A literature review of Web3 projects: After asking 7 questions, the nature of the project will be clear, whether it's divine or demonic!

In the crypto world, everyone should have heard this phrase:*** "Do your own research!" **Do your own research.

However, for ordinary people who are not engaged in the financial sector, how should we conduct investment research? How do we find information? How do we carry out research?

First of all, don't be scared by the two words "investment research". Think about whether you compare prices before buying something?

In fact, the process of investment research is quite similar to what you do before buying something: researching whether this item is really good? Is it suitable for you? What advantages does it have compared to other brands? And so on.

Web3 investment research is the same! As long as you have the method and the framework, conducting investment research for new Web3 projects is just like comparing prices before making a purchase.

New projects come out every day, and you can quickly judge whether they are promising or not!

🔥 Here are the 7 golden questions for Web3 research + essential tools, packed with valuable insights, highly recommended to bookmark! 🔥

The 7 core dimensions of investment research, check these first before investing:

1️⃣Market Demand: Is there a necessity scenario?

❓What problem does the project solve? Is it a real pain point, or just a "self-entertaining" innovation?

❓Who is the target user? Is the market large enough? Is there room for growth in the future?

Generally, we can find detailed information about the project on the official website's "Documentation" section for questions regarding "what it is."

**If you don't want to read these lengthy articles, you can visit some data websites to check the summary, such as: Rootdata.

This website can be checked for projects that have not yet issued coins, and it can also provide information on the project's investment and financing situation. For new projects, I generally use this website for checking.

2️⃣ Team Background: Veteran or Bystander?

❓Check the core members' resumes, do they have Web3 experience? What reliable projects have they worked on?

❓How strong are the consultants/partners?

For example, OKX Ventures was very active in Q1 of 2024, and the projects related to it are worth a closer look.

You can also find information about the team on the Rootdata website, including this person's past work experience and the projects they have been involved in. You can also check the X account of the core members.

You can also find out about their investors and the amount of financing. If you don't trust your own judgment, you can trust the judgment of some professional investors, after all, they are the ones putting real money into selecting projects.

3️⃣ Technical Strength: Don't be fooled by the official website

❓Which chain to use? ETH is stable but expensive, Solana is fast but has centralization controversies; choosing a chain is choosing a track.

❓Has the contract been audited? Are there security designs such as time locks, multi-signature, bug bounties, etc.?

❓Are there any technical highlights, such as zero-knowledge proofs, new consensus mechanisms, etc.? Is it true innovation or just a facade?

📃This content can basically be found in the "Documentation" section of the official website. If the project has a white paper, that would naturally be the best.

🌍If the project has already issued coins, it can also be found through Defillama, where you can check the TVL distribution across chains.

📊If you can still understand the code, you can go to the official GitHub: check the code activity (commit frequency, star/fork count, etc.) and see if there are any technical highlights, whether it's innovative or just a skinning, etc.

4️⃣ Competitive Landscape: Can it be mobilized?

❓What are the leading players in the industry? What makes this project better than others?

❓Is the entry threshold high? Are there difficult factors such as policies, user habits, technical barriers, etc.?

You can also check competitors on Defillama, where you can see the leading protocols in the field and whether the new project has competitiveness in this area, etc.

5️⃣ Tokenomics: Is the token design reasonable?

❓Total Supply vs Circulating Supply vs FDV? Is there a burning mechanism?

❓What is the use of tokens? Governance/Staking/Payments/Narrative/Meme... It is only valuable if it has real applications.

❓Is the distribution fair? Is the pre-mining ratio high? Is there a clear linear release schedule (vesting)?

❓Are there reasonable incentive designs for PoS or VE models? Is there income/scenarios to support the long-term growth of the token?

Regarding issues such as token economics, it depends on the situation of the token issuance. Web3 projects are inseparable from token economics. I previously wrote an article on the analysis methods of token economics, and if you are interested, you can find it at the end of this article.

6️⃣ Community Participation: Quiet or Active?

❓Is there a large number of people in the community? Is the activity level high?

❓Does the project encourage community participation in development, proposals, and promotion? Are there governance rights?

If you want to deeply engage and understand a project, you must join their community. Generally, good projects also place great importance on community building, after all, in web3, water can carry a boat and it can also capsize it.

The community mainly consists of the official X, followed by Discord groups, and Telegram. Some projects also have GitHub, Reddit, etc. These can all be found on their official websites.

Good projects can also listen to the voice of the community.

Get familiar with the role inside, there might be surprises during the airdrop!

7️⃣ Legal Compliance: Compliant or on the Edge of a Pitfall?

❓Does the project have KYC/AML? Is there a compliance roadmap?

❓Are there any intellectual property disputes? Are there risks related to privacy/data issues?

Security issues are a concern for each of us; no one wants their hard-earned money to be involved in some insider trading projects that suddenly collapse, causing them to abscond with the funds. Therefore, security considerations must be an important indicator for us to evaluate the quality of a project.

📃This information can generally be found on the project’s official website and white paper. Some projects will explicitly state whether they comply with regulations in certain countries and whether they conduct KYC/AML.

💰If a project has received funding, projects backed by major institutions (such as a16z, Coinbase Ventures) will typically mention compliance matters on their official website or in PR news.

For example, Aave's "Aave Arc" compliant version is designed for institutions, which will be highlighted in the news.

🛜You can also check X to see if the project team has mentioned "not supporting US users" or "serving according to the laws of which country."

🧠 Summary:

Want to invest in Web3? Don't just follow the hype/KOL recommendations! Especially now that "mouth play" is in vogue, popular ≠ good project!

Learn to rely on yourself: look at the data, look at the mechanism, look at the team, look at the scenario!

The earlier you spot the trend and enter the market, the more likely you are to reap the rewards!

Want to earn big easily? Keep an eye on early projects and get deeply involved!

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