We are in the season of Token Sales and TGE, but not all Token Sales are worth participating in. So how do you determine if a Token Sale is worth your attention?

In 2016, Token Sales offered significant opportunities. By 2017, ICOs had peaked in inflated expectations, much like the AI Agents in late December 2024. Nowadays, Token Sales feel like a game of roulette. Sometimes, they can yield 10x returns, although this is not the norm. According to data from Cryptorank, only 30% of Token Sales in January achieved positive investment returns. Among this 30%, there are some true hidden wealth codes. So, how do you judge whether a Token Sale deserves your attention?

Step 1: Analyze the Product

In short, when analyzing a Token Sale, you should break down the protocol into its components and evaluate each part based on its maturity, demand, and innovativeness.

For the product, I consider the following points:

• Narrative
• Product status
• Metrics and traction
• Competitive advantage

When analyzing the narrative, think about the Gartner Hype Cycle:

If the protocol category is:

• Close to the Innovation Trigger: 5 points (e.g., earlier BNB meme)
• Close to the Peak of Inflated Expectations: 0 points (e.g., new AI agents or AI agent launchpads on new chains)
• Close to the Trough of Disillusionment: 1 point (e.g., many current DePIN/GameFi protocols)
• Slope of Enlightenment: 3 points (e.g., many RWA protocols are here)
• Plateau of Productivity: 1 point (e.g., most DeFi protocols will be here)

Why do we only assign one point to protocols in the Trough of Disillusionment and Plateau of Productivity? When the narrative enters the Trough of Disillusionment, it may be forgotten or revived in a new form (like ERC404). In the Plateau of Productivity, the narrative remains neutral and does not contribute to the viral spread of the protocol.

Similarly, we assign 0-5 points for each parameter:

• Is the protocol already leading its category by TVL? 5 points.
• Is it still in the testnet phase? 2 points.
• Are competitors very dense, with only a few obvious and well-known leaders? 1 point.

Feel free to ask yourself as many questions as possible. Just make sure to record all questions and answers for later calculation of the average score.

Example of Kinto

Taking Kinto as an example, here is a brief overview to help you understand the specifics of the product.

Kinto is an institutional-grade modular exchange, serving as a layer between traditional bank accounts and Web3 wallets, focusing on providing secure on-chain financial access. In other words, Kinto is a wallet + on-chain exchange, built with KYC & AML and TradFi assets.

You might think Kinto is competing with Hyperliquid, but that’s not the case. Instead, Kinto provides users with direct access to Hyperliquid, facilitating lending across multiple chains on Aave and allowing swaps on any AMM on Ethereum, Arbitrum, Base, etc. It acts as a DeFi abstraction layer.

Now, let’s use our framework to answer key questions.

• What category does Kinto belong to? It sits at the intersection of infrastructure and trading, with several keywords: "institution-focused," "financial ecosystem," "chain abstraction," and "aggregator." There is certainly some novelty here; apart from Kinto, I personally don’t know of any product that can build a KYC-compliant DeFi chain --- --- but how much demand is there for such a solution compared to centralized counterparts? Can it win in the competition with the equally rapidly developing Particle universal account in the chain abstraction category? We need more time to judge, so I would give Kinto 3 points, and the score may increase as activity grows.

What stage is Kinto’s development in? According to L2Beat, Kinto has been live on the mainnet for some time since March 2024, with a TVS (Total Value Secured) of $47 million. However, the 30-day operation number is not high --- --- only 34K --- --- while the total number of wallets is 147K. I would give Kinto 4 points here.

Source: L2Beat

• How is Kinto’s trading product? In addition to traditional Web3 assets, Kinto also provides access to various popular TradFi assets. This feature sets it apart from CEX and DEX, with options like Nvidia, Meta, Uber, and the S&P 500. This diversity can attract a specific type of user to Kinto, earning it 5 points in this category.

The more questions you ask, the more accurate the final product score will be. Ensure that each question carries the same weight; otherwise, the final score may not be very accurate.

In the case of Kinto, my final product score is 3.6.

Step 2: Understand Expertise

In the expertise section, I consider all factors that contribute to the product's success from the perspectives of human resources, intelligence, and business development. Key areas of focus include:

• Team: Assess past experience, transparency, activity on social media, and developer engagement.
• Venture Capital: The company needs not only venture capital to raise funds but also to establish key connections with other projects and opinion leaders.
• Amount of Funding: Necessary for recruitment and development.
• Partners: A broad network of partners is crucial as it can enhance user onboarding efficiency.

I want to illustrate a few points using Kinto as an example. Many people find it hard to find information about the team, but the mechanism is simple. Just search for the brand name on X and LinkedIn, and you can browse the team’s profiles to assess their expertise.

When considering funding rounds, keep the following key points in mind:

• Leading venture capital firms continuing to participate in subsequent rounds (like Kyber Capital) is a positive indicator of investor confidence.
• On Cryptorank, venture capital firms are categorized based on their activity levels. You can also check the performance of other companies in their portfolio.

The more projects you analyze in this way, the faster the research process becomes, allowing you to effectively identify red and green signals.

Among Kinto's partners, notable protocols include Caldera, Socket, and Arbitrum.

How many points do I give Kinto?

• Team: 5 points
• VC: 4 points
• Funding: 4 points
• Partners: 4 points

Average score: 4.25

Step 3: Token Economics

This may be one of the trickiest parts, especially considering the historically disappointing low float and high FDV releases.

What should we focus on here?

• TGE FDV sufficiency (previous product and expertise analysis is crucial for assessing the sufficiency of FDV numbers)
• Circulating supply
• Token distribution model
• Supply and demand
• Short-term and mid-term inflation
• Token sale design

Our task is to answer three key questions:

• Does the protocol launch with an FDV that allows for short-term growth?
• Once the token is live, are there factors that could lead to higher sell-off pressure (e.g., airdrops, public or whitelist presales, advisor or ambassador tokens, etc.)?
• Considering its utility, does it make sense to hold the token in the medium term?

Let me illustrate this process by dividing all token economics-related facts about Kinto into two parts.

Positive Aspects:

• The auction design allows for setting a priority purchase price and facilitates a fairer FDV discovery.
• 70% of the tokens will be distributed to the community.
• The team has a 3 to 4-year vesting plan.
• Token sale participants do not need to lock their tokens.
• VC round transparency: The latest round of financing for Kinto was priced at $10 per token (with a $100 million FDV).
• The possible bidding legal person will be between $20 and $30, making Kinto's FDV reach $300 million, which is relatively fair.
• K is not just a governance token; its utility also includes an option for full account recovery payment and extended wallet insurance. Additionally, all revenue from the protocol belongs to the treasury, which is controlled by token holders through on-chain governance.

Concerns:

• The auction bidding price discovery leaves little room for a strong upward trend post-TGE.
• Airdrop pressure.
• The token will not be immediately transferable; to achieve transferability before March 31, two of the following three conditions must be met:
• 20% of the tokens are floating. To avoid launching with low float but high FDV, at least 20% of the tokens must be fully unlocked and distributed to participants.
• Governance has entered the second phase. The first Nios election has been held, and the aggregation work has completed the first phase, with the second phase about to begin (most likely before March 31).
• TVL must reach and maintain over $100 million for four consecutive weeks.

My score for Kinto's token economics: 3.25.

Step 4: Community

The final aspect of Token Sale research involves assessing the vitality, loyalty, and scale of the protocol's community. A loyal community combined with a successful product can achieve significant results, as demonstrated by Hyperliquid. Therefore, this aspect deserves our attention.

What should we check?

• Number of smart participants
• Community activity
• Product activity (measuring expected post-TGE product retention and actual demand for the token)
• Demand related to the token sale platform (some platforms have very active investor communities, such as Coinlist).

How to track?

• Analyze average participation numbers to ensure authenticity. For example, if a tweet has a high number of retweets but almost the same number of likes, it may be fake or come from task-like Galxe. Typically, the ratio of retweets to likes does not exceed 1:5.
• Use tools like Moni Discover, TweetScout, or Kaito to track mind share and wisdom quantity.

On Moni, Kinto's follower count has noticeably increased. This is often related to the following factors:

• Bots
• Galxe/Zealy-style activities or giveaways

Thus, we can assume that the actual number of real, engaged Kinto followers on X is about 35,000, which is reasonable considering other metrics.

The smart mention chart looks good, so my final score for Kinto's community section is 3.75.

What’s Next?

Everything we have done so far is crucial for measuring the sufficiency of the FDV at launch, assessing growth potential, and deciding whether the project is worth your attention. Calculate the final score for the protocol you are analyzing and make a decision. This is the structure I usually use:

• Below 2.5 → Skip.
• 2.5--3 → Only consider if there are strong factors (e.g., in the innovation trigger zone).
• 3--3.5 → If you join, invest a small amount as the risk is higher.
• 3.5--4 → Possibly a tier 3 protocol; considering several favorable factors, this could be a good opportunity. However, large investments are not recommended.
• 4--4.5 → A decent product; worth participating in the promotion.
• 4.5--5 → This is a wealth code.