2023-05-21 11:00:11
Basic concepts of investing in crypto: some conclusions | Part 2 ㅤ
Here we have prepared part 2 of the post with interesting conclusions about investing and crypto projects. Enjoy learning.
If you missed part 1, it's here. 1. Those who can adapt will surviveWe buy fundamentally important projects that are least likely to lose their relevance (due to a change in trend or the emergence of a new competitor). Crypto is a high-tech sphere, so even on SUI and all sorts of ZK-chains we will not stop, I am more than sure that with time these guys will become old and boring projects, and new, faster and more powerful blockchains will replace them.
That's why we look at blockchain tokens (except BTC) infrequently and with great caution. And if we choose such a project, it is only for the next trend, but not for the long term.
Various Dapps also do not inspire confidence in the long term. For the most part, the market stays with industry leaders like PancakeSwap and Unuswap, eclipsing the rest of the competition and their pathetic attempts to overtake older projects. The big fundamentally important Dapps (exchange services, lending) are already entrenched, and it's very hard to move them. All the rest are either copies of other EVMs, or other Dapps with more narrowly focused ideas that often do not survive because they do not gain the necessary popularity and customer base - the business simply does not make money.
Here we are interested in aggregation stories, that is, those projects that gather the user base around them but do not depend on the trend and blockchain. An example is 1inch, an aggregator of exchanges, because the guys gather a huge user base around them and they don't care which blockchain or token is trending, 1inch in any market will only grow every day. There are wallets like TrustWallet that, regardless of external factors, are gathering more and more customers by providing them with quality services.
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2. Is the business making money?It's important to understand the business model of the project. Examine the metrics and understand, is the project making money and how much? And also figure out if it will make money in the future? And consider all the options for how the project can monetize itself. If the project makes money, then it will have money for the team, development, and advertising. If the project doesn't make money, even investments won't save it, just help it live a little more than others.
Here's an example: 1inch collects tens of thousands of users on its platform, but 1inch itself is only an aggregator, it gives the best rate. Users love this feature, and many are willing to pay 1inch an extra commission for each swap in the future.
3. TokenomicsIf the project fits these two parameters, I look at tokenomics and capitalization: how many tokens are in circulation now and how many will be in the next 5 years. After evaluating all the parameters, I make a decision.
Very often it happens that the first two parameters are ideal, but when I get to the tokenomics and capitalization, I realize that there is nothing to do.
It is important to find a project that passes the first two parameters and at the same time will be obscenely tempting in terms of tokenomics and cap.
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