In the cryptocurrency world, investing in early-stage projects has become a common phenomenon. Many projects have received various responses during institutional investment or IDO before listing on exchanges, or during transactions after listing. However, for retail investors, most early-stage projects are more or less unsatisfactory to them. There are two main reasons for this:
1. The price of the currency did not reach the psychological expectation
2. I don’t know the project dynamics (inside information) and don’t know what they are busy with all day.
Over time, a phenomenon has emerged where investors believe that project parties are doing nothing and just enjoy life after raising money. Project parties may think that they are running around but no one is paying for it, and this eventually leads to conflicts. This is also the main reason for the failure of most early projects.
Of course, what the early project teams are working on every day is indeed a question worth discussing, after all, most people have no idea about the internal situation of the project. Although most blockchain projects claim to be decentralized and community-run, without a project development team to push forward, they may not be able to gain a foothold in the market.
To this end, we have a comprehensive understanding of what the project team usually does and show you a real-life scenario.
1. Financing
Most of the unlaunched projects are either raising funds or on the way to raising funds. For the project owners, the more money they raise, the better, but it is not so easy to obtain financing. Generally speaking, the project team will have a dedicated position to be responsible for financing contacts, and many projects also have clear plans.
The first step in financing is to contact investment institutions. This process generally involves activities such as roadshows. Sometimes it is common for CEOs or founders to meet with investors. Before reaching an agreement, they need to explain the current status, prospects, and technical core points of the project to investors. Of course, it also includes some information that cannot be displayed in the contract. Investors and project parties must meet offline to discuss some details and bet agreements, so project CEOs or founders often travel around the world and fly, which is a common occurrence. The cost is also quite high.
For most retail investors, the more money a project raises, the better, but not all project parties want to obtain huge amounts of financing. For some project party founders, the essence of financing is to borrow money from institutions, and the purpose of institutions is to make money from projects. Therefore, the more you borrow, the more rights and interests you have to give up to institutions, and your own interests will be reduced. There will even be many restrictive clauses in the financing contract. Therefore, the project party will formulate a financing strategy based on the development plan of its own project, and only the financing amount that suits them is the best. Blindly giving the project party too much money is not a good thing for both the project party and the institution.
2. Project Promotion
Unlike financing, which is staged, project promotion runs through the entire development cycle of the project and is also an important way for the project to be known to the public. There are many forms of project promotion, the most common of which are the following:
1. Content updates on social media such as Twitter and Discord
2. Conduct AMA, offline roundtables, or host/participate in various activities
3. Organize events, such as hackathons or airdrop/experience events, as well as offline events, etc.
Project promotion is an expense category. Simply put, it is responsible for spending money. It is also indispensable in the process of project promotion. Project promotion is mainly based on the three aspects of time, place, and people. It is not suitable for promotion at all times. For example, during the deep bear market, we saw that the project party pretended to be dead, but in fact, they did not want to spend money. At this time, the project party would most likely lay off the previous publicity and marketing team, or even fire them as a whole, in order to reduce the overall expenditure cost of the project. When the market picks up, they will recruit again and increase publicity expenditure. This is also the reason why we have seen many project parties have been silent for a while. In fact, the core is that the project party’s personnel are in the process of change, and the publicity and promotion team is still unstable.
Frequent personnel changes are also the reason why some projects cannot really become popular, so they are more inclined to wait for the market to pick up and then take advantage of the momentum to promote. We see that when a certain sector becomes popular, a bunch of similar projects emerge for promotion because the cost is lower at this time, but the effect may also be mediocre. If we see a project suddenly become popular and drive similar sectors, it means that the promotion team of this project has certain strength, and the project party must have invested a lot of money in planning.
Of course, a project promotion page is not as simple as a simple promotion. Many projects take a lot of time to finalize some details before actually doing the event, such as making posters, inviting guests, determining the time, how to warm up the audience, finding ways to attract traffic, and even thinking about the lines. After the event, you have to summarize the gains and losses and prepare for the next event.
However, most activities in a bear market generally have average effects, and it is basically a waste of money. However, if this waste of money is not spent, it may be worse. The main reason is that some activities may not be known to the public until some time after the content is announced. Therefore, this also creates a contradiction between the short duration of project activities and the lag in publicity effects. This is exactly why some project teams have recently extended the time span of activities, such as OP and Linea's Odyssey, so that everyone knows about this activity. However, if the time is too long, unless the project itself is high-quality, it will also have certain negative effects.
technology
Most projects are technology-based, so the technical team is generally relatively stable. However, the technology here is also divided into core and non-core. For example, framework building and smart contract writing belong to the core technical level, and some front-end page optimization and function implementation, as well as some functions required for activities are all non-core technical personnel. For example, if the project party is going to make an invitation promotion function, it may take ten days or half a month, and this technology also needs some non-core developers to implement it. Similar technical needs are also very common in the currency circle.
Of course, technology is not just about writing code. Some technical personnel in the team are also responsible for reviewing project technical articles, attending events to give basic explanations, conducting technical exchanges with other cooperating project parties, participating in technical docking and secondary development, etc., and also participating in hackathon activities of other projects, etc. These are relatively large tasks.
Similarly, the core code and framework of the project have actually been determined in the early stages of the project, and the status of core members is also quite stable, similar to the company's veterans. Generally, in a bear market, even if the project party intends to reduce the number of developers, it will give priority to front-end developers and retain a small number of core members so that the project can maintain expenses until the bull market.
Finance, Recruitment and Legal Affairs
Financial management is also very important for a project. Although the project has raised a lot of money, some financing conditions are relatively harsh. At the same time, investors do not want the funds to be spent indiscriminately. Therefore, the project also needs finance to manage and count some expenditures, and finally disclose them to investors, especially some listed projects. They will announce their expenditures regularly. Some projects will set up foundations to manage project funds (tokens and financing amounts), and some will use funds to invest in other projects in order to generate investment returns.
Of course, the listing of a project also requires the project party to contact the exchange, provide financial and technical support to the exchange, sign contracts with market makers to make markets, maintain a stable market value, team member salaries, promotion and publicity expenses, etc. All of these require professional financial personnel to manage so that the project can operate normally.
Of course, some project owners will also use various methods to obtain additional assets from the project. For example, the most common method is to embezzle project funds to purchase tokens or leverage cryptocurrency trading. Therefore, we see that whenever the market plummets, some projects disappear or become silent, and they stop posting on Twitter. This is the consequence of the project owners having gotten into trouble and having to lay off employees in operations positions.
Another way for project owners to benefit from projects is to set up new projects and then let the people from the old projects work on the new projects. In this way, the new projects have almost no early expenses, and the old projects can be emptied at the same time. Finally, the new projects are listed, and the old projects are tepid. Investors are helpless in the end because they invested in the old projects instead of the new ones. This is what some project owners do. However, some investment institutions are also very sharp. Generally, they will restrict the core members of the project from participating in other projects, such as not allowing such things to exist, or the institutions have various privileges when there are new projects, etc. This protects the rights and interests of the institutions to a certain extent.
Recruitment is also a way for project parties to spend time. It is generally more common when the bull and bear markets change. When the bear market comes, the project party will reduce expenses such as event promotion. At the same time, it will also lay off some non-core members, and some part-time MODs will also stop paying promotion fees. When the bull market comes, the market will turn for the better, and they will recruit a new batch. This can minimize the risk of project death and prepare for the bull market.
Legal affairs are one of the important links in project compliance. For example, it involves the country in which the project foundation is registered, the cooperation contract with other project parties or the token listing contract, the financing contract, and the resolution of some disputes, the compliance of tokens before going online and KYC, and communication with regulatory agencies. These issues all involve legal needs. Therefore, it is also necessary for the project party to deal with legal affairs.
In summary, a regular project actually faces relatively more issues on a daily basis. Of course, we are only involved in regular projects. In fact, many projects in the market have more or less problems, especially the leeks cutting projects. They may have only one or two developers plus the project founder, or the project founder knows a little bit of technology and then buys perfect code and modifies it to become a project. They get a lot of money through a public IDO, and then choose to play dead and run away.
Some other project owners specialize in defrauding investment institutions, inviting developers and operations personnel, and then firing them when they get the investment amount, and then disappearing. In short, there is nothing we can't see, only what we can't think of. That's why many people are cut off in every round of bull and bear markets, and their investments fail. A wave of projects die and come back to life, or live and die again, while the leeks continue to grow, resulting in various chaos in the currency circle. For investors, investing in a project requires not only background research, but also luck.