I think it’s good to have a process, of some kind - formally articulated. For longer term crypto investments where I’m locked up- here is how I think about things. Both in terms of how I advise, how I operate, and how I store wealth.
This is very different from trading where this is all much less important than short term data tracking/narrative etc.
1 Don’t sell.
The goal of cryptocurrency is converting fiat money into a decentralized bearer asset. The entity issuing the cryptocurrency should primarily be in the business of holding the cryptocurrency it makes - like Satoshi. Or buying the cryptocurrency it makes - like CZ of Binance. If your goal is to sell cryptocurrency for fiat, what are you even doing?
2 Have a way not to sell.
The development corporation for a crypto network must fund itself by doing something other than selling tokens. That could mean running an exchange. It could mean running a fund. It could mean providing business consulting or staking services. But what is very clear - is that big foundations that only sell tokens only serve to hinder network value. And that entities that are well capitalized, can create ecosystem funds, and market making activities (without paying 3rd party market makers) - drive value to their networks.
3 Own 1 use case and crush it.
There needs to be ownership of at least one use case. “If you build it they will come” might have worked for the early protocols, but it’s not even clear that it’s working well. The cryptocurrency, and its foundation cannot be the BD arm of the coin. So that means that the development corp or associated ecosystem funds need to own the costs of business development and product market fit for at least some key applications.
4 Make it useful for something other than trading.
Crypto networks should have utility from day 1. This isn’t hard. A cryptocurrency is a ledger - it should store information that’s useful to the operations of your network, or future operations if the network isn’t fully developed. There shouldn’t be a discussion that looks like, “Is this a purely speculative asset?” because the cryptocurrency should be used in all sorts of different transactions other than speculation far before it is ever listed on an exchange.
5 Design it for non-US users.
Crypto networks utility should not be designed for US persons. Binance is the major source of liquidity in the crypto market. Spot Binance ETH trades 40x as much as the leading 2 DEXes. And perps trade 200x. Binance is not allowed to serve US persons. The DOJ is in their offices. An example of a bad crypto use case: information on US stocks. An example of a good crypto use case: foreign exchange trading. The US SEC is at war with crypto companies. Until that changes, do not develop for US users. It’s that simple. That said - US investors such as institutions, or even retail via Coinbase can be great capital partners. But Binance is King, and you shouldn’t design a cryptocurrency that brings them legal trouble.
6 It’s not just product market fit.
It’s Exchange User fit.Crypto networks should be designed to bring new liquidity to CEXes when they get added. The TON airdrop brought over 7 million telegram users to Binance in 1 day who had never been on an exchange before. If your network isn’t bringing new liquidity into the market, it’s not adding value to the market - which at the end of the day, is about liquidity. Remember. The goal of cryptocurrency is converting fiat into a decentralized bearer asset. And that means with a low bid offer.
7 Solve a crypto specific problem with a huge TAM.
Crypto networks should solve a major problem in existing markets. Here are the big problems in the market: there’s no plan for Bitcoin fees after the block reward. ETH is becoming inflationary after the Merge even with massive L2 subsidies and it will only get worse. People don’t seem to want Dapps. Solana fees would need to rise tenfold for the network to pay for its current performance. Tron - a Chinese operation, is an absurd settlement layer for Tether - a $120b US stablecoin. XRP is too centralized, and is hindered by the US SEC.
8 Focus on security and stability before growth.
The focus on a crypto network should not be revenue, it should be sound monetary policy. Unlike a stock which assumes regulators will take care of bad actors - a crypto network needs to take care of bad actors via its tokenomics, and tech stack. Too many projects are focused on getting users - but put those users at risk. This only brings pain to both users and exchanges. The growth in the market comes from people demanding sound money. The growth takes care of itself. The “Sound Money” doesn’t.
9 Proactively cultivate a sound investor base.
The crypto investment case should be designed to dovetail well with family office and Ultra High Net Worth individual demands. The vast majority of low net worth crypto buyers globally want and need stability in their finances - and are better off owning stablecoins. The people who can responsibly take on high volatility assets are ultra high net worth people and their investment arms. The goal of a crypto network should be to cultivate this investor base, not a retail investor base. Retail users are valuable and should be respected, but should not be aggressively solicited for investment. This is a huge focus of regulators - making sure that average people don’t get screwed investing in things they don’t understand.
10 Be friends with the banks.
Attention needs to be paid to large fiat offramps. The reality is that the US and other countries routinely unbank crypto projects. A nightmare for employees, or HNWIs would be losing their financial system rails. The vast majority of them have less than 4% invested in crypto - so risking a whole operation is not acceptable. That means avoiding complex staking operations - and proactively engaging with real world financial institutions to make sure everything is cool. Even add value to them, and bring them on as investors. The banks are absolutely necessary to liquidity. Never forget the point - the goal of cryptocurrency is converting fiat money into a decentralized bearer asset. If you’re not allowed to do that, what are you even doing?