts in the crypto community consistently emphasize the importance of this principle. What exactly does it mean? DYOR means «Do your own research». It serves as a reminder for individuals to analyze projects independently, and to ensure they have a comprehensive understanding of crypto startups before making any investment decisions. In this article, we will delve into the proper techniques for analyzing projects on the crypto launchpad.
It is worth explaining why it is necessary to carry out an independent analysis. The cryptocurrency market is highly unpredictable and volatile. It can tempt investors to buy an asset due to FOMO (fear of missing out). During bullish market conditions, investors may get caught up in the hype and purchase assets without adequate research, driven by the fear of missing a potential opportunity. In this regard, DYOR helps individuals to minimize the risks associated with making impulsive investment decisions in the cryptocurrency market.
This method comes from the financial world and helps entrepreneurs determine the intrinsic value of an asset or business. If we want to evaluate a project comprehensively, it is necessary to analyze internal and external factors and answer the following questions:
In which industry does this project function?
Who are the project's competitors?
Who is the startup's target audience?
How many funding rounds did the crypto project go through?
Is the source of funding known?
What are the market prospects for the project, based on factors such as current inflation, technological trends, and the political landscape?
The answers will help you get a comprehensive picture of the crypto project and create your investment strategy.
We understand that the approach to analyzing startups differs from project to project due to different topics and focuses. However, without social networks, the life of a crypto project seems impossible. Let's take a look at some of them.
Almost every crypto project maintains an active presence on Twitter, making it crucial to analyze the page. In this regard, our focus should not solely be on the number of followers but rather on the quality. Large follower counts can be artificially inflated, so our attention is drawn to the number of renowned personalities and influencers who follow the project. To gain insights into the startup's subscriber base and track audience dynamics, the TweetScout website must be a valuable resource.
Furthermore, let's explore the list of accounts that the project follows itself. This can often include the project founders, team members, and other relevant individuals. By doing so, we can gain insights into the people behind the startup's creation.
Additionally, we should notice that conducting a search using the project's Twitter handle allows us to observe what people are saying about the startup and their sentiments toward it.
The website provides valuable insights into the project. A serious crypto startup can’t afford to have a sluggish website built using a cheap website builder. The website should align with the project's branding requirements, meeting both the standards of representation and aesthetics necessary for establishing a Web3 brand.
We need to understand who is behind the development of the project. Even if the authors act anonymously, Twitter or other social networks must be specified on the website. Moreover, the project's website should adhere to international standards and be available in English, reflecting its global reach.
The team's role in the project's success cannot be overstated. The team needs to possess competence, experience, and valuable skills to execute their plans effectively. An anonymous team is not aligned with our expectations. Ideally, the team members of a reputable crypto project would have LinkedIn profiles in addition to their presence on Twitter.
LinkedIn serves as a valuable platform for professionals to showcase their employment history and connect with potential employers. When project developers have completed profiles, including details of their educational background, degrees, diplomas, and ongoing education courses, it is a positive indicator.
Furthermore, assessing the team's background is crucial. We should consider the projects in which team members have been involved and determine if they had a proper experience. In addition, we can check profiles for fakes with a Google search.
Before investing in a particular crypto startup, it is necessary to read about the project's tokenomics. By doing so, you will understand if it is worth investing in this startup or not. Typically, detailed information about tokenomics can be found in the project's Whitepaper (which will be discussed further in this article).
Tokenomics refers to the economic system and mechanics behind a cryptocurrency or blockchain project. It encompasses various aspects related to the project's native token, including its distribution, supply, utility, governance, and overall economic design. Understanding tokenomics helps stakeholders determine whether the project's economic model aligns with their investment objectives and whether the token has potential utility and demand within the ecosystem.
When analyzing the tokenomics of a cryptostartup, it is important to consider the following key aspects:
The project's token issuance and distribution rules should be clearly defined. This includes details about pre-sales, private sales, airdrops, and the allocation of tokens to the development team.
It is crucial to understand the various roles and functions that the token serves within the project ecosystem. For instance, the token may function as a medium of payment to access specific features or services within the project.
The tokenomics should outline the mechanisms, goals, and incentives to attract and reward investors. These incentives can take the form of rewards, dividends, staking rewards, or loyalty programs, aiming to foster participation and engagement.
In decentralized projects, tokenomics may incorporate mechanisms that involve the community in decision-making processes. This can include voting systems and governance mechanisms, allowing token holders to have a say in the project's development and direction.
It is important to understand that a startup without a specific idea has very little chance to survive in the cryptocurrency world. The main question to ask yourselves is: what novelty does the project bring to the Web3 space? The idea doesn't necessarily have to be revolutionary; it can be an improvement upon existing offerings.
For instance, Solana highlights that its blockchain can handle over 50,000 transactions per second (TPS) under maximum load, making it the fastest blockchain available. Solana's speed surpasses that of Bitcoin by 1,000 times and Ethereum by 3,000 times.
By ensuring we understand the unique value proposition of a crypto project and how it enhances the blockchain world, we can make more successful investment decisions.
Certainly, only having an idea is insufficient for the successful execution of a blockchain project. It is crucial to make a well-defined plan outlining how the project will operate and progress. Hence, the next vital aspect of our analysis is the project roadmap.
A roadmap serves as a blueprint for the project's development and the attainment of significant milestones within a specified timeframe. Typically, the roadmap is visually represented through a graph that illustrates the sequential order of planned events, and tasks.
Let's look at the main points that can be included in a startup roadmap:
This section provides an overview of the project, its purpose, and the problem it aims to solve.
Partnerships and Integrations
Collaboration with strategic partners, such as blockchain projects, industry leaders, or crypto influencers, can be an important aspect of the roadmap. It may include forming alliances, integrating with existing platforms, or expanding the project's ecosystem.
Community Building and Marketing
This point focuses on growing and engaging the project's community through various activities, including social media campaigns, community events, and partnerships. It aims to raise awareness, attract users, and foster a supportive community.
Future Development Plans
Some roadmaps also provide insights into the project's long-term vision and plans beyond the initial roadmap timeline. This could include upgrades, expansion into new markets, or the introduction of additional products or services.
These milestones highlight the key stages of the project's technical development, such as the release of alpha and beta versions, integration with external platforms or protocols, and ongoing updates and improvements.
A crypto project **white paper **is a document that outlines the details, vision, and technical aspects of a blockchain startup. It serves as a comprehensive guide that provides potential investors, developers, and the community with an in-depth understanding of the project's objectives, underlying technology, implementation plans, and potential impact.
Key points to consider when analyzing a white paper:
If the document contains noticeable flaws, typos, errors, or other issues, it is advisable to avoid spending time on it.
The white paper should have a visually appealing design and be easy to comprehend. The graphic layout of the document can show you the project's professionalism and attention to detail.
Focus on substance rather than fluff. After a concise introduction, the white paper should clearly identify the main problem the project aims to solve, followed by a comprehensive solution.
Pay close attention to the project's references in the narrative. If the authors only mention well-known cryptocurrencies like Bitcoin and Ethereum, it may indicate a lack of originality and potential. Such a project might be targeting an inexperienced audience and could potentially be a scam.
Reputable projects often show the names of the authors of their white papers.
Read about tokenomics and roadmap provided in the white paper to understand the project's token distribution and future plans.
Check for references, links, and sources cited in the white paper. For instance, the white paper of the Chainlink project includes 238 references to scientific and technical publications, both within and outside the blockchain industry.
Sometimes the crypto market is unstable and unpredictable. However, investors can minimize risks by arming themselves with in-depth knowledge about the projects on launchpad they intend to invest in. The crypto market offers a vast array of information to absorb, and the more investors enhance their understanding, the more cold-minded and prudent their decision-making can be.