It is exciting to invest in a new crypto project, but you need to do your own research first. Advice from Dmitry Mishunin, Founder and CEO of HashEx.
Investing in a crypto project can be very profitable, but you should never rule out the possibility of losing your money due to poor management, a well-crafted cyber attack or other factors. So if you want to get a good return on your investment and protect your funds from possible losses, you should do your own research before investing in any crypto project.
Let’s see together the list of things you need to check before placing your funds in a crypto project.
Investment: the steps to follow to choose the right crypto project
1- Study the project’s website, white paper and roadmap
First, you need to have a clear idea of the usefulness of the crypto project, its area of activity as well as its long-term goals and plans.
2- Look for project partners
During this step, you will need to find the funds and investors that have supported the project. You can find this information on the platform’s website, but do not forget to double check it. If the project is not supported by credible and reputable partners, you may need to move on.
3- Read security reviews
Then find out the project’s minimum viable product (MVP) and its security audits. If the crypto project has already completed one or more revisions of its product, you should have no trouble finding this information. Usually, smart contract security auditors publish the audit reports on their websites. Links to these reports are usually available on official project websites.
It is also important to pay attention to the choice of listeners. The latter are actually not all as professional as each other. If you can see that the audit was performed by an unknown company, you should ask yourself questions. But if the audit was performed by a reputable major accountant, it is rather a good sign.
4- Follow the project on social networks
Here you need to analyze the project community on Twitter: how big is it and are its members involved? Also try to browse the subscriber list and see if any influential people follow the project.
Then check the project’s Medium account. In this way, you will be able to consult the published articles to assess the level of professionalism and involvement of the project team.
If you can see that the project community on Twitter is active and growing, and that the team regularly shares news on Medium, that’s a good sign.
5- Check if the project has an ambassador program
This type of program allows members of the community to become ambassadors of the project and promote its mission and image. If the crypto project does not plan to develop in the long term, it will probably not bother to create an ambassador program.
6- Check test nodes
Next, check if the project has its own test nodes. These allow you to test the product with greater efficiency, their availability means that the project is serious.
7- Study the project team
Browse the accounts of the project’s top management on Linkedin and Twitter. Most good projects actually have transparent teams that do not hide their social networks. Check their previous work experience, and then compare this information with what they do within the project.
8- Do competitor research
Find the project’s competitors and try to make a comparison with the crypto project you are studying. Try to identify its strengths and weaknesses. This will help you determine if the project provides enough benefits for you to choose it.
9- Analyze the distribution of tokens
Try to find information about the distribution of the project tokens: the allocation and the lock period imposed on the team members, the amounts spent on each of the investment cycles, as well as the initial price of the token. You should also have an idea of the minimum lockout period, its type and the platforms on which the sale will take place.
10- Choose the right financing cycle
If you have already chosen your crypto project, you must now decide which round of financing you want to participate in. To do this, try to find the right balance between the starting price and the investment amount.
11- Think about the risks
If you want to invest some of your capital and diversify your portfolio, you need to decide how much you are willing to devote to that crypto project. For this, you need to consider your investment strategy.
Investment: final advice
Finally, know that it all depends on your preferences and needs. Therefore, you should always do your own research on the projects you want to invest in and try to go carefully about it. Also, try to take a step back and not let yourself be influenced by marketing campaigns for crypto projects.
In this article, we have shared with you the essential steps you need to follow before investing in any crypto project. That said, by spending time on research, you will gain a better understanding of the usefulness and value of the project you are interested in.
Of course, use common sense, stay disciplined and remember your risk / reward strategy when making all your investment decisions. Finally, keep in mind that the long-term success of an investment largely depends on the discipline with which you apply your investment strategy.
About the author
Dmitry Mishunin is the founder and CEO of Smart Contract Auditing Company HashEx. He specializes in cybersecurity and security audits as well as product development on Ethereum, Bitcoin and Binance blockchains. Since its launch, HashEx has conducted over 500 audits for projects at various levels and has helped secure over $ 5 billion in investor funds.
All information on our website is published in good faith and for general information purposes only. Any action taken by the reader based on information found on our website is entirely at your own risk.