How to Increase Your Portfolio Returns by up to 30% By Making Investment Decisions as a Community

What’s better for a crypto investor’s ROI: building a portfolio alone or making decisions after a group discussion? The latest study by BDC Consulting finds that analyzing projects in-depth as a group can be a powerful way to reduce portfolio risks and maximize gains.

An Innovative Gamified Approach to Investment Decisions

Although crypto influencers constantly advise their followers to do their own research, many investors rely on advice given on YouTube and Twitter. Having to make investment decisions on one’s own can be overwhelming and even scary. However, the real question is whether one can be more profitable by selecting investment opportunities solo or after listening to the opinion of others. This question was addressed by BDC Consulting in their new gamified study, Crypto-minded.

The experts used an innovative research tool called gamified focus groups. Each of the 22 investors (divided into four groups) was given 200 game tokens and descriptions of 10 crypto projects – real ones, but without the names. There were 40 different descriptions in 5 categories: Blockchain, Exchange, DeFi, Gaming, and Meme.

The participants were asked to allocate the tokens in two portfolios: 100 tokens in a personal portfolio of 1 to 3 projects and 100 tokens in a common ‘investment fund’, to be formed after a group discussion. The researchers then calculated the ROI that each of the portfolios would have yielded to see if individual or group investment was more profitable.

49% vs 18% ROI: the effect of a group discussion

The study's key insight is that group decision-making does impact profitability – and that investors recognize it as a highly valuable tool. The individual investment round yielded an average ROI of 18%. The discussion investment round led to a markedly higher ROI of 38% for the group portfolio.

The increase in profitability was the highest for those who changed their original allocation choice after the discussion. They ‘earned’ 49% on their investment, while those who stuck to the original decisions ‘made’ only 18%.

The participants acknowledged that the group discussion allowed them to explore some aspects of the projects they had initially neglected and reduce investment risks.

The focus groups used two main algorithms to allocate the funds:

• Reliability first: 50% went to a reliable exchange or blockchain infrastructure project; 25-40% to a riskier but very promising DeFi or GameFi project; and the remaining 10-25% to a high-risk meme/gaming/NFT project.
• Growth first: up to 40% went to a viral meme or GameFi project, with the rest distributed evenly between reliable DeFi, exchange, and infrastructure projects.

The 5 top project categories for 2022 and selection criteria

Which types of projects are most attractive to investors in 2022? In the BDC Consulting study, the focus group participants named five:

• blockchain (L1 and L2)
• exchanges,
• memecoins,
• GameFi,
• DeFi.

During the group round, BDC Consulting also identified the main factors that influence investors’ decisions:

• The team: ‘A good team is 50% of success’
• Transparency about the development process
• Active development: ‘Community support, strong personalities, development according to the roadmap, emotional background surrounding the project’
• Understanding the mechanics of the project Innovation

By contrast, some features of a project make it unattractive to investors:

• Lack of an efficient way to solve the target user’s problem
• Anonymity and lack of transparency on behalf of the team
• Lack of well-known partnerships
• Similarity to other projects, lack of uniqueness

The study shows that engaging investors in community discussions is a powerful persuasion technique that projects shouldn’t neglect. Finding the most relevant narrative for each investor – be it team transparency, partnerships, or something else – can be more effective than focusing on the ROI alone.