Cryptocurrency presales allow investors to join blockchain projects before a public launch. These projects use investor funds to develop their platforms, ensuring users get the best version at launch. Crypto presales offer investors early access to join a community, contribute to a budding ecosystem, and enjoy several bonuses and early adopter advantages developers offer. Despite the attraction to new products, users must learn to discern between good and bad projects to reduce the risk of loss.
The types of presale crypto projects offered usually come with exciting promises and potentially great features. However, users must understand factors that form the foundation of a successful crypto presale regardless of the developer’s promises. Here are a few things the average investor should look out for.
Tokenomics and Utility
Kane Pepi shares that, when looking for a presale to invest in, tokenomics is a key consideration. He says that it’s preferable for a project to issue most of its tokens at the start rather than risking a major dump later on (source: best crypto presales).
There should also be a clear description of the project’s plan for token operations. The token’s total supply, distribution details, and any mechanisms to prevent inflation should be practical and not too ambitious. In addition, the token should have clear utility in the project’s ecosystem. Investors should carefully scrutinize for use cases and other factors like interoperability, which may give an advantage over the competition.
The Development Team
Especially in their early stages, cryptocurrency projects are usually only as strong as their development teams. Therefore, investors looking to participate in a presale event must research the team to confirm their proven track record in the target industry. In addition to specific sector experience, some technical knowledge of blockchain is also essential. This is because it is difficult to properly design a token and create use cases if the team only has experience with the traditional sector and none with blockchain.
Furthermore, the development team should include experts in other relevant disciplines. Designing a token for a presale will not yield fruits without proper marketing. If the buzz around the project and the token is inadequate, investors may never make any significant profits.
Whitepaper
Scrutinizing a token’s whitepaper before funding a presale is crucial. The whitepaper is the team’s way of sharing its blueprint with the public, detailing technological designs, information about a problem statement, and how the project can attract users while solving the highlighted problems. For instance, the Ethereum whitepaper specified three types of applications on the blockchain: financial, semi-financial, and non-financial. The whitepaper also explained each category, describing use cases for each one.
Furthermore, whitepapers may also contain market analysis, which should indicate the project’s chances in a highly competitive crypto market. The analysis should specify potential audiences, target sizes, and a reasonable assessment of the project’s competition. Furthermore, the whitepaper should describe a clear roadmap that states specific timelines and development milestones. These milestones may cover market expansion, partnerships, and community building.
Regulatory Compliance
Any project handling cryptocurrency must comply with regulatory requirements. Some projects launch with provisional or temporary licenses and continue interfacing with regulators to operate legally. However, investors should avoid crypto presales where there is no apparent attempt to satisfy regulatory responsibilities.
Project Engagement
Consistent engagement is another sign of a promising project. Any team serious about expanding its community would facilitate engagement on multiple online platforms, including options like Telegram, Twitter, Discord, or Reddit, whose strategic approach to community engagement has valued the company at a possible $6.5 billion in its upcoming initial public offering (IPO).
Projects must continuously communicate with prospective community members, asking questions and providing insight into plans for growth and expansion. Communicating with the community also helps to answer burning questions in the minds of prospective investors.
Partnerships
While it might be difficult for new projects, strategic partnerships may be a sign that a project is legitimate. Partnerships, especially with established firms and services, lend credibility to crypto projects, increasing their perceived legitimacy. Projects that have already inked notable partnerships may have more potential for success.
Conclusion
An exhaustive list of signs to look out for before investing in crypto presales might be difficult. However, there are several points the average project must have under its belt to convince investors of their commitment. Generally, a crypto project must provide users with specific utility and create a plan for longevity. Nonetheless, investors should be careful and note that these points only reduce the chance of a scam and do not entirely eradicate the risk.
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- Source: https://techstartups.com/2024/03/13/crypto-presales-spotting-the-diamonds-in-the-rough/
