It is no question that investing in the blockchain and cryptocurrency space can be a tricky task. There are so many different aspects of each project that you need to analyze before considering whether this project is even worthy of investment.
Read more about how to invest in Bitcoin and other cryptocurrencies.
At Republic, we realized that it is near impossible for every retail investor to evaluate crypto and blockchain projects at a high level. It typically takes a trained eye, someone who is in the weeds on the technology and industry on a daily basis. However, we’ve identified 6 core areas, which we are calling “The 6 Ts” which have allowed us to pre-screen cryptocurrency and blockchain projects before they get listed on Republic. This way, our investors can rest assured that the basics of every project listed on Republic has been covered.
The purpose of this post is to help shed some light on what these 6 Ts are and how we evaluate projects prior to listing them for you to invest in.
- Is the core team credible and are they who they say they are?
- Does the core team have the necessary experience to actually build the product they’ve spec’d out?
- Is the core team specialized enough to execute in the vertical that the project is in?
- Is the advisory team experienced in the industries that the project is tackling?
- Is there a sufficient professional network to cover the market?
- Is this project uniquely enabled by blockchain technology?
- Does the solution absolutely need to be decentralized?
- Is the project rendered useless if it is not censorship resistant?
- If they are starting their own chain, how does it compare to proven blockchains like Bitcoin and Ethereum?
- Is the network scalable from a tech capability standpoint?
- Is there a need for a token in their model?
- What value accretive properties does the token have?
- Do they employ any natural or artificial token velocity sinks?
- Are participants of the project incentivized to use or hold the token?
- Are the incentives set up to promote positive growth of the network?
- What is existing investor interest?
- How active do they appear to be on social channels (Twitter, Facebook, Reddit)?
- Is there an existing community of both developers and active potential users?
- What is the quality of their communities? Is the clientele primarily people interested in the project vision or in token flipping?
- What kind of partnerships have they developed thus far?
- Does the team have an active Github repository?
- How often are they pushing new commits and actually building the protocol?
- How often is the team releasing updates to the community via channels such as Medium, podcasts, or videos?
- Are founders and team members open about involvement and project status?
- What is the hard cap of the project’s raise?
- Is the network valuation reasonable considering how much they wish to raise and their fully diluted market cap?
- What is the token price being offered to investors?
- Are retail investors getting a similar deal akin to what a VC or high net worth LP would get in a private raise?
As the space continues to evolve, so too will our framework for evaluating new token projects looking to raise on Republic. We are working tirelessly on our vetting process to ensure that we properly assess a project before allowing our investor base to put their hard earned money into a project’s hands. We hope this framework has served as a good starting point for you to start building your own mental model on how to analyze blockchain-based projects and continue to level the playing field in investing in this industry.