Only 1% actually makes money in crypto, while the rest lose money to whales and VCs.
Just a few principles distinguish winners from losers.
Here're 5 things that big players hide from u, but u need to know to make money in crypto 🧵👇
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➮ Crypto is far from a fair game, and 99% of crypto investors/traders will just become exit liquidity for leading major players/whales
How to avoid it? Study the crypto market principals
Here are 5 principles that whales/insiders don't want you to know:
1/➮ DeFi protocols don't need a token
✧ Most projects have the following token model: facilitates governance division or boosts liquidity and supports the development of a 2ndry market
✧ Ideally, this is the case, but in reality, many projects end up creating a token just so the team can profit from it.
So how to avoid such projects?
➮ Here are a few things you should make sure of before buying a project's token:
1. Price increase corresponds with user growth
2. Addresses a market demand
3. Edge over similar protocols
4. Serves a purpose beyond profits for holders
This is what a good project should have
2/➮ Many projects are nothing
✧ In crypto, there are thousands of projects, and obviously, not all of them are truly useful.
✧ Many have a beautiful cover with incredible plans/roadmaps that will never happen.
So, how do you distinguish a facade from a truly good project?
➮ Here are a few things you should ask urself before buying a project's token:
1. Is the team real and who are these people, what experience do they have?
2. Who backed the project?
3. Is their valuation reasonable and what problems does the project solve?
3/➮ VCs make money by investing in private sale rounds
✧ Always keep in mind that VCs make their money by investing early in token seed and private sale rounds.
✧ You might think u're entering at a low price, but VCs entered at price 20x lower
Let me explain 👇
➮ Private and seed rounds are an integral part of any project that helps it get off the ground and start developing its product
✧ What's bad? This can create large selling zones when investors begin to dump their bags & most will become exit liquidity.
So how to avoid this?
➮ Here are a few things you should check before buying a project's token:
1. Unlocking Events
2. Tokens allocations
3. Vesting Schedule
Always monitor the unlock dates before investing
4/➮ Whales do opposite of the market
✧ Everyone has heard "Buy the fear and sell the greed", but few manage to do so
✧ This is what whales do; they build their positions while everyone is selling in panic and fear, and accordingly, they take profits when greed sets in.
➮ Thanks to such a rule, whales manage to accumulate positions during the dip and sell at the ATH.
✧ They simply understand the basic people psychology that governs the market.
Here's the rough pattern:
5/➮ APR is designed to boost liquidity
✧ Let's take the real world as an example, where companies offer various types of promotions at launch to incentivize people to spend money and get accustomed to their products.
✧ Something like: 40% off for the first 100 users, etc.
➮ In crypto, it works similarly:
✧ But instead of discounts, there is the token emissions to boost liquidity of the token at an early stage.
✧ This model generally shows success initially, but the subsequent path of the token often ends with a significant drop.
➮ A good example might be the case with $LUNA, where unclear tokenomics and emission led to over-dilution
✧ Holders should get profits through fees, not emissions
✧ As it turned out, the start of the project was promising, but it all ended in a collapse
How to avoid this?
➮ Here are a few key points, the presence of which would make such a scenario impossible:
1. High fees through emissions
2. Real users + big volumes
3. Strong token
4. The true usefulness of token
This way, you won't be holding a token that is being printed like a dollars
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