When it comes to cryptocurrencies, there are a few key factors you need to consider before making an investment decision. Whether you are just starting out with new crypto projects or want to expand your portfolio, it is useful to have a crypto project evaluation system at hand.

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This article will describe a step-by-step scheme to help you evaluate various crypto projects.

How do you rate the crypto project?

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During the analysis of a crypto project, it is important to study the various aspects of the project in order to make an informed investment decision. As a general rule, you should avoid making impulsive decisions based on emotions, as this can lead to financial losses.

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Instead, consider the following:

These are just a few of the questions you need to ask when evaluating a cryptocurrency. We will discuss them in more detail in this guide, which will give you a framework for evaluating crypto projects.

By the end, you should have a pretty good idea of ​​what to look out for and how to make an informed investment decision. Remember that there is a lot of speculation in the crypto world. So, do your research before you start investing.

How to research a new crypto project?

There are several platforms that can help you find quality crypto projects to invest in, such as Binance Launchpad, OK Jumpstart, and Gate.io Startup. These are all initial exchange (IEO) platforms that provide their users with the opportunity to invest in startup blockchain projects.

There are also Initial Coin Offerings (ICOs), which are fundraising mechanisms for crypto projects. However, it is important to note that ICOs are generally considered to be more risky than IEOs. This is because ICOs are hosted on a cryptocurrency project website, making them more fertile ground for scammers and scammers.

IEOs, on the other hand, are launched on exchange platforms like the ones we mentioned earlier. They are generally more secure because most startups that submit their projects to these platforms go through a verification process before they are allowed to start selling their tokens.

However, even when using the IEO platform, you should still do independent research. This will help you determine if the project is a suitable investment opportunity for you and if it can be invested in in the long term.

How to evaluate a blockchain project?

Generally, here is what you should consider when considering the main aspects of a crypto project:

Project vision

When evaluating a crypto project, it is important to ensure that it has a strong and achievable vision. In cryptography, there is such a thing as “vaporware”, which often refers to projects with all the bells and whistles, but is unlikely to get off the ground. When evaluating a crypto project, be wary of those that seem too cool and promise too much without having a solid plan or foundation to back it up.

Visionaries in the industry come up with many innovative design ideas, but few of them are ever feasible or practical enough to implement.

Background and team

Another key point to consider is the team behind the project. This is important because, in the end, it is the people working on the project that will make it successful (or not). When considering a command, consider things like:

  • Experience of team members;
  • Their history and level of knowledge in the crypto space; as well as
  • How close is the team.

The above factors will give you some idea of ​​whether the team is strong and able to make their project a success.

White paper quality

A white paper is a document that usually lays out everything you need to know about a project, including the vision, the problem it intends to solve, the solution, tokenomics, and more.

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A good white paper should be well written and easy to understand, but not too technical. It should also be clear about the problem the project is trying to solve and how that solution will work.

If a whitepaper is vague or uses too many obscure terms that you don’t understand, you might not be worth the time (and money) on this project. If you don’t have the time or patience to go through a few white papers, you can also check out the lightweight project docs. These are abbreviated versions of official documents, but they are no less informative.

Potential market and use cases

When considering a project, it is also important to consider the potential market and the need for the solution offered by the project. For example, if a project is trying to solve a problem that doesn’t exist or that has already been solved by another project, that project is unlikely to make a mark in the crypto space.

It is also important to think about possible use cases for the project. For example, if a project is trying to solve a problem that affects only a small group of people, then the market for this project will be very limited.

Tokenomics

Tokenomics refers to the economic model of the project and how the token will be used in the ecosystem. For example, if a token is only used as a means of payment, its value is likely to fluctuate with the market.

However, if the token is used to power a decentralized application (DApp), then the tokenomics will be more complex and its value will be more stable. Before investing, it is important to understand the tokenomics of the project as this can give you some idea of ​​the potential value of the token.

Growth potential

Upside potential refers to the likelihood of a project’s cost increasing over time. For example, if a project has a strong team, a good roadmap, and a solid tokenomics model, then it is likely that the value of the project will increase over time. Before investing, it is important to carefully study the project, as many factors can affect its growth potential.

Product

Product refers to the actual solution offered by the project. Again, it is important to make sure that the product is really needed and solves a real problem. Take, for example, Ethereum (ETH), which was created based on the need for a platform that could support smart contracts and extend the power of blockchain technology.

Solana (SOL), on the other hand, is a blockchain that uses proof of history, a unique consensus mechanism. Built on the premise that an “internal clock” can greatly increase the speed of transactions, Solana has managed to become one of the best blockchains when it comes to transactions per second.

Community Popularity

Community attractiveness refers to the level of interest and participation a project has generated in its community. A good way to gauge the popularity of a community is to look at the number of social media followers, blog followers, and forum posts. The more active the community, the more likely the project will be successful.

It’s also important to consider the quality of the community, not just the quantity. For example, a project with a lot of social media followers but very few active users is likely not as strong as a project with fewer social media followers but an active user base.

Market capitalization

Market capitalization is the total value of all mined tokens. This is a good way to estimate the overall size of a project. In the case of a cryptocurrency that is not mined, market capitalization can also refer to the total value of a company’s shares. This is a good indicator of asset stability given that cryptocurrencies can be volatile. As a general rule, cryptocurrencies with larger market caps tend to be more stable than cryptocurrencies with smaller market caps.

Platform

The project platform refers to the underlying technology on which the project is built. For example, Ethereum is built on the Ethereum blockchain, while BNB is built on the BNB Smart Chain (BSC). Each platform has its own advantages and disadvantages and it is important to study the project carefully before investing. For example, Ethereum is the most popular platform for creating DApps, while BSC offers high performance and low fees.

Transparency

Transparency refers to the level of information a team makes available to its community. The transparent team will communicate regularly with their community and provide updates on the progress of the project.

On the other hand, an opaque team will be secretive and hide information from their community. It is important to invest in transparent projects, as this is a good sign that the team is confident in the project and is ready to be open about its progress. In addition, it will protect you from various fraudulent activities such as rug pulling.

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Road map

The roadmap should outline the business plan for the project and give you some idea of ​​how the team plans to realize its vision. A good roadmap should be well thought out and realistic, with clear milestones the team plans to achieve. It should also be updated regularly to reflect its current status. If the roadmap is outdated or unrealistic, then most likely the project will not be successful.