I say shitcoin because any of these projects could be shitcoins. I don’t care if they have amazing tokenomics, crazy website, and revolutionary DApp. At the end of the day (or the hour) a large majority of these projects will be forgotten about. Hence the appropriate applicable term, ‘Shitcoin.’
Here’s a quick rundown of 10 shitcoin red flags that I personally look for before throwing my fat stacks of pennies at any project. All of these do not always apply because some of these can be unintentional or poorly managed – which in itself can be a red flag.
Muted group chat
Shitcoin red flag numero uno
A muted Telegram group means no one from the community can chat or ask any questions – only the admins can. Major sus alert. Why mute a community? No thanks.
A Telegram group should always be open for community members (aka potential INVESTORS) to ask any questions they have, address any concerns, or simply chat with other group members to encourage the “community” aspect.
At times, muting the chat is often a solution to address negative rumors or FUD. If the group is being littered with negative comments or messages that have a negative impact on the performance, sometimes the best thing to do is (temporarily) mute the Telegram chat and make any necessary comments to clarify the concerns of their investors.
Plain and simple – do not put your money into a project that shared their contract address without unmuting the chat. This is an tier 5 degen move.
Fake Telegram members
Buying Telegram members for the group chat is a major shitcoin red flag. This means that the team is trying to deceive potential investors by creating the perception that the project is larger than what it actually is.
An easy way of determining whether a telegram group is full of fake members or not is to look at the total members and total online ratio. If the Telegram group has 3000 members and only 69 online, then that should give you a clear understand that there’s thousands of fake members.
Botting a telegram (as it’s often called) can sometimes be used to fake results from a marketing campaign. For example, a project’s team can claim to be receiving publicity from a promotion somewhere, then fill it with fake members/bots to make it seem like more people are becoming interested in the project.
Cheesy / poor branding
Shitcoin red flag number 3.
Branding is used as the foundation of marketing and creates the first impression from potential investors. To me the math is simple – poor branding = poor effort.
Launching a project with noticeable branding takes a ton of effort, skill, talent, and time. And this effort never goes unnoticed by community member and interested investors.
If the logo, artwork, and other promotional material have been quickly slapped up and put together like a prison meal, then that should give you a hint that the dev / team does not take this project seriously themselves, and they see it as a way to make some quick cash.
Ask anyone. Shitty branding, logo from google images, etc, probably means they’re going to rug. I spoke more about this in How a project’s branding affect’s its success and your investment – breaking down what to look for in a project’s branding before you invest.
Refusal to open voice chat
Shitcoin red flag number 4.
These days, especially in BSC, voice chat plays a big role in community activity and confidence in the project. Opening the Telegram voice chat means the team is willing to answer questions and be transparent to their investors.
The voice chat feature allows for great and convenient AMAs where the community can join and ask about their plans, features, roadmap, tokenomics, etc. It adds another level of the community aspect and clarity.
If the developer or team refuses to open voice chat, it can be perceived as a red flag by the community. People want to interact with the people they plan to trust their money with. These days, just the Telegram group chat isn’t enough.
Another red flag within this shitcoin red flag is if the team opens voice chat but refuses to join. This sparks a lot of negativity and creates the perception that the team is hiding from answering questions from their community – because with voice chat, you cannot delete or avoid comments like you would in the written chat.
For me, it’s simple. If you have the ability to deploy a functioning token then you should know how to create a well-designed and informative website. Anyone can create a website for virtually no money.
Wix, WordPress, and Squarespace all offer super cheap hosting plans and templates for the average idiot to buy a domain and upload a few images. It’s always the extra effort that counts.
A website should be the hub of all information and display platform for the project’s brand identity. Therefore it should taken seriously. I personally love it when a project pours time and effort into the design, information accessibility, and overall interface of the website.
In summary, if the website is just a logo with the tokenomics and the “Join telegram” button, I’d consider that a shitcoin red flag.
Copied content from the web
This a shitcoin red flag you should considered especially if the project involves NFTs. Currently, our market is in the trend of NFT art and NFT gaming. This means that each NFT should be unique to that project. No copying what so ever.
There have been numerous scams with NFT projects buying pre-designed images from a designer (or even stealing) and using those images on their website and to display their upcoming NFT collection. This can create a fake buzz among investors, prompting them to think that these NFTs are unique and amazing and might be a great game to invest in.
With this shitcoin red flag, Google’s reverse image search is your best friend. You can easily drop any image into Google’s image search and see what similar image results you receive.
No DApp or game demo before launch or presale
Shitcoin red flag and any-type-of-project red flag. If the primary use case of a project is an integration of a DApp, NFT maketplace, blockchain game, or anything else that involves connecting your wallet, then you should at the very least be presented with an example or beta of it.
This is basically like saying, invest in our product now and we’ll give you in a couple of months. You are trusting that team will successfully deliver their promise. And with shitcoins, trust as at an all time low these days.
There are a few exceptions to this, and it depends entirely on their concept, roadmap, team, audits, etc.
No Audit (Conditional)
Audit (or Security Audit) is an analysis of the smart contract code to test for any potential errors or issues that may affect the project’s investors. It is sometimes considered a major milestone for a project to get audited (by a reputable smart contract auditor.)
There should be no excuse for a legit project to not get audited. Even TechRate offers a free audit for those projects that have low budgets. It’s a minimal effort the developer or team can put forward to reassure their investors that their funds are safe.
Spoiler: We will be starting our own Degen Clinic auditing services soon.
Dev is “sleeping” (Conditional)
This meme is a personal favorite of mine. Mainly because I’ve been rugged and learned to avoid rugs in the past based off of this one sentence. “Where tf is the dev?” Response from an admin: “He’s sleeping bro.”
There should be no reason why the dev is sleeping during launch or presale. Of course, it’s different if it’s days before the set date then it shouldn’t matter. This refers primarily to an important time frame where it’s crucial to the project’s success.
If the dev is “sleeping,” during a time like this, it probably means he’s hiding to avoid any questions or concerns. Keep in mind, again, that this doesn’t always apply. Always read the room.
Obnoxiously large presale (Conditional)
This depends entirely on the scale of the project. If a project is asking for 3000 BNB (hardcap), you should be questioning why do they need that much initial investment to launch their project.
Commonly with presales especially on DX Sale, the team will choose to allocate a certain percentage of the raised funds towards the LP (Liquidity Pool). Now in the scenario of 3000 BNB, if 70% of that goes to the Liquidity pool, the LP will get 2100 BNB. And the remaining 700 BNB goes where? In the team’s pocket for “marketing” and “growth”
It’s simple, if the size of the presale doesn’t match the scale of the project, then the team is being greedy and/or they plan to rug and run away with the 30% as well.
This is something you should also look at regarding profits. If everyone buys in the presale, who will buy at launch? Presales should remain available to only a handful of investors which will result in hype and buying power at launch and after launch.
All of these are based on your own judgement. This is what I personally look for but doesn’t mean that this should be 10 commandments of shitcoins by any means. Feel free to refer to this list when doing your research on new project presales and launches before investing. Some of these don’t always apply, and some of these are obvious.
Let me know what you think and if you agree or disagree with any of these – I’m open to debate! Either way, I hope this helps you. Invest wisely