The truth about crypto startups - who succeeds and who fails?
The crypto industry is growing by the day. Even as you’re reading this article, chances are there’s a crypto project launching at this very moment. The success rate, however, is a whole different story. According to Coinopsy, a website that tracks crypto failures, at least 2,047 crypto projects failed just by May 2021. Ouch.
So, if you’re looking to launch a token or any crypto project, you should brace yourself for many challenges. As Gimli says in Return of the King: ‘’Certainty of death. Small chance of success. What are we waiting for?’’
There is a great number of factors that determine a project’s success. Though we could discuss dozens of variables (plus the Fortuna factor), let’s group them into 5 main categories:
Unique value proposition
Crypto legislature varies from country to country. There are progressive countries with decisive pro-crypto laws (e.g. El Salvador), and there are those who cut crypto at the core (e.g. China). Most of them, naturally, are in the middle. Crypto is either semi-regulated or requires meticulous compliance with the law.
First things first, before you actually do anything with your project, carefully consider legal obstacles and necessary criteria to operate lawfully in your chosen country. Since many crypto founders have technical backgrounds, it’s natural they don’t have much legislative experience.
And no matter how great your project is, if the government thinks you’re doing business illegally - you’re more or less done. You’ve probably all heard about Telegram, and most of you know of its token (GRAM) and blockchain (TON) failure. Telegram had enough resources to see this project through, but it stumbled down on the last obstacle - legislature.
‘’Telegram's unregistered offering of digital tokens called "Grams" violated the federal securities laws. The defendants agreed to return more than $1.2 billion to investors and to pay an $18.5 million civil penalty,’’ was the official outcome. And that was about it - no more TON, no more GRAM.
So, as a new crypto project, you need legal help. Who do you ask? Even if you find a credible intermediary institution, it’ll cost you arm and a leg just to get advice.
Believe it or not, Dexvers exchange offers outstanding tiered support not just for customers, but also for the listed project - e.g. T3 customer support offers legal and accounting advisory.
Unique value proposition
One of the most important factors is your project’s uniqueness. Why is your product or service different and revolutionary? Is it just another altcoin doomed to fail or an outstanding idea?
You might think you have an original idea that you truthfully came up with by yourself. Before you shout how you’ll change the industry of crypto, do diligent competitor analysis - you’d be surprised by the chances that somebody else has already launched a similar product.
A great example here is stablecoin issuance. There are dozens of widely-accepted stablecoins out there - fiat-pegged, commodity-pegged or even algorithmic. If you issue an e.g. dollar-pegged stablecoin - that’s absolutely nothing new - people will still opt for USDC or USDT because they’ve been here for a long time.
Now, don’t get discouraged - no law says there should be just e.g. one altcoin, one blockchain network, or one decentralized exchange. Diversity is good for the market! Nonetheless, you’ll need additional features that make your project stand out, for two key reasons:
Crypto users love to be the first to try something new
Investors give funds to original business ideas.
Having a unique value proposition is important, but that’s only the beginning. This UVP must have a real-life use case - a concrete situation without an efficient solution at that moment. A great illustration of a good use case is, for example, the utilization of blockchain technology in supply chains.
However, even though there are great blockchain use cases (e.g. with World Food Programme), lots of them are just words on paper. Keep in mind that investors are detail-oriented and while hype content is good for press releases, it usually leads nowhere, certainly not to funds.
Having an original solution is amazing, but only real-life implementation will bring you investments and later on, good ROI. Now, you can share use cases with other projects, but keep in mind the golden rule: the more unique niche you target, the better the results.
Must be funny in the rich man’s world, right? Not every project has enough funds on its own and further funding is needed to continue the project development. For example, if you are a new altcoin on the market, you’ll need to invest a lot of money before the global community notices you, no matter how revolutionary your project might seem.
Starter Story research shows the average startup cost for a blockchain services business is $17,491 per month. That’s around $210,000 just for the first year without the advertising budget that should be at least $100,000 for a year. Naturally, most people don’t have an extra $300,000 to throw in the wind with or without RoI.
Additionally, centralized exchanges usually require compensation for listing, and decentralized exchanges (though you can create liquidity pools for free) don’t give you additional promo support.
Dexvers solves this problem with its StarBurst program - listing is free for any crypto project + every listed token is eligible for additional community funding. If you’re broke but in a need of exposure, this is a very elegant solution.
If you are a marketer in the world of crypto, you already know there are many obstacles to overcome in order to advertise on Meta or Google. Usually, in most industries, you can just allocate money for paid advertising, and that’s it. In crypto, you need to be… inventive.
Bounties, community building, crypto ad platforms, organic SEO, influencers - there are viable solutions, but they require patience and time.
You have two choices - to focus on organic growth or spend a lot of money on alternative channels. There is a third solution, though - reach other communities. What we lack in crypto are hubs, spaces for credible promotion, and working together for mutual success. Dexvers community is at the disposal of every new project that comes into the family.
The key message here is - new crypto projects need support. Legal, financial, promotional - any help they can get.
That’s one part. The other is adequate project management - firm data, numbers, analysis, predictions, and of course, people management. If you lead your team sufficiently and manage to find a helping hand in the process - you are in the right place and your future surely looks promising.
And, most importantly, don’t get discouraged by the humps on the road. Crypto as such is volatile and unpredictable - sometimes, failure is inevitable because everyone is in the same boat. What counts is how you respond to such events and whether you’re brave enough to build your project from the ground up, if necessary.
Disclaimer: The information provided in this post is not legal, accounting, or financial advice. The information should not be construed as investment or trading advice and is not meant to be a solicitation or recommendation to buy, sell, or hold any cryptocurrencies.