Quickly Filter Projects from Three Dimensions

Despite the entire crypto market being in a bearish trend since the end of 2021, new projects continue to emerge and secure substantial funding. According to Crunchbase, in the second quarter of this year, Web3 startups raised over $1.8 billion in funding through 322 transactions.

Although the total number of funded projects and the overall funding amount have been decreasing, on average, individual investors need to review 3.57 projects per day to identify potential investment opportunities.

Is there a quick and simple way to help individual investors assess whether it's worth paying long-term attention to a particular project？

WikiBit has compiled a set of methods to aid investors in swift screening.

Treat Investment Institutions as Your Free Labor Force

Investment institutions have professional teams that conduct in-depth research and valuation of projects, as well as post-investment project incubation. Compared to most individual investors, institutional teams are more specialized and have a deeper understanding of the industry, making their guidance on project development and execution clearer and more informed.

Projects that receive investment from reputable institutions often have notable strengths, whether it's in technology, team members, or project concepts. Therefore, when evaluating which projects to pay attention to, it's important to consider the capability of the investing institution. Industry-leading institutions such as A16Z, Paradigm, Pantera Capital, etc., are worth noting based on factors like establishment time, managed funds, investment returns, and whether they publish industry research reports.

Additionally, it's essential to pay attention to the funding amount, project valuation, and funding rounds. By combining these aspects, one can assess the project's progress and the institution's valuation of the project's worth.

Token Economic Model

The token economic model is not inherently good or bad, but poor economic models are easily identifiable. Evaluating a token economic model mainly involves considering two aspects: token allocation ratio and release rules.

In contrast to traditional finance, decentralization has always been the focus in the blockchain industry. This aspect also influences token allocation, where project tokens are distributed to aid the project's development, attract users, and incentivize genuine contributors.

Therefore, if a project or institution has an excessively high allocation ratio, it is often not worth following. For instance, there was a project called Farm Sky that allocated 50% of tokens to the project team, and unsurprisingly, the project ran away after the token sale. Notable projects like Uniswap, Arbitrum, and Chainlink have allocated a majority of tokens to ecosystem development.

Another crucial aspect is the token release rules. The timing and duration of token releases by the project team and investment institutions are significant indicators of the project's seriousness. If a large portion of tokens is released initially, it could trigger dumping in the secondary market and hinder project growth.

Public Chains and Categories of Ecosystems

Apart from infrastructure projects, most projects can be screened by observing the public chain they are built on and the category of their ecosystem. Projects within the Ethereum ecosystem often have greater development potential compared to projects built on other public chains. This is because Ethereum boasts a larger user base, higher user net worth, and a more established ecosystem infrastructure. Despite efforts from cross-chain bridges and various protocols to break down barriers between ecosystems, inter-chain operability still remains relatively low. Therefore, establishing a project on Ethereum means having access to a larger potential user base.

To illustrate, if AAVE were built on Nuls instead of Ethereum, would it still have the same potential to become a leading project in the Lending category？ Many in the industry might not even be aware of NULS as a public chain.

The category of the ecosystem in which a project operates is equally crucial. Projects in incremental categories naturally deserve attention. If a project competes in the Lending category, can it really compete with giants like AAVE and Compound？ Lending is a mature category, and the leading projects have already established strong business moats, making it challenging for new projects to compete with them.