The upcoming encryption market investment logic

Source: Dao Says Blockchain

A reader wrote in the comment section at the end of the article:

"I no longer know what is worth investing in..."

I don't think this is a bad thing. If it were me, I would buy nothing in a state of confusion and hesitation, observing more and acting less, waiting until I have sorted out my thoughts before taking action---I haven't bought any other coins during this period except for Ethereum.

In fact, aside from those projects that are purely for fun and gaming, there shouldn't be many projects that are truly worth our serious investment.

It should be the same in any investment market.

In this regard, the senior investment masters have set a good example for us:

Among the thousands of US-listed companies, Mr. Buffett only holds more than a dozen stocks. The number of stocks he heavily invests in is even fewer.

After this period of organizing my thoughts, I have roughly divided the tokens in the current crypto ecosystem into the following categories:

The first category is collectibles in the crypto ecosystem.

The most typical tokens of this kind are Bitcoin, Cryptopunks, and some on-chain artworks (NFTs), etc.

For this type of asset, I firmly believe that the future of the crypto ecosystem will thrive, and this prosperity will definitely lead to value spillover into some highly collectible categories.

Therefore, I would choose valuable varieties to buy at the right price.

The second type is tokens that have commodity value or use value.

This type of token is most commonly associated with a layer 1 blockchain (L1), and the token is an indivisible part of the project, serving as the driving force behind its operation.

For this type of asset, I believe the future of the crypto ecosystem will thrive, and the tokens that can support ecological development will definitely have hope in the future.

Therefore, I will also choose to buy valuable assets at the right price.

The third category is governance tokens that have a very large market share and only voting functions.

In the future, for this type of token, no matter how good the project behind it is, how good the team is, or how profitable it is, I will be very cautious when spending real money to buy in. I will mainly just take advantage of opportunities to grab some airdrops when time and energy permit.

The fourth type is tokens with vague positioning and unclear attributes.

For this type of token, the project team’s descriptions are very ambiguous, meaning they do not clearly define their usage functions or their rights attributes. At most, they might repurchase the tokens using the project's profits in certain circumstances to indicate the project team's "importance" placed on the tokens to some extent.

For this type of token, I will observe and proceed cautiously before their functions and attributes are clearly defined.

There is another type which is the real equity token.

These types of tokens are essentially like stocks. If someone buys all the tokens of this project, it is equivalent to owning all the rights of the project, allowing them to completely reorganize the management at their will and take all the profits of the project as they please.

This type of token seems to be nonexistent in the crypto ecosystem at the moment. If it appears in the future, I will pay attention.

Using this method to re-examine the tokens in the ecosystem, I feel it has become clearer how to participate: more than 95% of the tokens in the ecosystem should be approached with caution when spending money---this is true for some well-established classic projects, and it is also true for the AI agency projects that have risen this year.

Following this line of thought, I will first conduct a strict review of those tokens in my possession that only have governance functions and whose project teams have unclear definitions for their future development. Any tokens that continue to be positioned as governance functions will be eliminated, regardless of how compelling their backstories are, how advanced their frameworks are, or how promising their technologies may be.