As a large number of blockchain projects spring up, a new type of financing method known as token crowdfunding has emerged. Its high rate of return has attracted a large number of new investors to enter the market. However, due to the immature market supervision mechanism and continuous innovation of blockchain technology, there is the problem of information asymmetry.!
How should retail investors identify a truly valuable project from the rest?
After studying thousands of popular blockchain projects, I have selected 25 "junk projects" and summarized their three characteristics. Without any technical background, you can still pick up the skills of filtering such bad projects after reading this article.
Figure 1. 25 junk projects rated by RatingToken
1.Low whitepaper quality
Most of blockchain projects are in the early phase of "proof of concept". Therefore, the quality of the whitepaper is an important criteria for determining the value of a project.
Someone may say it's difficult to read a whitepaper! Don’t worry! Because whitepapers for most junk projects are so terribly bad that you can identify them in a glance. For these 25 junk projects, projects without white papers account for 8%, projects whose whitepaper links cannot be opened account for 8% and projects with less than 20 pages and poor layouts account for 52%, not to mention business models and development roadmaps.
Such mindless packaging projects on the market indicate that the blockchain industry is still in an early chaotic stage and investors must be very cautious.
Pic. 2. The whitepaper for the 19th NSD project in the table actually has a whole page of glossary
2.Low social media activity
The social media popularity of blockchain projects is also an important factor in evaluating the quality of projects, because most blockchain projects will promote the project through channels such as Facebook, Twitter and Telegram. The frequency of social media updates, the number of followers and the telegram group activity can reflect whether the project is progressing smoothly and whether the market is positive.
For these junk projects, most FB/TWITTER accounts will stop updating a few months before the end of crowdfunding and they don't usually get as many followers. At the same time, telegram groups of these projects either get very few members (four-digit or less) or are inactive, and basically zombie followers.
Pic.3. The second GEA project on the list has stopped updating on social media in February this year
3.Incomplete team information
The quality of core team members for a blockchain project largely reflects the development potential of the project.
In terms of these 25 projects, for 28% of them, you would not find their core member information on LinkedIn. For 40% of them, the project is not shown on the resumes of their core members, and for 24% of them, they only have part-time project team members. For the remaining 8%, the project CEO has less than 100 contacts! The weirdest case is “Alibabacoin” (ABBC), which becomes infamous for brand trademark issues. Its founder claims to have eight years of solidity development experience...
However, the syntax concept Solidity was not proposed until 2014...
Come on, you urbanites can really brag. Why don't I say my family has specialized in applying screen protectors for 50 years?
To sum up, please check the following points before project investment:
- The quality of the whitepaper (or formatting layout at the very least!)
- The degree of social media activity
- Basic information of team members
Based on the three points, you can at least judge the sincerity of a project...
Of course, if you want to judge the reliability of a project more accurately, you also need to consider professional factors, including the frequency of project code update, actual application scenarios and token distribution. But these factors are not easy to evaluate for ordinary people.
Based on this pain point, Cheetah Mobile Blockchain Lab has produced a third-party rating system - RatingToken. The project takes “Filter Token Circle” as its slogan. By using mass data analysis, it has formulated a comprehensive project evaluation standard so that investors can objectively assess risks and fully understand the project and its potential. For more information, please click “Read Full” at the bottom.