I skip 90% of pre-sales, LBPs, IDOs, KOL rounds, and Ambassador Programs.
They don't make the cut in my evaluation.
Here's my pre-investment research approach ↓
Here is the list of criteria you should evaluate, from most critical to least critical:
• Tokenomics
• Marketing/community (Hype criteria)
• Product & roadmap
• Narrative & competition
• Backers
• Team
This topic is very broad, so in this thread, I'd like to focus on one of the most critical aspects – TOKENOMICS.
Once the secondary market opens, all projects, in one form or another, will have various categories of users who may become your competitors.
They include:
• Token sale investors (all private and public rounds, including KOL rounds)
• Ambassadors (KOLs who have tokens in return for their contributions)
• Early users (airdrop recipients)
• Incentives recipients (staking, liquidity mining, etc.)
• Team
Interestingly, if a project raises from American investors, it must be SEC-compliant. As part of it, ALL tokens allocated to insiders (early investors, team, advisors, etc.) MUST have a minimum 1-year cliff period.
Source: @a16zcrypto's article "Token Launch Playbook".
Essentially, it's crucial to review the cliffs and vesting terms for all parties intending to sell tokens for profit.
Ideally, all insiders should have a minimum 1-year cliff (after all, who wants to invest in a protocol with potential regulatory issues?); it's just healthy.
For public sale investors, the primary threat arises from airdrop recipients and KOL round investors.
Airdrops are usually not vested, similar to public round tokens, and both want to take profits. Typically, 30% – 50% of airdropped tokens are sold within the first month.
When it comes to KOL rounds, the situation gets even more amusing.
I get at least one KOL round invitation every day. These rounds are usually disguised within tokenomics (presented as incentives, marketing, or other purposes), and most KOLs are quite receptive to these offers.
The interesting part emerges when you delve into the specifics of these KOL rounds.
Many of them offer huge price advantages over public rounds, sometimes at the seed round valuation, along with shorter cliffs and vesting periods.
In some cases, there's not even a cliff at all.
A classic scenario is when there's a 3x TGE advantage with 30% of the investment unlocked on TGE (or something similar).
This setup allows KOLs to recoup their investment on day 1, with the remainder serving as their additional reward for marketing support.
It's similar to Ambassador Programs where KOLs get tokens for their support. However, KOL rounds are more lucrative for projects; they receive both moni and marketing.
It's a fair deal, but the challenge is that retail investors are unaware of the influencers' selling pressure.
As a result, we have:
• A bullish sentiment, projects launching tokens at too high FDVs
• KOL rounds disguised in tokenomics
• Private rounds predominantly conducted during bear markets (yielding at least a x10 price advantage)
• Airdrop mania, farm & sell
After reading this, you might consider skipping all public sale rounds and only buying tokens on secondary markets.
However, in some cases, public sales can present excellent opportunities, with the excess selling pressure being quickly absorbed (a good case is @ether_fi).
Absorbing selling pressure is primarily reached by the product, BD, marketing, and token use cases. This will be a central theme in my upcoming threads on this subject.
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t.me/muur_posts