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Making Sense of the Noise in Web3 Web3 has exploded in popularity in recent years. But staying up to date in Web3 requires constant monitoring and attention.

By Dylan Vanas

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

Opportunities are abundant in Web3, but as the sector continues to evolve and transition into the mainstream, so does the level of competition. From Starbucks to Gucci and Nike, there is no shortage of well-established brands alongside prominent investors and celebrities who are pivoting to embrace this new gold rush.

But for those looking to invest, launch or simply get involved in Web3, determining which projects have the qualities and characteristics for success is much easier said than done. So, here are a few points for you to consider before jumping in.

Related: This Is What Content Creators and Entrepreneurs Need to Know About Web3

Check out the community

One of the most important aspects of Web3 is community. There is no benefit in being a well-kept secret. Even if you think you have the best project in the world, if nobody knows about you, then nobody is using your product.

This is why checking the level of engagement in a Discord or Telegram community is essential. A large, vibrant and engaged community is obviously ideal, but even communities with small numbers that are highly engaged can be an early hallmark of success — especially for newer projects.

Additionally, sometimes projects artificially inflate their follower numbers on social media, so it's important to be discerning when checking for real engagement, whether it's likes, comments, retweets or subscribers.

Marketing vs. product development and building

Marketing, including public relations, is important for brand awareness. However, successful and legitimate Web3 projects will also focus on product development, and getting the right balance between these two elements is essential.

When it comes to product development, transparent communities that provide regular progress updates are best. If the developers aren't "anon," then it's always a good idea to check out their background, their experience and what other projects they have worked on. If they are "anon," then it's still possible to find some of this information, but you may have to go digging around on #crypto Twitter, Discord or Telegram.

Additionally, Web3 projects that continue to build out their products and offerings during market downturns can also be a good indicator, as it demonstrates commitment to their work — rather than just building to make money in a frothy market. For the more tech-savvy, you can also check out the number of "Commits" on Github to check on the progress of the work.

On the marketing side of things, checking for third-party news coverage can be a good filter to verify projects. Often, the editorial teams at these publications will have conducted their own analysis before deciding to publish or run a story. However, this shouldn't always be assumed.

Untrustworthy marketing tactics — including fake endorsements, unsolicited messaging on Discord, shady influencers and pump-and-dump groups — are all obviously red flags. Additionally, projects that purely focus on marketing and not on product development are also major red flags.

Related: Why More and More Companies Are Embracing Web 3.0

Due diligence on founders and investors

It's also important to have a clear understanding of who is behind a project. This includes both the founders and investors. Checking out their background, their experience and what other projects they have been involved in is key. When it comes to investors, specifically, big names provide instant credibility, but even smaller investors, depending on their tenure and credibility, can provide useful insights and clues into the future potential of a project.

Tokenomics

Token incentives are important in Web3, so it's crucial to understand how the mechanics behind a project work. It can get a little technical, but looking into vesting periods and the allocation and distribution of tokens is important.

Most Web3 projects have pre-mined tokens that are distributed among exclusive addresses, usually to team members and investors, before going public. It's important to gain an understanding of how many wallets hold the available supply of tokens and whether the distribution is too concentrated, as this poses the risk of a whale dumping their holding and crashing the price of the token when launched.

Web3 is undoubtedly becoming more mainstream by the day, but there are still many risks when it comes to investing and getting involved in the space. That's why it's important that investors and market participants do their own research and undertake due diligence before jumping in head first.

Dylan Vanas

CEO @ AgencyBox

Dylan Vanas is the go-to expert on building and monetizing with social media. He is the social media strategist behind several of the most influential Internet personalities in the business world, and reaches millions of people monthly through his social media and podcast content. As a former college athlete, he volunteers his free time, working with athletes to help them transition their career after sports.

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