A step-by-step framework to evaluating crypto projects

When it comes to cryptocurrencies, you need to consider a few key factors before you decide whether to invest. Whether you’re just beginning to get on the ground floor of new crypto projects or are looking to expand your portfolio, it’s helpful to have an evaluation framework handy for crypto projects. 

This article will explain a step-by-step framework to assist you in evaluating various crypto projects.

How do you evaluate a crypto project?

During your analysis of a crypto project, it’s important to examine the different aspects of the project to make an informed investment decision. You should generally veer away from making impulsive decisions based on emotions, as this could lead to financial loss.

Mull over the following aspects instead:

These are just some of the questions you need to ask during your cryptocurrency evaluation. We’ll discuss them in greater detail throughout this guide, which will give you a framework for evaluating crypto projects.

By the end, you should have a pretty good sense of what to look for — and how to make an informed investment decision. Remember that there is a lot of speculation in the crypto world. So, do your research before you begin investing.

How do I research a new crypto project?

There are a couple of platforms that can help you find high-quality crypto projects to invest in, such as Binance Launchpad, OK Jumpstart and Gate.io Startup. These are all initial exchange offering (IEO) platforms, which provide their users with opportunities to invest in startup blockchain projects.

There are also initial coin offerings (ICOs), which are fundraising mechanisms for crypto projects. However, it’s important to note that ICOs are generally considered riskier than IEOs. This is because ICOs are hosted on a cryptocurrency project’s website, making them a more fertile ground for fraudsters and scammers.

IEOs, on the other hand, are launched on exchange platforms like the ones we mentioned previously. They are generally more secure because most startups that submit their projects to these platforms undergo a vetting process before they are allowed to launch their token sales.

However, even when going through an IEO platform, you should still conduct independent research. Doing so will help you to determine whether a project is the right investment opportunity for you and if it’s something you can invest in long-term.

How to evaluate a blockchain project?

Generally, here’s what you should consider when looking at the main aspects of a crypto project:

The vision of the project

When evaluating a crypto project, it’s important to ensure that it has a strong and achievable vision. In crypto, there’s such a thing as “vaporware,” which often refers to projects with all the bells and whistles — but are unlikely to get off the ground. When evaluating a crypto project, be wary of those that seem too cool and promise too much without having a solid plan or foundation to back it up.

Visionaries in the industry come up with many groundbreaking project ideas, but only a few are ever feasible or practical enough to be implemented.

Background and team

Another key thing to consider is the team behind the project. This is important because, at the end of the day, it’s the people working on a project that will make it successful (or not). When looking at the team, consider things like:

  • The team members’ experience;
  • Their history and level of expertise in the crypto space; and
  • How cohesive the team is.

The above factors will give you some insight into whether a team is strong and likely to make their project successful.

Quality of the white paper

The white paper is a document that typically outlines everything you need to know about the project, including the vision, the problem it intends to solve, the solution, the tokenomics and more.

The roadmap

The roadmap should outline a project’s business plan and give you some insight into how the team plans to execute its vision. A good roadmap will be well-thought-out and realistic, with clear milestones that the team plans to achieve. It should also be updated regularly to reflect its current status. If a roadmap is outdated or unrealistic, then it’s likely that the project won’t be successful.