CEO @ PlasmaPay.com and Plasma.Finance
Strong communities are the backbone of crypto projects
Initial decentralized exchange (DEX) offerings – or IDOs for short – are increasingly earning a reputation for being a viable method of raising capital through crowdfunding.
In a previous blog post, we detailed how new DeFi and NFT projects are successfully using IDOs to list tokens, benefiting from advanced features and fairer methods that give improved visibility and empower uses, among others.
A dashboard overview of IDOs from SpacePort’s IDO Launchpad
But IDOs, much like other past blockchain-based crowdfunding methods in the past like ICOs, STOs, and IEOs, also have a high rate of failure in the long-term, with the vast majority of projects unable to sustain the same levels of hype and interest that will, naturally, cool off once a crypto rally runs out of steam, as is surely to happen in the market at some point.
The good news is that there are some commonalities between projects who manage to stay the course, keeping a consistent momentum even after a token sale, balancing project development and product adoption. One of these common traits is the people that surround the project, both from the side of development and on the side of adoption. Namely, the project team and the project community.
Examining the project team’s talents and experience can give you assurances that the project has the necessary blend of ability and know-how in dragging the project past milestones, while also giving you a good idea of how sustainable their development is over the long term. The same goes for their community, how healthy they are and their motivations will tell you if it’s just a project filled with short-term profit-takers, or true enthusiasts who ultimately decide the lifetime of the project.
In this Part 1 article, we take a look at both sides of this coin and see what makes for good IDOs, before we move on to technical aspects in Part 2.
The first port of call should be the team behind the project. Who they are and what they can do is less important than what they have done. An anonymous team isn’t necessarily worse than a team with names and photographs.
Like any startup, bright young talents may fill up the team roster so they could be bare on blockchain experience, but a look at their past employment and achievements should give you a clue about how well they can deliver on the project, or if they’ve worked with reputable (or disreputable) projects in the past.
Another aspect of the team to look at are their advisors or advisory team. Crypto projects and IDOs often have advisors for their project who aren’t directly on their development or operations team, but are supposed to provide guidance to the project, typically in the non-blockchain specific industry they are experts in.
These can be academics, entrepreneurs or even executives from other companies. Take a look at these and see who else they’ve advised before to get a grasp of how credible the project really is.
Be wary of those serving as project advisors but in reality are only there to lend their high-profile name to the project to get as many people on board as possible! Many of these types of advisors are doing little more than shilling these projects to their online followings, moving on as soon as they’ve made their profit from dumping their tokens (or “advisory fee”) onto unsuspecting newcomers.
Finally, watch out for highly-qualified teams with seemingly every possible coding language and expertise in their locker, but without any actual completed projects or professional achievements. You don’t want to be saddled with a project that doesn’t know how to actually push out finished products.
IDO projects, if distilled to an end result, are essentially technology developers and product experts working to build a product that successfully implements features using blockchain technology. Like it or not, this means the beating heart of the project is its code. Because blockchain is still a new industry, there is a lack of high-end developers able to create robust infrastructure -- hence the many hacks and exploits in the space due to poor coding backbone.
Identify the project’s developers. Are they active? Are they dedicated to the project? Or are they just Fiverr freelancers patching up carbon copies of existing source code?
Also of importance is their source code: is it open source and, therefore, open to public scrutiny? Or is it a closed source? One isn’t necessarily worse than the other, but some investors prefer code that is open source (and therefore, can reveal malicious loopholes, deliberate or otherwise) while others don’t mind closed-source projects that protect proprietary, unique technology, hoping for a first-mover advantage.
Transparency is a big deal in the crypto space and more people, whether users or investors, demand as much transparency as possible from projects they invest in.
Transparency can mean many things and by definition, most public blockchains today that host IDOs are transparent in the sense that they can be viewed by anyone with an internet connection. In many cases, as well, you can view an IDOs code if it is published by their developers, as mentioned in the previous section.
But full transparency in every aspect is difficult to achieve and this is perfectly natural for new projects and smaller startups, where decision-making will still be reliant on its core developers or project owners, at least until the community is large enough to sustain decentralization efforts.
Nevertheless, it’s important to look at what attempts have been made by the project to be transparent. Some make an effort to put faces and names behind the entire team (though, as we mentioned earlier, anonymity doesn’t make for a bad project either). Others ensure there’s always an open line of communication to the team so that users can reach out, and information can be shared directly.
PlasmaFinance holds regular community calls and AMAs with other crypto communities.
Some projects even have a place for development updates, keeping their communities abreast of developments and of progress towards it. Some companies only announce things on social media or through PR campaigns, while others make personal contact on Telegram or Discord, or arrange for live streams for people to join.
In all cases, a good IDO makes a consistent effort to plainly communicate with their community, and doesn’t hide when things don’t go well.
If people can be defined by the company they keep, then it’s almost certainly true that IDO projects are defined by the communities they have, and where they choose to live.
For example, the level of activity in a community is a great indicator of healthy adoption and use. Then again, if the only activity you can observe on social media and online is non-stop shilling, then you can be sure that you’re dealing with token buyers and speculators, rather than actual users and project enthusiasts.
SpacePort lists all the social media accounts of each IDO project so you can easily look them up
Numbers aren’t everything! Don’t be fooled by Twitter accounts with tens of thousands of followers and hundreds of daily RTs and shares. Dig a little deeper and look for conversations that indicate a deeper level of community engagement.
A quiet Bitcointalk thread that sees only a handful of weekly posts with critical assessment and discussion of a project’s utility from real users is worth a lot more than a Telegram channel filled with hundreds of “wen listing” and “wen moon” comments if you’re looking for meaningful engagement.
On the other hand, you also don’t want a project whose only activity is on Github, because you do want a good balance between long-term project viability and short-term market movers unless you’re willing to project profits years ahead!
Crypto Twitter and Reddit are such diverse and active platforms that have the most active and engaged people coming together under a common banner of crypto use. But it isn’t enough just to have hundreds and thousands of users talking about the product and enjoying it.
Crypto relies heavily on mass adoption -- getting as many people to use it as possible, so that demand organically grows, fueling further development and improvements, and pushing natural acceptance and recognition, much in the way Bitcoin has over the past ten years.
But there are also past examples that show that the general mood of an overall project can also collapse under the weight of negativity, or find itself unable to grow further because of its inability to attract new users.
Some early forks of Bitcoin, for example, started off well enough, with plenty of users looking for cheaper and faster alternatives to the original Bitcoin -- but when their founders and core developers continued a persistent strategy of antagonizing those who didn’t choose them, even their largest supporters began to move away, put off by the cloud of negativity that constantly surrounded the projects. The same thing happened with Ethereum, whose original community rejected the fork that created today’s Ethereum (the original is known today as Ethereum Classic).
They did not foresee that the majority of users would choose the fork that protected their interests, rather than the principles proposed by the original project.
Then, you also have highly technical projects that perhaps breed small groups of supporters who can act condescendingly to mainstream newbies, creating a sentiment of elitism that retail users, many of whom may enter crypto for the first time without aligning themselves with purist ideologies like decentralization or anonymity. While these ideals are hallmarks of blockchain projects, forcing users to only accept these and reject all others with a “with me or against me” attitude can often backfire against a project.
One shining example of how a crypto project has succeeded against the odds thanks to a positive community is Dogecoin. Despite it being purely a memecoin with little intrinsic value backing it, it continues to grow even today. This is largely due to the positive attitude of its general users, known for generous donations of DOGE to newbies, and welcoming all to its fold.
So, take the time to delve into the crypto project’s community and try and get a feel of who the supporters are, and what they do to grow. A positive culture looking for mutual benefit for all is often what will help the project stand the test of time.
Of course, there are many more things to consider when trying to find good IDOs, particularly from a technical standpoint, and we will discuss these technical aspects in more detail in a follow-up article (Part 2). But when it comes to the intangibles, we truly believe that people are the backbone of any good project -- be they developers creating the product, or users giving the product true value.
And this is why, when we built our IDO launchpad SpacePort, we made it so that any project, big or small, deserves the chance to launch their IDO without restrictions. So that the best talents can have the opportunity to get their projects seen by the users eager for decentralized solutions to their daily lives.
For SpacePort IDO Launchpad:
(Disclaimer: The author is the CEO @ PlasmaPay.com and Plasma.Finance)
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