How does a Newbie conduct project research?

Written by: le.hl

Compiled by: Luffy, Foresight News

As an investor, the easiest way to lose money is to blindly follow trends, entering projects without any knowledge and relying solely on others' advice. I have had such experiences, so I would like to share my project research experience.

If you are a newcomer to cryptocurrency and are looking for reliable practical methods, this article is prepared for you.

Clarify project narrative

Narrative is one of the core elements of the cryptocurrency industry, and market trends often revolve around narratives. If you want to invest in a project, you must first understand the narrative logic behind it. If a project is still stuck in outdated narratives like the metaverse or GameFi, it is unlikely to succeed.

I usually check project narratives on the CoinMarketCap and CoinGecko platforms.

Operation Steps:

Visit the website:

Enter project name;

Scroll down to the “Tags” section to view the narrative associated with the project.

After understanding the narrative, the next step is to identify the leading projects in the track. Observe the recent changes in trading volume to assess the dynamics; at the same time, evaluate whether the projects you are interested in have the ability to compete with the leaders. Remember, investing in the competitors of the leaders often has more opportunities than chasing after the already skyrocketed leaders.

Choosing currently popular narratives (such as AI, prediction market InfoFi, etc.) is the best path to profitability.

Verify project investors

Nowadays, many people are averse to the term “venture capital” and prefer projects that are self-funded. However, the fact is that if a project's product is not excellent, the team's capabilities are average, and it is not a leader in any narrative, it requires reliable investors to promote its development.

The platform I use most often to query project investors is CryptoFundraising, which can display all key information about the project's investors, team, social accounts, official website, etc., and it is completely free.

Operation steps:

Visit the website:

Search for target projects;

Check the financing amount and venture capital level.

I have found that projects with less funding, supported by only 2-3 venture capital firms, usually perform better than those with over 20 participating venture capitalists. It's like a cake being divided among too many people; when the team needs to reach consensus from all the venture capitalists, it can actually become restrictive.

The level of venture capital is also crucial, and I personally prefer these projects supported by venture capital: Coinbase VC, a16z, Polychain Capital, Paradigm, GSR.

Examine project social dynamics

This step is crucial. If the project disables the comment feature or frequently changes social media account nicknames, please steer clear. To check the project's previous nicknames, you can use the Rick bot on Telegram:

Log in to Telegram;

Send a message to Rickburpbot;

Input command: /twit current project nickname, you can query historical nicknames.

The number of “mutual followers from well-known figures” is also worth considering: if there are more than 20 industry influencers following the project, it is usually a positive signal.

Verify the legality of the project, and you can also use Ethos Network:

Visit the website:

Install Chrome browser extension;

Set the following: If a project has negative reviews, block it to avoid seeing related disruptive information on X.

You can use this plugin for free without an Ethos invitation code.

In-depth Research Core Dimensions

Founder

I prefer to invest in projects where the founders are active in the cryptocurrency community every day and interact with the community. Excellent founders believe in their projects and are willing to acknowledge their mistakes.

Avoid founders or anonymous founders who claim that the community is everything but behave in a high-and-mighty manner, detached from users.

The actions of the founder often determine the direction of the project's development after its launch.

Product

Usability is the most important metric to me. Only simple, user-friendly products can achieve real user adoption and consequently generate revenue.

No matter how cool the concept is (such as “Quantum Blockchain Solving Global Hunger”), if it is complicated to operate and difficult to use, no one will pay attention.

Token Economic Model

For projects with issued tokens, be cautious if the following situations arise: allocating tokens to groups unrelated to the project (for example, allocating tokens to platforms like Binance Alpha for short-term speculation, without receiving any substantial support). Such behavior typically leads to a failed TGE and a dismal price trend afterward.

The token economic model does not require all tokens to be allocated to the community, but it must establish a clear and transparent unlocking schedule for all stakeholders, including the team. Transparency from the team is always a top priority.

To query the token economic model and unlocking plan, you can use Dropstab:

Visit the website:

Search for target project;

Check the price trend after the last round of token unlock for the project to assess the impact of the unlock on the price.