Why token use cases and adoption decides project success?

In today’s world, there’s tonnes of projects being offered on ICOs. Duplicity in projects are very common, and so are far-fetched ideas and dreams. At its core, many ICOs do not care for project profitability or success. Founders (and early investors) just want to flip their tokens (or coins) for a quick profit.

While these issues are widely acknowledged as the key pitfalls of the ICO market, good projects still continue to get funding with ease, and without any major hiccups – which is good for the ecosystem as a whole. However, at Centive, we have identified 2 key problems we believe are the long term determinants of project success and failure – use cases and adoption.

Use cases drive token value

Experts agree that the ICO market is mostly pre-mature, although there are at least a many thousands of projects that raised via ICO by this stage. But numbers do not result in maturity of the market – just yet.

Many project teams fail to realize – token value is driven primarily by use cases. Use cases of tokens drive adoption, which in turn drive token value (through supply and demand). The basis of these principles are the main determinant of the token’s ultimate value (zero or to the moon). The next time you want to look for a potential winner ICO, the best way is to look at how they pitch their use cases. If it is very vague from the start, perhaps you might want to sit this out.

Adoption determines the token’s long term existence

As tokens get picked up thanks to tonnes of use cases, then adoption becomes the norm. There are not shortage of companies who manage to eke out a few use cases for their tokens, only to fail when it comes to adoption – simply because there’s not enough users.

Easy as it may sound, users are fickle and resistant to change. Adoption is borne from habit, and norm. Bitcoin, for example, found many supporters because it was a quick and efficient means to transfer value, at a very low cost.

Often, the best ways to start adoption is by making it friendly to everyone – businesses and individuals. If the token introduces convenience, speed, and reduces friction, that’s a start.

Driving project success

To sum everything, investing into projects with the highest potential success rate is in every investor’s interest. For any token to succeed, we posit that the project must have the following covered:

  • Solving real problems and finding use cases
  • Focused on token adoption and wide acceptance
  • Solid infrastructure and platform planning
  • Experienced team and clear profitability route