Why understanding the utility of tokens is essential to finding real value

It looks a bit like the heady days of the 2017/18 ICO boom with the rise of meme tokens, which caught the attention of crypto investors after the 14,000% rise in the value of DogeCoin in the first six months. 2021. Back in the ICO boom, dozens of crypto projects backed by little more than white papers and a compelling story have attracted first-time investors keen to take advantage of the spectacular gains on offer. When the ICO market collapsed and the lack of real utility of most of these tokens became evident, while still leaving people out of pocket, it also left a question mark over value in the long run. term of crypto companies.

With the rise of meme tokens, the importance of establishing real utility is even more important in 2021, not only for meme coin projects, but also for the broader crypto and blockchain industry. For the crypto investor, faced with an overload of token lists, how to find the hidden gem rather than fall into the trap, whether it is a new token meme or an innovative blockchain project? Billionaire entrepreneur and head of Alameda Research and the FTX cryptocurrency derivatives exchange, Sam Bankman-Fried said in a recent Vox article that some information is “clearly legitimate”, that some information is “clearly bullshit”, and in between there is a plethora of information that is “a little confusing”. “In this financial environment,” he continued, even a token, stock, or asset with a meme can get “a valuation of $ 20 billion.”

Projects like ChainLink, Cardano, BitcoinCash, Polkadot, XRP, EOS, Stellar and many more have been backed by billions of dollars in market capitalization with billions of dollars in cash. Luke Stokes, managing director of the Foundation for Interwallet Operaability, highlighted the challenge of finding utility and therefore getting into a crypto project early. It can be argued in many ways that these projects are “innovative and provide solutions in a way that investors (real investors) think second-layer bitcoin and bitcoin solutions currently cannot.” Will these projects be still relevant in a decade? Is there a way to spot these projects before they reach the rankings?

To sum up how to spot a coin with real utility and real value, there are several common characteristics worth paying attention to, Stokes. The first is to look at the team, what is their track record, do they have a lot of experience or is they their first company. In an industry as new as coins, this may not be easy to assess, but it is still worth researching. Second, review the product or service that the crypto startup is looking to solve. In the case of the DogeCola coin, the team not only took the initiative to launch the first crypto-based cola drink, but also continued with its first GameFi product, MoonAlley. “This is a great example of the maturity of coins because they see the need to demonstrate real utility to users, not a ‘pump and empty’ token. I think this is just the start of an exciting phase of development in the crypto space, which harnesses the power of the community from memes to real-world projects, from consumer products to green campaigns, ”said BigONE President Anndy Lian. The BigONE exchange was the first central exchange (CEX) to list DogeCola, in large part thanks to its understanding of the value of utility for its long-term prospects, confirms Lian.

DogeCola entered the cryptocurrency gaming industry with the intention of bringing cryptocurrency into the current mainstream economy of the world. “DogeCola is here to stay,” confirmed the The DogeCola team last month. When considering the value of the token, it is also worth reading the fine print when considering the impact that its perceived usefulness can have on the price of the token. For example, as the DogeCola website states: “Even though the DogeCola DeFi / Crypto project is brand related, the token and the soft drink should not be considered the same legal entity. DogeCola Token is created, managed and maintained by a community of developers in a decentralized manner. The DogeCola brand will be used by another company aiming to connect the crypto and real worlds. BigONE Exchange will continue to find innovative projects to be part of our ecosystem.

So, when looking for crypto projects that are worth investing in, consider whether the token utility is helping meet a real customer need, from consumer game projects to more business propositions. In the booming gaming industry to win (GameFi), the utility token often has value both as a cryptocurrency to reward the gaming community and to fund in-game transactions. from Axie Infinity, the hugely popular crypto gaming platform that runs on Ethereum, created by Vietnamese developer Sky Mavis. After generating over $ 220 million in revenue in 30 days through early August, the up-and-coming game has its own in-game token, SLP, which can be sold on an exchange, with top players winning. up to 1,500 SLP. one day. As an additional source of income, the adorable digital pets in the game, called Axes can be sold as a non-fungible token (NFT).

So where else should investors look for long-term utility gains, rather than quick cash? Paddy Osborn, managing director of the London Academy of Trading, says it’s clear that crypto’s returns with utility are far superior to coins with no intrinsic value or function. Osborn pointed out that the real challenge in this complex and fast-paced industry is to identify these “hidden gems” before their prices skyrocket. A good place to start is that when considering the usefulness of tokens, any valuation should be defined in a business context. CEO Mayande Walker, which is the blockchain startup OpenCT, first appeared during the ICO boom era in 2017, agrees that explaining the role of the token utility within the company is essential to persuade investors. “When you examine the technical details of how our OpenCT protocol transports data, it quickly becomes clear how much it depends on a utility token to drive our VPN-killer product, the Private Crypto Network. But it is also our experience of working with governments and global carriers that goes a long way in convincing potential investors and partners of the long-term value of the OCT token, ”he added.

For rising stars in the GameFi industry, or with rapidly evolving NFT projects, this likely means doing more in-depth research into the industry, as much as an individual project. Solana is attracting attention, which despite outage issues since early August, Solana’s price has risen by more than 100%, making it the tenth largest cryptocurrency by market cap. In the recent Raconteur article Osborn highlights three other pieces with real utility, which he says are worth checking out: Polkadot, Internet Computer, and Vechain. Polkadot is building a network for the purpose of supporting a range of different blockchains, allowing them to work together. Internet Computer aims to disrupt the internet space through a decentralized web platform running on a blockchain. Vechain helps companies monitor and analyze their products at every step of the supply chain in a safe and secure manner. Ultimately, it is up to the individual investor to do their due diligence before parting with their hard-earned cash, whether it is to back a popular coin or invest in the token of a little-known crypto startup. .

About Mariel Baker

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