Earthlings Twin Talk Researching Projects (Part 2)

In part two of this Twitter Spaces, Earthlings and HashPack along with other panelists speak about the process of due diligence in projects and some of the red flags to keep an eye on.

Transcription

Earthlings Land – Patrick De Grijs – Founder
‍So Marc, you had something still, it's still.

HashPack Wallet – Marc Ugas – Director of Operations
‍Yeah. So, I think that everyone brought a lot of very good points. Personally, kind of the process that I really focus on is, you know, very geared into, and you know, with a mix of everything that everyone has been saying, really diving deep into the discords. I think that, you know, kind of getting to know the what people are talking about and what people are excited also in people to decide when asking, you know, it's having kind of more deep dives with the people that you know might have been involved with the project for a lot longer. That's something that Apph talked about in terms of like learning, you know, a little bit about the what the founders have been saying and stuff like that. So, another thing that I think is very valuable is keeping a record of what the project's saying. So, you know, if they say something through Discord, checking that if they're on a Twitter spaces, they're also kind of following the same thread, and that they're not trying to hype something up. I think it's, you know, we through the different cycles we've seen a lot, you know, the hype is great and all that, it gets everyone excited, but at the same time, if it's not something that you can sustain for the long term, you don't want to be left, you know, left alone at the end just holding, right, and believing on this project. And then I think finally, you know, go into what Tudor was talking about in terms of, you know, researching the team. I think that that's like really essential. I think that at the end of the day, having an idea and executing an idea is two completely different things. You know, you could have the best idea in the world, but like if you cannot execute, then that might not come to fruition. So, this is also something that I've talked about, right, in terms of, doing some sort of like soft background check on the projects, and this is also something that Head Starter with the Sentinel does in terms of like, you know, getting some sort of background. We understand that, you know, keeping people anonymous is they're right, and I think that that's completely, completely fine. But at some point, there has to be some sort of checks and balances that have to be put in place just so we can protect the end user. Because if I'm a new user into web3, you know, I might just be caught up in all the hype, and then, you know, if the first project they jump into, it's some sort of, you know, there's something fishy going on, they might just steer them away from web3 for for the forseeable future. So, so it's, it's a very interesting topic, but yeah, that's kind of my two cents, and I know that I've Apph you have your hand up, so, yeah, go ahead.

Apph
‍Thanks. So, yeah, I'll just give like a little bit more some more color on like some of my experiences the last year on Hedera, but it's even more than that. Like when a founder says, "Well, I mean, I keep a private Discord with and I usually try to group the whales. You can, you can see all their Discord names and account numbers based on sales and all that stuff." And so, socially, as an investor/slash you know, consumer, because you know, I love to play games at the same time, and I love to consume just as much as I like to invest. It's kind of like a 50-50 for me, you know. And, but knowing one side helps the other at the same time, so you can make money and have fun at the same time, which is why I love Hedera so much, you know, even though it's a bear market. But, yeah, now, as you create a private Discord and, and then have, you know, instead of just one set of eyes looking in on the project before you invest serious money, have like, you know, five or six or seven people's set of eyes. And so, you get a sounding board of not just your bias but like what are other people that have put money into it, what their bias is, and then you can, you know, kind of create, because we are so native in this industry and on this network, and plus the bear market, there's a lot of influence to make projects successful at this point. And, even in the questions, you know, asking, you know, where development Runway is, you know, where is the money coming from, what is their previous successes, you know, I can already tell like, you know, design is amazing, okay, you guys, you know, have world-class design experience, but do you have game experience, do you know how to operate a business, where some of your shortfalls and where the risks are, and then kind of look at, you know, okay, you had this x problem or that X problem, and how did you resolve it, understanding where my risk is, and knowing that nothing's going to be perfect and there's no team that's going to hit it out of the water, and be totally perfect and transparent and have history. Otherwise, they wouldn't be asking for crowdfunding, so there's an element of that too. But, understand, okay, if design is what they're best at, I want to make sure at least going forward the design is consistent and amazing. And if they have issues with operations, what are they doing better, and kind of hold them, you know, not accountable, but just be a check on them and help and have a discussion and talk to them, and don't be afraid to open up a message, you know, with the founder and start a dialogue. But don't be too pushy, you know, have an element of respect because they are putting their own money into it, and you're just an investor. So, you know, I have investment in other things, and if it didn't turn out, it's not gonna be the end of the world, but for the most part, for creators, it is their world, and so this, they probably have a little bit more of an emotional attachment to it, which is fine. So I mean, I don't expect perfection, but I do expect, you know, at least results and a good faith effort. I think that's all ultimately required. But if they are exceptional in one aspect, I do expect, you know, at least an above-average result in another aspect of business, etc. And so, those are kind of the things that I look at.

Earthlings Land – Patrick De Grijs – Founder
‍Okay, Marcel said we're gonna end it, this question with you. Keep it, try to keep it short because we're, uh, well not sure of time because it's a fun space, it can take a bit longer, but I want to go to the red flags because that's one that I like a lot. We can make that a bit short maybe, but Marcel, go ahead.

Earthlings Land – Marcel De Grijs – Founder
‍Well, I thought we already talked about a lot of red flags. I know some other red flags, again, but I just wanted to reply on Apph because I think he mentioned earlier that he was also talking, chatting with team members, etc. just to try to get a feeling about them. If I'm correct, I think he told that. And I talked to Apph also a lot personally, but I also feel that if you, have a lot of conversations, even if it's just words on your screen, you really get to know people. And I had so many talks with some people online before I met them in real life, no not in real life, but I mean, on seeing them face to face on Skype or Zoom, and they were actually exactly as I expected. So, having discussions or talks with people, just chatting, it tells a lot. You can really feel how someone is. So, I think, yeah, same thumbs up. I think he meant that, but I agree with that. You can really feel how people are just by how they are responding and get to know them. Back to you, Patrick.

Earthlings Land – Patrick De Grijs – Founder
‍Yeah, sometimes we do have different opinions, of course. I think in a way you are right, indeed, but someone can, of course, it's easier to pretend to be someone else, of course, with just text than face to face or just talking like this. So, not always true, but yeah, there's a core of truth in there as well, of course. And I want to go to red flags, and we did already do that a little, I think. For me, I'll just do it shortly. For me, the first red flag in any crypto project is if you go to the Twitter or the Discord and they are a new project and have like a zillion followers. You go to Discord, and you see "Hi sir" with ER good morning! And you only, and it's like they paid a lot of-- well, you don't even have to pay a lot for that, I think. But that, for me, is such a red flag because you need to grow organically. And if you have a good project, it's better to grow slowly with serious followers than to do that. Okay, I saw-- sorry, Marcel, I want to hear Coffee speak again as well. Coffee, what's your take on that?

Leemon Swap – Coffee – Head of Business Development
‍Sure, I think one of the biggest red flags once you're invested in a project and they're developing or they're building whatever the product is, if they're not taking responsibility for problems that arise or mistakes that they make. A lot of Web 3 is built on the back of relatively small teams. You know, we don't have 60 people developing a protocol, so mistakes are going to happen. Things are going to change, timelines change, and even products sometimes change. But at the end of the day, if they're taking responsibility for the changes or the mistakes that were made and they're trying to make the product fit the market better or make it right with the people that they've already gotten investments from, I think that's a big positive. But if they start making excuses or blaming market conditions or other people for mistakes that could have been avoided, you know, that's a huge red flag.

Earthlings Land – Patrick De Grijs – Founder
‍I agree. And we're going to go to you again as well, Apph. But Apph said actually something about that as well because he just said, "I'm so happy with my pen making notes here." And it's shortfalls, the word shortfalls triggered something with me because yeah, a project must be able to admit its shortfalls as well. And if something goes wrong, then just tell the community where it went wrong and what you're doing to fix it. And then of course, then people can understand. But if you are making excuses and unfortunately, we met some projects already that were always just making a few excuses, then trust is gone. Trust is, you need to earn trust, but you can lose it. And it's very hard to get it back. And oh, well, there's many hands. Okay, keep your hands up, guys. I see you too. But I do know that Up was first. Up, keep it short, then we can go to the other twos as well.

Apph
‍Thanks. I'll keep it short, but basically, you know, I've been involved in probably like four meme coin creations and I haven't lost anything. Yes, you can buy users, Twitter followers, Discord members. It's all on a price sheet. You can DM me if you like. So don't think of that as respect. When you go into a Discord or into a community, look at how many people are actually on a regular basis responding and talking and understand your real engagement. From the last facts that I looked at, there's somewhere between 250 and 350 people buying Hedera NFTs on a weekly basis. Our market is extremely nascent, dispar this and there are several (I'm not going to name anything) but there are several projects that do trade among each other to increase the volume. So there are top at Zuse, and so, you know, understand that what you know, humans ultimately are a visual species. They believe what they see, and that's part of our wiring, so just do a more logical approach. See what people are actually engaging, and you can determine the level of engagement within that community.

Earthlings Land – Patrick De Grijs – Founder
‍Thanks for your opinion there again. I always appreciate it. I'm not going to comment on that because I want to hear. Uh, head starters already um, on muting, so um, but Mad V Apes was first, I think. Am I right? Yours all right, man.

Head Starter – Tudor - Founder
‍Thanks for that to an earlier point that Marc mentioned, yeah, so we did particularly create the Sentinel project to provide the wider community with some key objective metrics that they can follow while doing their dyor on various projects. Currently, the ones that are captured there have a fungible token, but, yeah, we want to create something for projects that have NFTs, and we also would very much appreciate feedback or suggestions for improvements to the currently existing methodology. Going back to the question about the red flags, something that for me personally is very important and hits home a lot of the times is the raise amount, right? A lot of the times we see a certain amount that projects are raising, and they're looking to for the community to back them up into raising their goal, but is that amount justified? How much are you overshooting? Why, and if you're going to raise that amount, how do you intend on using those proceedings? And I think that probably certain elements are obviously more or less confidential, but, I think that this particular point in the raise amount is very important because you can a lot of the times, founders end up being very greedy, and that ends up in the detriment of their longer-term tokenomics sustainability models. And, yeah, it's in the favor of their backers, of course. The fake followers, the fake interactions, and bots are a very important element, and some other marketing stints and fake advertising could be red flags there. Overpromising, and yeah, something else that probably would be important is to see when it comes to their launch strategy, how sustainable those plans are, their commitments there, and if they're biting something that is too big for them to chew. I'm not sure if that's an expression, but when it comes to the road map and to their development goals, how do they approach it, and if that is something that can be done, or it's just that they are looking to do a lot without specializing in something in particular and delivering it correctly.

Earthlings Land – Patrick De Grijs – Founder
‍Thanks for that. Did anyone, did I miss a hand here? Mad Ve Apes. Did you still have, yeah, you have two hands, so didn't forget. You go ahead.

Mad V Apes – Cigtoshi Nakamoto – Community Manager
‍Yeah, a couple things. One, the first one's a little bit controversial, I think, but I think we'll look at wallet distribution. And checking in on the whales, right? Whales are great. Whales are great, you know, they come in, sweep your floor, then everyone's happy. But, but when the whale wants to sell, then it's like, oh, we hate whales, right? So it's, it's definitely a double-edged sword there, but if, if there's a couple whales, right, that can basically control the entire market, that could, that could be an issue. That can be an issue because then, sometimes the team feels obligated to make sure that the direction of their project goes in favor of the whale or they want to keep the whale happy and, and those sorts of things. So that's, that's one, a little bit controversial, but you know, I hope you understand where I'm coming from with that. Um, the other thing is I think communication, right? And in this case, lack of communication between the team. Someone said it before, it's like, you know, timelines change, things change, you have to pivot. Communicate that as much as you can, you know, to excess. I think is probably the better thing to do, from a team standpoint. If a team's not communicating a lot with you,  especially if there's missed deadlines, why just tell us why, you know, for us, you know, Mad V Apes, we do a lot, we have a lot of different arms to our project. We have an upcoming collection called the elite collection. It's, it's basically a consolidation of existing NFTs to reduce our overall supply, and then you get this new art piece with the utility of those, you know, NFTs that you burned rolled up into one NFT. So we have this whole thing planned, we have the timeline for it, but we got invited to go to the VeChain Summit, you know, conference in Las Vegas and have a booth there and be on the speaker panel. Uh, then after that, we locked down a partnership with a web 2 business, so our attention got focused to really kill it at the summit and the conference and, and really focus on this new web 2 business partnership. Make sure we get everything in place for the event that's actually happening this Saturday. So attention, you know, and someone said it earlier, we have, you know, there's these very small teams that are kind of running these projects. So you know, our attention was focused on making sure we really execute on these things that are right in front of us, these opportunities that we can't pass up. So just communicating to the community that, hey, you know, Elites are coming, we're still working on it. Like everything's going great. We don't want to rush it out, but our attention had to be focused on the VeChain conference and this web 2 business partnership because we think in the long run, that stuff is going to be very important for the future of our project, so long story short, I think communication is super important, and just making sure that the teams of these projects you're invested in are basically over-communicating with the community.

Earthlings Land – Patrick De Grijs – Founder
‍I think I'm just gonna have something to say about the first part because I know he had a very smart comment about that in our Discord as well. I'm just going to come shortly on the second part that you did. I think it's awesome to hear other builders in the space with similar projects, not too similar, but you know what I mean. Who also see these things happen. Sometimes your project takes a different course, someone on the delivers, and you need to make up or stuff like that. But indeed, communication is very important then explain to the community because they owe you a project. So you are responsible to explain what you're doing, but Apph give it, give come on stage.

Apph
‍Thanks, Patrick. So, I gotta talk about the whale stuff because it's something that's never talked about, and so I am a whale on Hedera, and my degree is in economics, so I understand the math behind all this. All basically under 10% of your project, it's fair game. Once one entity or a cartel of entities acquire more than ten percent of the market share, they can start to exhibit Monopoly abuse. So whales are great, especially during funding or bear markets when you need money, you know they are the ones that will come to you, but they'll do that at a price, and the price is, you know, relative, you know, market share control. Once the idea comes to fruition, so you know once market share gets to about 40%, that the Monopoly control or return on Investment goes from 10 at 10 to 30. So basically, they triple their profit when you get a 40 market share. So as long as you keep the distribution to the point where no one person or a cartel of people control more than ten percent, there's really no issues with someone having a significant stake. This kind of depends on what your definition of a significant stake is, and I posted the on the Earthlings chat a little bit of the math behind that. And so you know, it just kind of depends on someone's, you know, that's their ability to kind of abuse the market. So as long as they're not abusing, you know, there's not having someone buy into your project for five or ten percent is fine. It's when they start buying in for 25 and 30 in your project that's when it becomes an issue.

Earthlings Land – Patrick De Grijs – Founder
‍Yeah, I've got my two cents on that as well because I agree with a lot of what you're saying, and you wrote a nice essay like I sometimes do in this discord. Well, they say I always do it, but I think even if you have a will or even more, um, if you just continue building, if one of these Wills decide to dump everything on you, and some people don't like it when there's Wills in your project, but then for instance, if one of these Wills or more are dumping it with maybe a lot of profit, hopefully for them, then and as a project, should just keep on building. And if you are a strong project and you have a good project, then long-term, you will show them that. Well, the two bad for them and all those people who were then complaining that there were too many Wills, did they then make use of that and pick up these, these new items? I would say yes. But I think if you have a strong project and you just keep building, then it shouldn't really be a problem. And I think actually having some Wills just shows that there are some people who really, see, um, oh yeah, HashPack needs to go. I know that on top of the hour, he needed to go, so Marc, thanks for having you. We're running a bit late, I know. So yeah, it's a double-edged sort, but I think the quality of the project, will decide long-term if, if then, that will have an impact. I think, the Head Starter also had the hand his Hand up, did you Tudo or did you not?

Head Starter – Tudor - Founder
‍Yeah, I was just gonna touch a bit on the point of, that was mentioned earlier by, I think, by Apph. I think, obviously, when you look at the, Wales, and of course, this varies based on the market cap of the respective project, but you need to look at the average Buy price that everybody has. So if any everything goes according to plan, for a particular project, they're respecting the roadmap, they don't lose any credibility, there's no hack, that the product is going well, then you, you look at the project by Price, average by price per round, you have, you might have see it private, public grounds, Etc., and, um, if everything goes according to plan, then even the people that let's say back the project earlier on shouldn't have a big enough pie, um, so that they would affect the price significantly. Now, obviously, as I mentioned, there's various projects and the various market capitalizations for each aspective project, but whenever we're looking at a, let's say, a larger project that is building a big, let's say, Application, um, I think that generally, this can also look at it to be a red flag, um, if the let's say, the seed and private round equate to more than, I don't know, 20%, that generally is a red flag. If the team, the founding team has more than 10% of the token Equity, that's generally not the red flag. So, there's all these more things that have to do with tokenomics and on-chain metrics in relation to the respective project's token price. Um, if that project has a functional token, that is.

Earthlings Land – Patrick De Grijs – Founder
‍Thank you for that, and yes, you can see, having a Head Starter going through all our paperwork is great because you know where, I think the community knows then that there's gonna become something great out of that as well. And of course, we have some amazing team members as well helping me out on that side because I know where my shortfalls are. I'm a designer, I'm a gamer, I like to design and create a great game, but for some things, I need help, and we've got an amazing team together now

So, we have reached the end of the hour, and I must say, I think we can do even three more shows. Uh, with this, it's amazing! I love these shows. I wanted to also speak about seeing the whole space on the fire. The whole space, the crypto space, is a bit on fire by the media. However, so how important is transparency within these projects? And what to look for in the team? We did cover that a little bit as well, but you can also tell a lot from the white paper how much love is being put in there. Well, Twitter and Discord followers, we spoke about that as well. What is the long-term vision, but also if I look at a project there, I think that's a very important one, and coffee spoke a bit about that as well because indeed, um, what is the long-term vision? And anyone can now start quickly start and build vetaverse, but are they really doing it differently or with gaming in the gaming aspect as well? Uh, what is the project going to be like in five years time? Are they really putting effort in design and, in our case as well, gameplay, or are they just trying to build on the hype and doing something short-term and quickly? So those are things that I look at as well, mentality. Uh, so we can go on forever with this. I think it's important also to note, by the way, that next week there's going to be another tweet of space, and there's going to be Joey and Milan to Earth, and they're gonna look at onboarding to web 3. What's it gonna take? I would love to do that subject as well, by the way, but we hope that everyone is going to join then as well. And they are here, and I hate how their banner looks better than mine myself. Why is that better, better design than ours? That's on you, Marcel.

Earthlings Land – Marcel De Grijs – Founder
‍Yeah, because I made ours in a hurry. Hey, because she needed it quick, and I wanted to, I like them more than I like you. Maybe it is a better answer.

Earthlings Land – Patrick De Grijs – Founder
‍It's also your space, man. Yes, but I'm very humble. We're gonna have, we're gonna have many shows. I did make a note here because I saw that all this, oh, she's back or he is back. I don't know who's behind it. You did request to speak. I did give you a seat, but then it, threw you off to spaces, I think because I did that in the weekend as well. I requested to speak somewhere, and I requested three, four times, and every time they gave me a seat, they threw me out. So I'm sorry for that. I didn't throw you out. That was Twitter being buggy again. I hope that they're gonna fix that soon enough because Twitter is bugging a lot lately, but hopefully next time we can put you on the stage again. This was a great Space, I must say, and I love all the different um opinions that we have here. So, share, and retweet this space because we love to grow our community in this way as well. And I think it's an important topic to also discuss. I think we're going to do a follow-up on this topic again because it's just fun to talk about this stuff. I want to thank all our guests, Tudor from Head Starter, love to have you on the space always, you're a real professional when it comes to this stuff. Of course, Coffee, love your insights, thank you for joining again. And Mad V Apes, it's amazing that we have VeChain coming over to Hedera to visit as well. And we're gonna have, by the way, many more guests from other chains soon in some very fun shows that we're gonna do as well. Apph, thank you for speaking out as well. You have a very great view and different view and opinion on things sometimes as well, and we like that as well. I see Wallow Wallet as well, I see our team members, so great to have all of you here on the space. And I need to scroll down to see more people, but that's it. Yeah, well, it's going to be too long. I hope I did not forget anyone. Marcel, I did forget you, but that's okay. I'll see you tomorrow in the morning again. So, guys, that's gonna be it. I'm gonna love and leave you with that. Yes, I got it from a YouTube channel, and hope to see you next week with Milan to Earth, man, that's a catchy title, I love that. Okay, I'm gonna equip this with that. Love you later guys. Bye.