There are many cryptocurrency projects out there and more projects are coming into the crypto space daily. This has made it difficult for investors to choose the crypto project they will invest in, in order not to miss out on a potential project, and also to avoid investing in a scam project.
Many people have different things they look for when investing in any crypto project. Some people look at the supply of the token, and the network the token is built on while others consider the utility and team behind the project.
For me, I do consider the following before investing in any crypto project especially when the project is new.
Use Cases / Utility: 2021 ushered in Shit coins into crypto space. These coins were soon characterized as pump and dump coins because their lack of use cases has made investors dump them when they rise in value.
When a project has use cases It helps bring in new investors while sustaining existing investors. For example, the Binance Smart Chain was easily adopted by crypto investors not just because of the low gas fee associated with it, but also because it is a blockchain on its own through which new projects can be built. There will thus be a continuous demand for the coin during transactions and this will, in turn, give value to the coin, and investors will prefer to hold it for long.
Again, use cases such as when a coin can be Staked help to reduce the rate at which people trade the token. The staking of the token will initiate scarcity which will lead to an increase in price.
The Project Team Members: Crypto Projects with Anonymous team members are not for me. Bitcoin was able to survive with such a method because it was the first cryptocurrency project.
Again, when the Team members are not well-known people or at least have not worked with well-known projects which may not necessarily need to be crypto-related, the crypto project won't be for me. This is because I believe one needs a good background in finance or technology to survive in the crypto market.
Since there are fake doxing these days, I am not interested in doxing of Project team members provided that the team members have a well-known background in the digital world.
The Liquidity Needs to Be locked: It is no longer news that many crypto projects have been rugged by the owners of the project. I have made it a point of duty to check if the liquidity is locked or not before investing in any new project.
Total Supply / Circulating Supply: Any crypto project with more than 1 Billion supply, and without a burn mechanism is not for me. Large Circulating Supply makes it possible for whales to control the market.
The project Smart Contract Needs to be audited.
This is very important as it helps me to avoid falling victim to fraudulent smart contracts that can spend my funds without permission. Also, when the smart contract is audited, it shows that it is free from loopholes that can be leveraged by a hacker to carry out fraudulent activities on the project.
The Network the Project is built on: Interoperability and scalability is two factors I consider in the blockchain of the new project. I wouldn't want to invest in a project where I have to experience slow transaction processing and high gas fees. This is why the Ethereum network is not for me. Cosmos, Polygon, and Solana are my favorite blockchains.
As surprising as it may be, the Binance Smart Chain is no longer for me because of the high rate of scams on the blockchain. Presently, I try as much as possible to avoid new projects on the Binance Smart Chain.
Token Distribution Among Project Team/ developers.
When a single wallet contains up to 40% of the circulating supply, the project is not for me because that single wallet can crash the market of the coin.
These are a few things that I consider before investing in new projects. I would love to read your contributions down the comment box.
This article was first published here by me with the username digitaljoseph