By Josiah Wilmoth
The most difficult parts of participating in token generation events (TGEs) are evaluating individual token sales and determining which ones deserve your contributions and which ones are ill-conceived — or even outright scams. This is especially true for token buyers who do not have technical backgrounds and consequently cannot judge projects on their technological merits.
However, according to a panel of industry insiders, token buyers can evaluate TGEs by asking three basic questions:
1. Is There a Product, and Does It Have a Market?
Speaking during a discussion at Unchained, a blockchain conference hosted by content distribution platform creator DECENT in Hong Kong earlier this week, Jaroslav Kacina, chief executive of enterprise blockchain platform SophiaTX, stated that TGEs should be evaluated by asking the same questions venture capital firms use to analyze traditional startups: does the company have a product, and if so, is there a market for that product?
These questions are particularly important for token buyers since the hype surrounding TGEs makes it possible for companies to raise significant amounts of capital, even if their token is superfluous. One notable project raised tens of millions of dollars for a token whose sole purpose was to pay for services that the company already offered and for which it accepted fiat currency.
Quality projects present clear solutions to actual problems, and the token should be a key feature — not an afterthought.
2. Do I Trust These People With My Money or Not?
However, identifying a problem and proposing a solution are not enough to ensure a project’s success, which is why it’s also important to scrutinize the startup’s development team. “Eighty percent of success” is directly tied to “the people,” explained Matej Michalko, founder and chief executive of DECENT. Consequently, token buyers should identify teams with diverse backgrounds and a history of demonstrated success within their specific fields.
But even a qualified team can be derailed by infighting, which is why it is important to determine whether the developers will work well together. This can be difficult to gauge without interacting with them on a personal basis, so look for teams that have successfully completed projects in the past.
3. If I Give These People My Money, What Are They Going to Do With It?
If the merits of the development team survive scrutiny, you should take a closer look at how they intend to spend their TGE funds, says Joseph Wang, co-founder of Hong Kong-based fintech research lab Bitquant. Ensure that contributions will be spent wisely — toward project development — and not used solely to line the pockets of the team and its investors.
David Wang, executive director of the Gibraltar Stock Exchange, added that token buyers should avoid projects that do not devote resources to legal compliance, especially considering the nascent nature of the burgeoning crypto space.
Participating in token sales may seem complex, but these three questions will help token buyers winnow the field so they can devote more time to researching the most promising market opportunities. For more information about evaluating TGEs, consult the in-depth token analysis reports developed by Strategic Coin’s research team.
Strategic Coin is committed to providing you with trustworthy information about launching and participating in the world of cryptocurrency. Whether you are a start-up or existing business that desires to enlist the help of a professional utility token generation event advisor or a token buyer who needs help navigating the blockchain space, Strategic Coin will provide you with the resources you need to take advantage of market opportunities within the crypto marketplace.
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By Josiah Wilmoth