As the current period is in the bear market phase (bearish), it is less easy to make profits from your crypto-currencies. In order to bet on projects promisinghere are 5 indicators to watch before investing in the bear market.
1. What does the project bring to the ecosystem?
Many projects promise worlds and wonders and sometimes even features that have no use case. A need must therefore first be met for the project to be of interest to investors. We must therefore ask ourselves the question of real-world project use case. Does it bring something interesting and that can last in the long term?
If the answer is no, all you have to do is read the whitepaper of a new project hoping to find the rare pearl. On the other hand, if the project has specific use cases, we will see another criterion to observe.
2. How does the project stand out from its competitors?
The crypto ecosystem is a world full of projects of all kinds and the competition is tough. The second indicator is therefore how the project stands out from its competitors.
Does it bring real added value with features or a pale copy of what already exists?
In a constantly changing sector, if it does not stand out or very little, it is possible that it will never be appreciated at its fair value. If we take the case of Decentralized Exchanges (DEXs), many exist today that have similar functionality. It is therefore particularly difficult to launch this type of project without real added value.
3. How does the project generate income?
Whether in crypto or the real world, one stays in a process or a job deserves pay. The development of this type of project will therefore require time and money.
It is therefore important that the protocol derives benefits from its operation. The purpose of this indicator is therefore to understand where and how the protocol will generate revenue to build for the long term. Generally, the protocols do not benefit from their own tokens which will make it possible to attract new users. Instead, they will use the buy-back process to buy and destroy (burn) these and ensure a certain sustainability of their assets.
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You must therefore ensure a certain economic stability of the project so that it is viable in the long term.
4. The Roadmap (project roadmap)
The project roadmap will help define its objects and ambitions. An NFT project which intends to release only one collection will have every chance of being forgotten in the next 2 years.
On the other hand, a project that takes place over several years with measurable and achievable goals is much more promising. It is therefore important to favor projects whose roadmap is constantly evolving.
This demonstrates a certain motivation of the team to always want to go further.
5. Does the project have cash?
A project that has funds is exposed to the market in the same way as an average user. It is therefore important for him to know how to take his profits and not have a single cryptocurrency in his wallet.
In addition, owning cash can allow him to survive during a bear market or to call on third parties for various reasons. This can also allow it to carry out certain operations to expand more widely in the ecosystem.
This also allows to have an overview on the good management or not of the funds of the team. A DeFi project that exposes itself too much to certain crypto-currencies is not necessarily a guarantee of success and we have been able to see this recently with the fall of Terra.