A collection of links/notes re: evaluating crypto/DeFi projects for investment.
Edit 6-8-23: Hindsight 20/20. I now have a hard time taking any of this seriously.
The Bull Case for DeFi | Vance Spencer - Bankless Podcast
- Focus on "who" is building (talent magnets, perpetual optimism, work ethic, integrity)
- Use the protocol, get involved in the community
7 indicators every #DeFi investor should be using to evaluate projects - Spencer Noon
- Total Value Locked / Fully-Diluted Marketcap
- Price to Sales (aka Marketcap / Revenue)
- % of Token Supply on Exchanges
- User Growth (aka Unique Address Growth)
- Token Balance Change on Exchanges
- Non-Speculative Usage
- Liquid Inflation Rate
What we look for: the 9 core value propositions of crypto networks - Jake Brukhman (CoinFund)
9 core value propositions that, in aggregate, make crypto networks a transformative innovation that will outpace legacy products
- Permissionlessness, censorship resistance
- Borderlessness, global access
- Public governance, governance-as-software
- Political decentralization, regulatory arbitrage
- Capture resistance
- Mutualization, secondary markets
- Privacy, security
- Trustlessness, outcome certainty
- Cryptoeconomics, recursive incentives
Our Process for Evaluating New Tokens - Nick Tomaino (1confirmation)
Team
- Who is the founding team behind the project?
- Is the team exceptional technically, inclusive, transparent, objective and capable of fostering a vibrant global community?
- Founding team is evaluated based on
- History of success, demonstrated ability to overcome obstacles to success and strong desire beyond money
- Attract and surround themselves with top technical talent who are inspired by vision and leadership
- Obsessive about the problem they’re solving
- Mature thinkers — deeply thoughtful about problems and realistic about growth plan
- Team is uniquely suited to tackle the technical problem
Product
- Does the product solve an important problem for a segment of people today? In the near future? (that segment can either be small with potential to grow or large)
- The product assessment is based on:
- The technical specification that describes the product. Is the technical specification thorough and does it demonstrate mastery of the subject matter?
- At least two customer or potential customer reference calls — are there people out there who want and need this product right now?
- Does the product benefit from network effects?
- Is there a core technical or product advantage that is likely to lead to competitive differentiation?
- Does the product surprise and delight users?
Community
- Is there a community developing around the project or does there appear to be a group of people within an existing community that values what the new network will offer?
- Does the founding team demonstrate the potential to foster a vibrant and healthy community long-term?
- The community assessment is based on:
- Reddit community (# of subscribers, daily engagement)
- Slack, Rocketchat, Gitter, Telegram (# of members, daily engagement)
- Has the founding team demonstrated the characteristics (inclusive, transparent, objective, etc.) necessary to build a healthy community?
- Have the public or private interactions by the founding team been balanced and unemotional, or have they been emotional and irritable?
Token Mechanics
- Is the token a usage token, a work token, a security token, or a combination?
- Token mechanics are evaluated based on:
- If it’s a usage token
- Is the digital service being offered useful and does the network underlying the digital service aggregate resources (hashing power, file storage, etc.) that will differentiate the service in the long-term?
- If it’s a work token
- is there a strong network emerging that wants to contribute and is the UX well thought through?
- And is the service offered useful to people?
- If it’s a security token
- is there some technology underlying the security that gives the token a long-term competitive advantage?
- Is the team distributing the token in a fair and equitable manner, considering all market participants and optimizing for long-term usage of the product rather than short-term fundraising?
.jpg)
