How to evaluate Blockchain Projects
Blockchain is one of the most revolutionary technologies available today and can completely change a variety of sectors, but it will take a lot of commitment and effort to reap the benefits. There are so many projects out there that are capital intensive and garner lots of attention from investors, but do they have what it takes?
Many individuals make hasty investment decisions when they are excited about new, emerging technologies without completely understanding the technology, their team, or the road map for their projects. In this article, I’ll teach you how to identify blockchain projects that are worthwhile investments.
Now, how do you evaluate your Blockchain Project?
Understanding and researching the projects is the first step to adopt to make an informed investment decision when examining Blockchain projects. Before making an emotional decision that would drain your bank account and leave you penniless, you should have a firm understanding of what you want to invest in.
Look at this checklist.
Identify the problem that the project is trying to solve.
How is the project developed to solve this problem?
Who are the team players behind this project?
Are they experts who have the experience to deliver this project?
Is the technology behind the project sustainable and secure?
These questions are what you should ask when evaluating a project on the web3. If you are thinking about what Web3 is all about, you can read and learn Web3 in easy steps.
When you look at this checklist, you can see how far it can go to influence your decisions and make you look deeply. This post will go over these checklists while walking you through important factors to think about. By the time you’re done, you’ll know how to assess any blockchain project you want to invest in. In the blockchain community, there is already a lot of speculative activity. Therefore, research the market before you invest.
How do you do research on a Blockchain project?
When you come across a new blockchain project, your adrenaline rush may tempt you to explore it without conducting the due diligence, especially if someone has widely publicized it in web3 communities and social media. Do not give yourself to your enthusiasm. This is not the moment. It’s time to conduct a thorough study. You must know the project’s creators, team, proposed solution to an issue, magnitude of the project’s whitepaper, project value, social media presence, and website. Always assess its worth compared to existing projects. Do not simply invest because others are doing so. If you do, you will lose money, while others do so as well.
Resources for your research
The official website of the project:
You may learn about the project’s history, the creators’ objectives and vision, and much more by visiting the project’s official website. Your understanding of the type of individuals working on the project will depend on the website’s interface, organization, and usability. In the end, a project’s success or failure will depend on the people working on it, so look for the names of the founders and team on the website, perform a formal background check, and learn how they have worked on prior projects and how successful they have been.
Use community platforms
You may use a few websites to locate top-notch cryptocurrency projects to invest in, including Binance Launchpad, Gate.io Startup, Coingecko.com, and Bitcoin Forum Index. Use websites like airdrops.io and coinmarketcap.com that advertise airdrops as well. You may also explore websites like Twitter Spaces, Telegram, Reddit, and Discord. Here, you may take part in discussions, hear professional perspectives, and look for advice. These online marketplaces provide customers with the chance to invest in startup blockchain projects.
You can watch videos on YouTube to learn how to do your research on any blockchain project. Content creators on YouTube offer insight, analysis, compare, and contrast Blockchain projects. Their analysis can be helpful in making your decisions.
These resources and platforms will help you decide if a project is the best place to invest your money. Even if you find it worth investing in, these findings will let you know if you can make a long-term or short-term investment.
Blockchain Flash news
Newkids on the blockchain
Blockchain at Berkeley.
Once you’re done and dusted with your research, here are the main aspects on evaluating a blockchain project:
How to evaluate a Blockchain project
Marketing and Transparency
A good project team will share a lot of information about their project with the public. It’s better to invest in a community that is open and shares information. Secretive teams won’t make a good investment. A good project with a sustainability plan will also invest in marketing their product. Also, make sure you look at the investors they mention in public. If some big names in the Web3 space are supporting them, it means the project has community support. A project with loads of community support will be around for a while if the creators are doing the right thing.
Before investing, it’s crucial to comprehend a project’s tokenomics since it might provide some insight into the prospective value of the token.
Tokenomics describes the project’s business plan and how the token will function inside the ecosystem. It outlines elements, such as distribution, supply and demand, incentive systems, and token burn schedules, that affect a project’s use and value.
For instance, if they primarily used a token for payments, its value would probably change along with the market.
All the same, the tokenomics will be more complicated and its value will be more steady if it is being utilized to power a decentralized application (DApp).
Growth Potential Analysis
You need to examine if the value of a blockchain project will probably rise. For instance, it’s likely that a project will increase in value over time if it has a strong team, a clear plan, and a sound tokenomics model. It’s the same when two adults meet each other and try to find out if they want to go into a long term relationship that could lead to marriage. You might want to check if you two would make a great team, grow together, and understand each other. It is crucial to conduct comprehensive research before investing in a project, since a variety of factors may impact its potential for growth.
This relates to how communities respond to, ask about, and take part in the project. You may also have a look at the quantity of subscribers to blogs and newsletters, social media followings on various platforms, and other forum posts. It’s a wise method of determining traction. The project has a better probability of success when the target community is engaged and excited about it. When more people are involved in the community, the project has a high chance of success.
A project’s hosting platform has a significant influence on it. Every project’s success depends on it. For instance, whereas they built BNB on the BNB Smart Chain, they built Solana on the Ethereum Blockchain (BSC).
Every blockchain platform has unique benefits and drawbacks, which is why you should do extensive research on a project before investing.
Study failed Projects
You can also study blockchain projects that are failed like Luna and Terra and see if the project you are investing in has similarities with them.
Although evaluating a blockchain project may seem difficult on the surface, I mean not everyone will be willing to make the necessary research, it is overall worthwhile. Any project involving investment money is a delicate matter that requires a careful approach and should not be taken lightly. Don’t forget to put all that you’ve learned in this article into practice. You need to keep studying because there is still a lot to learn and a lot more strategies to use. Watch videos and read through a collection of online articles to gain a basic understanding of the project and the issues the team is trying to solve. Even if the questions on the checklist seem silly and ridiculous, keep asking them. Always keep in mind that your money is at stake, and that losing means you lose. Once you conclude your research, follow the price charts and do some technical analysis before investing.