Foreword

With the development of blockchain technology, cryptocurrency investment has become a hot topic in today’s financial market. However, for investors, choosing a safe and reliable cryptocurrency project to invest in is not a simple task. Investing in cryptocurrency projects requires professional skills and knowledge, just like conducting fundamental or technical analysis in the stock market.

We often see some dazzling new cryptocurrency projects that attempt to attract investors’ attention. But are these projects really worth investing your hard-earned money into? The risks and probability of failure are high for new startup teams, and investors should not blindly invest, as it could result in significant losses.

To help you navigate through the crowded market and identify truly promising projects, this lesson introduces the key elements to consider when evaluating cryptocurrency projects. While meeting these criteria does not guarantee future success, it can help you filter out unqualified and risky projects, thereby reducing your investment risks.

Key Factors for Successful Project Development

There are several important factors for successful project development, including team, technology, market, funding, legal compliance, security, and community, among others. These factors are essential and collectively determine the project’s growth prospects and potential. Follow us to explore the importance of these factors to better understand the key aspects of successful cryptocurrency project development.

Team Members

The team is the cornerstone of the successful development of a project. A well-rounded team has the opportunity to survive and thrive in a competitive market. While the project’s development plans may change over time, core team members are usually not easily replaceable. An excellent project team not only possesses rich professional experience and knowledge but also strong collaboration, communication, and implementation abilities. The blockchain industry has a wide range of applications and sophisticated technologies, necessitating diverse team members with expertise in areas such as technology, marketing, finance, operations, recruitment, and more. Statistics show that over 90% of startups fail, highlighting the importance of a strong team to navigate different challenges and ensure comprehensive support for project development.

Technical Expertise

The technical aspect of a project is crucial as it directly influences its development and market competitiveness. With the rapid advancement of the blockchain industry in recent years, technology is constantly evolving. If a project lacks strong technical capabilities, it may find it difficult to compete with other players in the market or face issues such as attacks, code vulnerabilities, system failures, or financial losses, all of which can impact user experience and the project’s reputation, ultimately leading to obsolescence.

Projects with low technical proficiency are easily outperformed by competitors. Therefore, technological innovation is vital for project success and establishing a competitive edge. A reputable project must possess strong technical expertise and the ability to continuously innovate and evolve to thrive in a highly competitive market and dynamic industry environment.

Market Positioning

Market positioning is a critical factor for project success, as it determines the project’s growth and relevance in the competitive landscape. Projects need to consistently track and assess user needs and market trends to ensure their products or services meet customer demands. This enables the project to secure a solid market share and garner support from the target audience in a fiercely competitive market.

The product-market fit pyramid is often used to illustrate this concept, with the target customers at the bottom. The needs of these users are to be met by the services provided by enterprises or projects. The pyramid signifies the degree to which a product aligns with market demand, its acceptance in the market, and the level of satisfaction it brings to users.

Source: https://delighted.com/blog/how-to-measure-and-track-product-market-fit

Products that achieve product-market fit can gain market recognition, increase user numbers, and improve profits. Therefore, any project and product development needs to be constantly adjusted and improved to maintain market competitiveness and long-term sustainability.

TAM, SAM, SOM, CAGR

Not all user needs can be met by the market, and no project can serve all users. When we talk about market positioning, there are some other specialized terms worth noting, including TAM, SAM, SOM, and CAGR.

Source: https://www.thepowermba.com/en/blog/tam-sam-som

TAM (Total Addressable Market) is the total addressable market of a company’s products or services, representing the overall market size where the product or service can be sold. For investors, TAM is a reference point for estimating the maximum revenue and growth potential that a startup can generate in a specific market. TAM can be seen as the valuation of the entire market and is almost impossible for any company or project to reach unless it operates as a complete monopoly without any competitors, being the sole provider of the product or service.

SAM (Serviceable Available Market) refers to the market share that can be covered within the TAM through the company’s existing products, services, business models, and sales channels. SAM is a subset of TAM and represents the actual market size that can be effectively served, taking into account factors like geographic variations, regulations, and pricing/quality differences. It can also be seen as the upper limit of growth for a specific company or project.

SOM (Serviceable Obtainable Market) is a further segmentation of SAM into submarkets that can be realistically obtained by a company or project, considering limited resources, competition, and limited market awareness. SOM is derived from performance based on various key indicators, in contrast to TAM and SAM, which often involve assumptions and idealistic evaluations. Therefore, potential investors can monitor the progress of the company or project using SOM. Startups or projects often consider SOM as a short-term goal in their development process, with SAM or even TAM as long-term goals to dominate the market.

CAGR (Compound Annual Growth Rate) is a method for calculating the compounded annual growth rate, used to evaluate the return on investment of a project. The value calculated by CAGR reflects the average annual growth rate. Understanding this data about a company or new project can help investors better evaluate its long-term profitability and development trends.

Market Share and Competitor Analysis

Market share and competitor analysis are also critical factors for the success of a project. Market share refers to the proportion of a company or project’s specific product or service in the market and is an important indicator for measuring market presence. Competitor analysis focuses on evaluating the advantages and disadvantages between the project itself and its competitors, meant to identify its weaknesses in the competitive landscape and formulate corresponding strategies.

Through market share and competitor analysis, a new project can gain a better understanding of the target market’s size, demand, and economic conditions, as well as the products and services of its competitors. This enables the development of more cost-effective products or services with core advantages and differentiation. Some common techniques and tools include:

1. SWOT analysis
   Utilizing the SWOT analysis method (Strengths, Weaknesses, Opportunities, and Threats) to evaluate competitors, helping the project identify its competitive strengths and weaknesses, as well as opportunities and threats.

2. Porter’s Five Forces
   Porter’s five forces analysis is a commonly used method for analyzing the competitive environment from the aspects of suppliers, buyers, substitutes, competitive rivals, and new entrants. It helps the project understand the competitive forces and environment in the market.

3. Benchmarking
   Benchmarking is a method of comparing a company with its competitors to identify its strengths and weaknesses. This can be done by comparing different companies’ products, services, processes, systems, etc.

4. 4Ps Analysis
   Also known as marketing mix analysis, 4Ps systematically analyze and integrate the four elements of product, price, promotion, and place to help businesses formulate comprehensive marketing strategies, determine market positioning, and make competitive strategies.

5. Moon Sheet
   This is a relatively simple method for comparing projects and calculating return on investment (ROI). A moon sheet typically consists of four columns: price, market capitalization, ROI, and project names. By comparing the market capitalization of the purchased token with a specific project, the moon sheet can calculate the potential ROI.

Funding and Utilization

Successful projects are typically based on sufficient financial support. Hence, fundraising is one of the challenges that projects must face for successful development. To successfully raise funds, a project needs a clear business plan, feasibility analysis report, and a clear explanation of fund utilization to establish a good relationship of mutual trust and cooperation with investors. Therefore, fundraising not only involves acquiring funds but also involves how the funds will be used, as well as communication with investors and maintaining their interests. After raising funds, startups must allocate the funds appropriately according to the proposed financial plan for different purposes, such as operations, research and development, marketing, talent recruitment, etc. A clear, specific plan for fund utilization can effectively attract investors and increase the chances of successful development of the project.

Security

The core of blockchain technology lies in its decentralized trust mechanism, which ensures the security of transactions. If the security of a blockchain product or service is compromised, this trust mechanism is undermined, and the confidence of users and investors is affected, posing a threat to the healthy development of the project.

There are many security threats in blockchain networks, such as smart contract vulnerabilities, loss of private keys, phishing scams, etc. Malicious hackers can cause asset losses for users or project teams and even lead to system crashes that are difficult to recover. Therefore, ensuring the security of blockchain products and services is one of the critical conditions for the successful development of a project.

To prevent various possible attacks, project teams need to employ the latest technologies to safeguard the security of their products and services. They should also enhance security awareness and be prepared for emergency responses in unexpected situations to earn the trust of users and investors.

Whitepaper and Vision

A whitepaper is typically a technical and business planning document for a blockchain project, aiming to showcase the value and potential of the project to investors and the community. It usually includes an overview of the project, identified problems and proposed solutions, a roadmap, an introduction to the team, technical architecture, market and competitiveness analysis, tokenomics, fund utilization, and other relevant details. Generally, a high-quality whitepaper possesses the following characteristics:

1. It has a clear structure and expression of language, making it easily understandable for readers.

2. It provides a technical and business overview, offering detailed explanations of the project’s technological and business value.

3. The introduction of products and services is clear, highlighting the project’s features and advantages.

4. It outlines the token utility and the economic design of its ecosystem, elucidating the token’s use cases and sources of liquidity.

5. It has clearly defined market positioning, specifying the project’s target users and market.

6. It includes a detailed development roadmap and timeline, demonstrating the project’s development plan.

7. It offers a comprehensive team introduction, showcasing the project’s capabilities and credibility.

8. It provides risk analysis and response measures, addressing potential project risks and corresponding strategies.

An excellent whitepaper can help investors and users better understand the project and its long-term development prospects. It captures investor attention, earns user trust, facilitates project development, and builds market reputation, thereby establishing the groundwork for project success. Therefore, high-quality whitepaper and vision are crucial factors for the success of a project.

Sustainable Business Models and Tokenomics

The relationship between sustainable business models and tokenomics is crucial for the success of a project. If a new project lacks a sustainable business model and tokenomics, it will eventually face funding constraints, hindering project progress, causing loss of users, and losing market competitiveness. As a cutting-edge industry in finance, the blockchain world is rife with financial scams, and only by breaking free from Ponzi-like economic structures and creating real value can the market provide a steady stream of resources.

Furthermore, sustainable business models and tokenomics can incentivize user participation, encouraging users to actively use and help promote the product or service. They enhance user trust and foster community development, creating a vibrant, robust, and stable ecosystem that generates positive feedback loops and flywheel effects. Therefore, new projects need to focus on the design and optimization of their business models and tokenomics to enhance their sustainability and stability, ultimately achieving long-term development.

Openness and Decentralization of Community

Openness and decentralization are another characteristics of successful projects. In the realm of cryptocurrencies, openness is demonstrated through collaboration and interoperability between projects. Successful projects typically operate within an open ecosystem, allowing other developers and users to participate in project development, providing open-source, auditable code, and leveraging the power of the community to ensure the quality of products and services. Decentralized governance delegates power to the community, mitigating the risks of centralization and enabling anyone to easily understand the project’s operations, decision-making processes, and fund allocation. Through proposals and voting, users are encouraged to actively participate in the project’s development and promotion, ensuring that the project meets their needs and expectations more effectively. This helps enhance user satisfaction, engagement, and trust, improve the reputation of the project team, and increase its market share.

Marketing Strategy

In the blockchain industry where information flows fast and is accessible to all, marketing would never be wrong. Even if a product or service is excellent, it would be in vain if it remains unknown and unnoticed. Therefore, a successful marketing strategy is an indispensable aspect of project development. A well-executed marketing strategy and media exposure can make a blockchain project stand out in the market, capturing the attention and support of users and investors.

Project marketing activities can be observed from multiple perspectives, including but not limited to blog articles, video introductions, community management, follower and activity counts, discussions by key opinion leaders (KOLs), public relations, brand image, and media promotion. A good marketing strategy often precisely targets the intended user base, provides solutions to market demands and pain points through excellent service, encourages community interaction, sharing, and innovation, expands the project’s audience, establishes brand recognition, and further strengthens market share and competitiveness.

Advisory Board and Partnerships

Examining a project’s partnerships, supporters, and advisory board can provide valuable insights into the project’s maturity and professionalism. A good project is not isolated but has a dense network of collaborations and relationships. Information in this aspect can give you a better understanding of the project’s standing. High-quality projects often establish partnerships with leading companies in the industry and receive support and investments from well-known venture capital funds in the blockchain field.

Successful Projects Overview

Ethereum

Ethereum is an open-source smart contract platform that supports the development and deployment of various blockchain applications. Ethereum raised approximately $18 million through a token presale in 2014 and was officially launched in 2015. It is currently one of the largest and most active blockchain ecosystems, hosting thousands of dApps and millions of users.

Binance Coin

Binance Coin is the native token issued by Binance, the world’s largest cryptocurrency exchange. It can be used for trading fee discounts, voting, participating in IEOs, and more. Binance Coin raised approximately $15 million through an ICO in 2017 and was launched in the same year. It is also the native asset of the centralized Binance Smart Chain. Currently, Binance Coin is one of the largest exchange tokens by market capitalization and has numerous applications in the DeFi sector.

Chainlink

Chainlink is a decentralized oracle network that connects blockchain with real-world data and services. Chainlink raised approximately $32 million through an ICO in 2017. It is currently one of the most popular and widely used oracle solutions, providing reliable and secure data sources for many blockchain applications.

Cardano

Cardano is an open-source blockchain network created by IOHK, aiming to provide a more secure, sustainable, and scalable blockchain solution. Cardano raised $64 million through an ICO in 2017. The Cardano platform has developed into an open-source project with a large community and has gained a good reputation in the crypto market. It is currently one of the top ten cryptocurrencies by market capitalization, and its token ADA has garnered significant attention in the market.

Filecoin

Filecoin is a decentralized storage network that allows users to store and access data across global nodes. It raised approximately $257 million through an ICO in 2017. Filecoin utilizes blockchain technology to achieve decentralized storage, enabling users to store and access data in a more secure, private, and efficient manner. With its innovative business model and potential for application value, Filecoin has become one of the top 50 cryptocurrencies by market capitalization and a leading project in the blockchain storage sector.

Conclusion

This course introduces important indicators and tools for analyzing investments in new cryptocurrencies. In this process, it is important to understand project maturity and professionalism from various facets, including the team’s professional experience, technological innovation, funding support, regulation, business model, marketing strategies, etc. In this way, investors can better assess the risks and potential returns of new cryptocurrencies, choose suitable investment methods, and reduce the chances of falling into scams.

In the next session, we will guide you through various common danger signals and precautionary measures in the primary market. It is important to learn how to protect yourself first in order to survive and profit in the volatile cryptocurrency space.

Takeaways

• Team members are the cornerstone of a project’s successful development, and their professional experience, expertise, teamwork, communication abilities, and execution capabilities are important indicators of an excellent team.
• The technical complexity of a project is crucial as it directly influences its development and market competitiveness. Technological innovation is an important pathway for a project to excel and establish a competitive advantage.
• Product-market fit refers to how a product aligns with its target market. It measures whether a product meets market demand, gains market acceptance, and satisfies users’ needs.
• TAM, SAM, SOM, and CAGR are important indicators and tools for analyzing investments in new cryptocurrencies. They help investors understand the potential market size, long-term profitability, and development trends of a project.
• Market share and competitor analysis are crucial factors for a project’s success. They help new projects understand the target market size, demand, economic conditions, and competitor products/services. This knowledge enables them to enhance their core strengths and differentiate their offerings, thereby developing more cost-effective products or services.
• Market share and competitor analysis can be conducted using various methods or tools such as SWOT, Porter’s Five Forces, benchmarking, and 4Ps.
• Successful projects typically have sufficient funding support, clear business plans, feasibility analysis reports, and a transparent explanation of fund usage to establish a trustworthy and cooperative relationship with investors.
• Regulatory compliance is also crucial for the successful development of a project. A compliant project can increase investor trust and recognition while reducing investment risks.
• Ensuring the security of blockchain products and services is an important requirement for the successful development of a project. Project teams need to employ the latest technologies and best practices to safeguard the security of their products and services. Enhancing security awareness and being prepared for emergencies is necessary to win the trust of users and investors.
• An excellent whitepaper and vision are important prerequisites for the successful development of a project. A high-quality whitepaper can help investors and users better understand the project and its long-term prospects, attracting investor attention, earning user trust, and promoting project development and reputation.
• The relationship between a sustainable business model and tokenomics is closely tied to the success of a project. New projects need to focus on the design and optimization of their business and tokenomics to enhance sustainability and stability, thus achieving long-term project growth.
• Openness and decentralization are key characteristics of successful projects as they ensure product and service quality while avoiding the risks of centralization and monopolization.
• Marketing strategy is an essential aspect of project development. A well-executed marketing strategy and media exposure can help a blockchain project stand out in the market and attract the attention and support of users and investors.
• Examining a project’s partners, supporters, and advisory board can provide you with a better understanding of the project’s maturity and professionalism.