The journey of cryptocurrency started in 2009 with the launch of Bitcoin, the largest cryptocurrency in the world by market capitalization. The price of Bitcoin was just $1 in February 2011. It now stands close to $38,800. The exponential growth of Bitcoin and other cryptocurrencies has attracted the interest of businesses and investors globally. Crypto has emerged as an alternative investment option that provides steady gains in the long term.
The rise of cryptocurrencies is fuelled by the adoption of the underlying technology i.e. blockchain by businesses globally. The crypto boom has provided the motivation for entrepreneurs to explore business opportunities in the space. Several crypto startups have emerged in the past few years. Crypto has largely been looked at as a means to grow investment until now. However, the get-rich-quick IPOs and emerging success stories can tempt new entrepreneurs to jump into the crypto bandwagon from a business perspective. Crypto has the potential to democratize businesses but it is still in an evolving phase when it comes to business.
Source: https://www.bitcoininsider.org/article/40648/digital-currency-group-leads-vc-investment-blockchain-startups-rises-300
After investing heavily in blockchain startups, investors are looking to delve deeper into the crypto bandwagon. Venture capitalists invested a whopping $25.2 billion into blockchain startups globally in 2021. This marked a 713% surge in year-over-year global blockchain funding from $3.1 billion in 2020. Chris Bendtsen, a senior analyst at CB Insights, told Cointelegraph that the majority of VC funding was allocated to crypto-focused startups. These figures could be motivating for any emerging crypto startup but it is important to get the basics right to succeed in the highly competitive crypto ecosystem. Here’s a list of 9 key aspects every crypto startup should focus on.
Team: A strong team is a driving force behind any startup. The crypto field is witnessing the evolution of new technologies and trends with every passing day. You need to have team members with proven track records and technical expertise to sustain yourself in the highly competitive market. Here are a few factors that you must consider while building a team. Crypto is a lucrative industry and raising funds is easy if you have got your basics right. But a startup should avoid focusing merely on raising funding. VCs bring a lot of expertise and connections along with the funding. While approaching the investors, you must look for those who have already invested in similar projects and have a sound understanding of what they are getting into.
Source: https://wixalia.com/en/workplace-how-to-choose-your-integrator/
When competing with the best in the industry, it is important to have a team of experts with proven track records. While preparing the team structure and updating the team info on your website, you must state clearly if your core team has expertise in the crypto domain. It could be a key differentiator for investors. While raising a startup from scratch, having an in-house team is seldom enough. You should also collaborate with experts within the crypto space to advise you at various stages. Having a transparent team structure is one of the must-haves for emerging crypto startups.
Whitepaper: A whitepaper provides in-depth information about businesses. Technical experts and auditors always have a thorough look at the whitepaper while assessing a startup. Your whitepaper must contain all the necessary information about your startup including the problem that you are solving, the scope of scalability, a realistic roadmap and a well-maintained website. Crypto is all about transparency and decentralization. The crypto ecosystem is powered by technologies like blockchain and having a tech differentiator increases your chances of success significantly. The decision-making process should be democratized with all the stakeholders and community members having voting rights. Your startup should follow the DAO governance mechanism.
Source: http://gens-associates.com/whitepapers/
Tokenomics: Tokenomics is a combination of two words- Token and economy. Tokenomics plays a key role in ascertaining the future worth of an asset. In layman’s language, tokenomics refers to the features of a token that make it desirable for an investor to invest. Here are some of the factors that must be considered while analyzing the tokenomics of a particular project.
Source: https://academy.moralis.io/blog/understanding-tokenomics-an-introduction-to-token-economics
Whether vesting period for seed investors/team is 6 months
Is there an established mechanism to create token scarcity to increase token value
Liquidity Allocation
Nearly 50% of the token should be in public and development fund
Regulations: With countries like the United States, Russia and India moving towards the regulation of crypto, the stage is set for emerging crypto businesses to take off. Registering your crypto business is the first step towards building a reputation as an authentic business. Having a smooth KYC process is vital to assessing and verifying customer risk and verifying customer’s identity.
Auditing: Auditing by a certified agency is another great way of making your startup stand out amid a competitive crypto industry. Auditing adds authenticity to the financial statements put forward by you with respect to your startup. You should collaborate with leading ranking platforms like CertiK for proper auditing of your startup. CertiK has evaluated more than 1669 projects so far and the net market cap of the businesses assessed by them stands at $263 billion.
Github Updates: The Crypto industry is fuelled by technology and having regular Github updates adds to the transparency in your business. Plus, it enables open source contributors to help you refine your codes to make the project even better. A crypto startup should have a strong technical team working on regular updates of codes.
Source: https://medium.com/analytics-vidhya/github-for-beginners-bb1b6d9911a4
Community: Having a strong social community play a key role in defining project use cases and token use cases of a project. A strong community is a reflection of the value that a project brings to the table. For a crypto project to succeed in the long term, it must have a strong organic presence on all channels such as Twitter, Discord and Telegram where the community members can be informed about upcoming updates such as token burn, staking pools etc. There must be effective communication with the community through the social media handles to establish yourself as a transparent brand.
Rugpull Check: The crypto market has evolved significantly and investors now look for real-world use cases before investing their time and funds in a project. The famous Squid Game Rug Pull that brought down the price of the Squid Game coin to $0 after surging 2400% in 24 hours, left the entire crypto community alarmed. Rugpull happens when a developer team abandons a project or removes liquidity, leaving investors in a huge loss. This is the reason that investors are shifting their attention towards projects with a strong team and an equally strong community. You have to make sure that your project adds some value to the ecosystem and solves a problem. We are already beyond the phase where people looked at crypto as a get-rich-overnight scheme.