Compiled by Tim, PANews
A few weeks ago, I talked about the qualities I look for in crypto projects.
But then I realized that there has never been an article specifically written to tell everyone: which red flags mean that you should not invest.
Failed deals over the past few years have all displayed the same warning signs, so in this article I want to cover a few of the key warning signs on my watchlist.
1. Constantly bashing competitors
Those of you who have been in the crypto space for a few years may remember that famous tweet from Do Kwon (founder of Terra) back in 2022:
“I will personally end Dai.”
Ironically, Terra Luna’s UST stablecoin collapsed a few weeks later, while the DAI stablecoin remains intact to this day.
Now, it seems that the collapse of UST was not because Do Kwon was an arrogant cult leader. But before the collapse of UST, many people pointed out that the economic model of UST was unsustainable.
However, his hubris and overconfidence led him to ignore these concerns and fail to address them, ultimately leading UST to experience one of the worst crashes in cryptocurrency history as it decoupled from the US dollar.
What can we learn? Invest in projects where the teams are humble, pragmatic, and willing to listen to community feedback.
The leaders of Ethereum, AAVE, Hyperliquid, Pendle, Uniswap and almost all the leading projects in this field are very humble and low-key, and I rarely see them attacking others.
2. The team flaunts their wealth on social media
If the founder of a project you invested in is having fun in Dubai this week, spending money at a casino in Monaco next week, and then going on vacation to France, then my friend, I'm afraid I have bad news for you about your investment.
Many of the protocols that were very successful in 2021 are no longer active today because their teams lost the motivation to work hard after their success.
How do I notice this? Usually, I look for:
- The project founder or team members are very active on social media and show great enthusiasm for the direction of the project.
- You never see posts or photos on social media showing off the project team's luxurious lifestyle
- The team always delivers quickly and keeps their promises
If your favorite project performs contrary to your expectations, you may need to reconsider your investment choice.
3. The posts published by the project party are like "hieroglyphics" and full of popular terms
Have you ever read a long article about a protocol and felt like you didn’t understand anything at the end? I’ve been there several times.
This is not because I don’t understand the meaning of certain words, but because the purpose of this article is to attract the public by using flowery words and convince them to buy tokens instead of actually providing useful information.
My advice is to stay away from these flashy packaging items.
If a project’s vision isn’t clear and it takes you more than 5–10 minutes to understand how a protocol actually works, you’re probably not going to lose money.
The most successful products are often built by teams that can clearly explain their functionality in just a few words.
What is certain is that if you want to be successful in investing, you need to have a keen ability to distinguish between truth and falsehood.
I would even go so far as to say that over 95% of the projects launched today have the sole objective of making as much money as possible.
Does this mean you can no longer make money with cryptocurrencies?
Of course not, it’s just that you have to be careful in choosing the coins you buy.
