crypto strategy

Finding strong investor communities is the springboard for Web3 startups

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Mid-2022, capital risk business as Andreessen Horowitz (a16z) and Binance Labs invested $4.5 billion and $500 million, respectively. However, bear market conditions make many VCs nervous, as total investments dropped 66% to $4.98 billion in Q3 2022. This represents an opportunity to reclaim the core philosophy of the blockchain/cryptocurrency industry: community-backed decentralized investments and collective ownership.

A bear market is ideal for separating greedy communities from value-driven communities that will help build innovative technology solutions. A strong and tight-knit community of investors can support Web3 projects even in volatile market conditions. Initial DEX offerings (IDOs) are just one of many methods to find suitable investors for a Web3 project. IDOs – combined with on-chain analysis tools and investment redemption options – provide a safe investment space for investors and startups.

In 2013, the Web3 investment began its evolutionary journey with Initial Piece of money Offers (ICO). And while ICOs have raised over $22.4 billion in 2017 and 2018, they were plagued with problems. The most unfortunate problem was that more than 80% among them, ICOs were scams, severely lacking in investor protection. Additionally, ICOs were centralized, with pre-mining unfairly favoring project teams over investors.

To address these shortcomings, the Raven protocol conducted its first IoT in June 2019. IDOs allow Web3 projects to pool funds from retail investors by launching project tokens on a decentralized exchange. As no centralized intermediary is involved, this investment strategy can provide instant access to liquidity and faster trading opportunities. Startups also don’t have to pay a fee to an intermediary to facilitate investments.


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Since Web3 projects no longer need permission to list their tokens, there is no unnecessary waiting time. Without centralized approval procedures, the community takes the initiative to verify projects and tokens. Thus, a new project organically expands its reach without the need for formal advertising and marketing support. The community is responsible for ensuring that they enroll genuine project tokens.

However, this poses a challenge to project promoters. The management team must find suitable investors who will provide long-term support for the projects. Blindly buying and selling project tokens on DEXs for quick profits will have adverse consequences. Therefore, startups need screening procedures to find reliable investor communities that funds their during developmental stages.

On-chain analysis: the spotlight for finding investor communities

Benefit block chain Thanks to the technology’s immutable data storage facilities, on-chain analysis provides startup founders with the tools they need to find suitable investors. Project teams can then gauge investor sentiment to understand their interest in funding specific long-term projects. For example, if investors “HODL“a NFT collectible, it means they are optimistic about NFTs and could support new NFT Projects. Thus, analyzing on-chain investor activity helps projects allocate token supplies during public sale cycles.

Public sales based on on-chain activity have become a popular investment strategy for creating personalized investor communities consistent with a project’s vision. Web3 startups can design their own criteria and parameters to screen applications from investors with a provable investment case. For example, their requirements may mean operating as liquidity providers on DEXs or holding a cryptocurrency worth $5,000 for six months. This helps startups identify a community with a common interest in a product before onboarding them.

On-chain analysis integrates high-quality retail investors, helping projects find and build suitable investor communities. However, investors must also have safety nets to prevent them from participating in questionable projects. A refund option is a way to ensure that malicious projects and uncommitted management teams don’t cheat investors. After all, no one wants a repeat of the 2017/2018 season ICO fiasco.

Suppose a project succeeds and maintains interest in the token for a predefined duration. The community can quantify success or failure in terms of percentage changes in asset price from the initial day of sale. If the project token maintains the desired price during the period, investors cannot avail the redemption option. However, if the price of the asset drops drastically, the project will have to reimburse the investors.

Fine art photographer Dave Krugman once compared with NFT communities with mycelium of the mushroom network, which feeds on symbiotics. In many ways, the Web3 investment space is similar to a network of mycelium. Investors and project promoters maintain a reciprocal and mutually beneficial relationship. Therefore, finding the right investment community is essential for sustained growth and development of the entire Web3 ecosystem.

In addition to funding opportunities, investment communities will also provide space for ideation and create exciting collaboration opportunities. These communities could disrupt the industry, forming a feedback loop to reinforce each other. In this long crypto winter, a strong community of investors will help create a powerful sense of belonging and affinity towards a project. This will lead to organic growth, paving the way for an eventual crypto market renaissance.

Hassan (Hatu) Sheikh is Director of Marketing and Strategy at DAO Maker.


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