Investing in new crypto projects is an exciting thing. But before that, you should do some thorough research of the projects, advises Dmitry Mishunin, founder and CEO of the DeFi security and analytics firm HashEx.
Crypto projects can be a profitable investment, but at the same time they carry many risks. To minimize these risks, it is important that you inform yourself about the projects in advance.
Let’s look at what you need to be aware of when investing in a new crypto-venture.
Investment: choosing the right project
1. Check the website, white paper and roadmap
First, you should take a closer look at the benefits, scope and goals of the project.
2. Find out about partners
Next, it is best to look at the funds and the projects that support the chosen project. You can do this by checking the project’s website and then double-checking the information on the partners’ websites.
3. Check the security audits
Then find information about the project’s MVP and security audits. If the project has already had revisions, you will find information about them quite easily. If you find audits from respected auditors during your research, it speaks to the seriousness of the project.
4. Check social media accounts
First and foremost, be aware of the size of the Twitter community, take a closer look at the followers’ profiles, and keep an eye out for influential people among the followers. The project’s Medium profile also gives you the opportunity to assess the team’s professionalism and commitment. An active Twitter community and regular updates on Medium bode well.
5. Check if the project has an ambassador program
Ambassador programs allow community members to become ambassadors for the project, which promotes mission and outreach. A project that does not have long-term intentions will probably not bother to develop an ambassador program.
6. Check the test nodes
Next, check if the project has its own nodes to test the product. With nodes, the products can be tested with higher efficiency. The availability of such nodes confirms the seriousness of the project.
7. Find out about the team
Check out the core team’s Twitter and LinkedIn profiles. The teams on most good projects are transparent with social media, so you can check the team’s professional experience there.
8. Examine the competition
What competitors does the project have, and what are the strengths and weaknesses of the project? By comparing it with the competitors, you can determine if your chosen project provides sufficient benefits for your investment compared to other projects.
9. Look at the token distribution
Find information on token distribution, specific team allocation and lock-up, allocation for different investment rounds, investor lock-up and token price.
10. Select an investment round
Once you have decided to invest in a specific project, you still need to decide whether you want to participate in an investment round. You should find a good balance between the entry price and the size of your investment.
11. Manage your risk
Decide in advance how much you want to invest in the project and what proportion this investment should have in your portfolio. Then create your own individual investment plan.
Investment: How to find the right project
When you have to choose a new investment opportunity, you must decide for yourself which project suits you best. Therefore, find out more about the projects in advance and try to keep a cool head. We have already summarized the key steps for your research above. If you invest some time, you can get a good idea of which projects are worthwhile.
Also use common sense and stick to your investment plan. Because long-term investment success often depends on the disciplined implementation of your investment strategy.
About the author
Dmitry Mishunin is the founder and CEO of the smart contract audit firm HashEx. He specializes in cybersecurity and security audits as well as product development in blockchains Ethereum, Bitcoin and Binance. HashEx has already performed more than 500 audits for various projects and helped protect investor funds worth more than $ 5 billion.
All information on our website has been examined to the best of our knowledge and belief. The journalistic contributions are for general information purposes only. Any action taken by the reader based on the information on our website is entirely at your own risk.