The crypto borrowing and lending platform Nexo recently provided transparency into exactly how its business makes money. Its lengthy breakdown follows the collapse of numerous high-profile crypto lending firms that were overexposed to defunct projects and businesses. Nexo’s Business Model As Nexo explained in a Twitter thread on Monday, Nexo’s primary business strategy is to facilitate collateralized credit. Its core services include crypto collateralized loans, interest-bearing crypto accounts, and spot, futures, and options trading. Through its Earn product (crypto interest…
You’ve finally found the one crypto token offering (ICO) you’ve always sought. Somehow though, a cautious part of you prevents you from taking that plunge. As excited as you are about the product, there’s that uncomfortable feeling urging you to reconsider. You finally submit to this prodding to evaluate the ICO that has got you so smitten. The problem is you’re at a loss as to where to start your search.
Crypto token offers (ICOs/IEOs/STOs) are the route that many projects follow to establish a market presence. Considering the proliferation rate and the buzz that accompanies their issuance, identifying a genuine product from the rest can be daunting. However, with the right knowledge, this shouldn’t be the case. In this article, you will find the knowledge required to determine any ICO’s value that interests you.
Considerations when Evaluating Crypto Offering
Scrutinize the Token’s Whitepaper
Before making any crypto investment, ensure you have read and understood the whitepaper. The whitepaper explains the thinking process behind the issuance of a particular token. This encompasses the road map, the objectives, and the timeframe for the implementation of the project. Whitepapers are usually detailed and, therefore, crucial sources of information regarding a project’s viability.
A white paper explains the following aspects of the project:
- The project intends to cure pain points and how unique it is from those already in the market.
- The concept behind the project and how the team leaders intend to implement it successfully.
- The measures the firm will adopt to guarantee the achievement of its objectives.
- The token’s application.
Seek Complementary Information
Look for complementary information after reading the whitepaper. Such information includes the financial projections, a SWOT analysis, legal compliance, and the timelines for implementing a project.
Trust them Cautiously
The absence of a white paper sounds alarms over the project’s authenticity. Should that happen, then it’s best to explore other investments. An investor shouldn’t take the promises entailed in the white paper to be the whole truth. A well crafted white paper could be the ruse that scam projects use to trap the unsuspecting. Before the U.S Securities and Exchange Commission shut down PlexCoin, it had used a well crafted white paper to raise over $ 15 million from the unknowing public.
Familiarize with the Team Behind the Token
Any project is as good as the team behind it. It is crucial to know the management and development teams pushing a particular token.
Their reputation in the crypto space should provide you with a fair idea of their project’s viability. It is crucial to ascertain if any has previous associations with reputable projects. Moreover, determine if they have the qualifications and experience to run the project they’re selling you.
Smell a Scam
Ensuring that people of impeccable reputation are the one’s running the project helps one avoid scammers. They’re inventive, and some use fake founders and biographies to hoodwink the public regarding their project’s authenticity. The only recourse is to research the team championing the token thoroughly.
Scant or unavailable developer and founder information is the cue to avoid a particular coin. Take caution to match public profiles with their activities, including their followership and reactions to their online presence.
Verify the Project’s Legitimacy
Another factor to consider is the project’s standing within the law. Ensure that the law regulators within your area approve of it. One’s place of jurisdiction may disqualify them from participating in a token offer. Should they decide to go ahead and do that, they may run foul of the law.
Establish the Problems the Project Seeks to Solve
A couple of questions should come to mind when considering the token to invest in. First, what solutions is it offering the market? Second, what is its uniqueness in comparison to what is already available? Any project worth investing in ought to be clear on its offering and its different from the rest of the market.
To secure your investments, it is essential to interrogate the project. Increased awareness of how insecure one’s online presence is, makes many prioritize their security. We ought to exercise the same vigilance when determining the value proposition of a particular token.
Furthermore, projects with unique selling points have larger traction. Consequently, they have higher tradable values. It follows that one will strike secure and profitable investments with them.
Audit the Token Sale
At the crowdfunding phases, all ICOs depend on the token or currency system. As an investor, keep tabs on the token sales figures. Keenly follow the token sale over time. To establish legitimacy, projects ease the process of auditing their systems and token sales.
We’ve made significant technological advancements, allowing any venture to attain openness with its clientele. As such, any project impeding you from tracking its ICO progress is probably a scam you’ll do well to avoid.
Study reviews and Ratings Of the token Offering
Take time to read reviews and critiques on the ICO you intend to invest in. One may indeed find enough information from ICOs marketing. Nonetheless, these often tend to skew information in their favor. An independent evaluation of the project becomes useful in judging the integrity of the information presented.
Expand Your Knowledge
Joining a crypto forum provides a better understanding of the project. Here, members offer their views on the project’s hits and miss enabling you to make informed decisions on the token’s investment. Notable platforms to sign up to include Quora, BitcoinTalk, Reddit, and other social media platforms. Exercise caution since some of the advice could mislead you.
Engage Trusted Players
Security is of paramount importance to any crypto enthusiast. Despite the strides the sector has made in securing user activity, vulnerabilities still exist. Here’s where working with reputable industry players makes sense. Seek the guidance of industry professionals. They are an invaluable asset because they have a good grasp of the crypto space working. Therefore, they give sound advice.
The proliferation of ICOs makes determining the right product challenges. The noise and glitz that accompany their introduction may hinder a careful analysis of their value. This evaluation is critical since not all projects are well-intended. To the uninitiated, this doesn’t need to be a complex engagement. Equipping themselves with the right information builds their capacity to discern the gold from the dross. It’s essential to scrutinize the project’s whitepaper, research the team pushing the product, understand its value proposition, and comply with regulatory requirements. Also, it helps to audit the token sale, study reviews, and opinions about the project and seek professional advice. Armed with this knowledge, anyone can make informed investment decisions.