Must-read before investing in ICOs: Seven dimensions to help you avoid 90% of the pitfalls

The ICO boom is once again sweeping through the crypto space, but the question is: most participants are betting on “the next MegaETH” without thinking through why, after Plasma’s success, the ten projects that followed mostly failed. This is not coincidence, but a pattern.

Level One: Market Environment Determines Everything

This is the easiest point to overlook. In a true bull market, even a mid-tier project can raise $500 million to $1 billion in fully diluted valuation just by telling a good story. Now? Even the hottest projects struggle to break $100-300 million in valuation.

The same project placed in different market environments yields vastly different results. You must first ask yourself: What stage is the market in? This determines the risks you must bear and the potential rewards. Glacier signifies a critical point: when market temperatures drop, your expected returns should also cool down.

Level Two: Can the Product Solve a Real Need

Don’t be fooled by beautiful PPTs and influencer marketing copy. Ask the core questions directly:

• Is this product actually usable now? Or is it just in the “future”?
• What real problem does it solve? Are there other solutions already addressing it?
• Why issue tokens? If you remove the token incentives, will people still use it?

Good ICOs usually already have a working product and genuine users. If the team can’t clearly explain what the product does in a sentence, that’s your first red flag. Don’t trust testnet data blindly—any data can be faked. Monad is a textbook example of this.

Level Three: Backers’ Background and Valuation Logic

Check who invested in this project: top-tier VCs or unknown small funds? What are the funding rounds, amounts raised, and current valuation?

The key is understanding who entered at what price. If insiders and early investors entered at very low valuations, you’re likely to become a “bagholder.” A truly healthy valuation, even without hype, should be logically sound.

Level Four: Team Execution Power Is the Long-Term Decider

Whether a project succeeds depends 80% on the team. Look at their backgrounds: what products have they built before? Have they succeeded? Experienced teams can adapt more flexibly to market changes; inexperienced teams often disappear once hype fades—this is the brutal reality of attention economics.

Anonymous teams aren’t necessarily bad, but they must deliver beyond expectations to earn market trust.

Level Five: Real Data vs. Fake Metrics

Assess the actual situation of the project:

• Does it have real revenue?
• What is the active user count?
• What is the total value locked (TVL)?

Data quality is far more important than the numbers themselves. Dashboards filled with bots and fake activity won’t suddenly turn into real usage just because an ICO launches. Projects claiming “high activity after the incentive period” often go silent after launch.

Level Six: Marketing Narrative and Market Attention

This is more critical than many realize. MegaETH’s success was fundamentally because the team completely controlled the narrative—every discussion revolved around it, keeping the hype alive.

And what about poor projects? They hide behind buzzwords and pile up concepts: “We are Web3’s ChatGPT + Nvidia + prediction markets…” but no one listens. In crypto, attention equals capital. A project that no one cares about before launch shouldn’t expect miracles after.

Level Seven: Token Economics and Issuance Terms

This is the easiest trap for newcomers to fall into. You must understand:

• What are the token unlock rules?
• What is the vesting schedule?
• What percentage of tokens are in circulation?
• What is the fully diluted valuation (FDV)?

If the ICO structure clearly favors insiders and shifts all risks onto retail participants, stay away. Fair issuance doesn’t necessarily mean cheap, but it aligns the interests of the project team and participants.

Final Warning

ICOs are never free money. They always create winners and leave many lessons.

The most dangerous approach: buying just because others are buying, or because your favorite KOL is pushing it. Thinking that because MegaETH succeeded, all ICOs will be the next MegaETH.

The worst projects are often the ones most skilled at exploiting your FOMO and chasing hype. Before pressing the buy button, ask yourself: Is this truly an investment or just gambling?