Important takeouts:
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Builder: Look for active repository, stable commits, and external validation to see actual progress.
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Usage: Price and Retention Revenue Issues over Hype – Use a clean and consistent definition.
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Liquidity: The depth and overall venue spread show true trading, not inflated amounts.
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Token Design: Float, fully diluted rating, unlock the cliff and find the supply supply.
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Security: Auditing alone is not enough. See who did it, when it was done, and how the upgrade is controlled.
Early on the table means finding real progress in front of the crowd. The team will ship useful code.
There’s a lot to organize. Developers sell thousands of repositories, but new Layer 2, Applich and protocols are on sale every week.
This guide will help you separate your early momentum from the miiro by offering five simple checks: builder, usage, liquidity, token design, unlock and security.
1) Builder: Who is shipping?
Start with people and codes. The clearest initial signs are teams publishing updates that are useful to the general public. Multiple active maintainers, recent mergers, tests, and documents address new features and perceptions of grants and hackathons.
Good places to check include developer reports such as power capital for big names trends, hackathon showcases such as GitHub for commit-pace and issuance activities projects, Ethglobal, and public grant records such as optimism RetropGF and Arbitrum.
The stable, consistent progress is better than a sudden “big drop” and stands out by builders who have won funds and prizes from programs with clear rules and public outcomes. Visible work and external validation can help rule out empty projects.
Did you know? Over 18,000 developers contribute monthly to open source Web3 and blockchain projects. Ethereum alone has over 5,000 active developers per month.
2)Usage: Are real users doing something valuable?
Once the builder checks out, make sure people are actually paying to use the product. The two most important metrics are fees (what users spend to access the protocol) and revenue (what the protocol holds after paying participants such as validators or LPS).
Do not confuse miners with fees paid to liquidity providers (LPSs) or retained take rates of protocols using standard definitions from platforms such as Token Terminals. Strong usage is shown as increased per user fees and increased profits, along with daily or weekly active wallets, rather than temporary spikes from the incentive program.
Cross-check metrics using independent sources such as messaging and token terminals to avoid vanity statistics and thin volumes. When assessing locked total values (TVL), you ask whether the deposit is genuine and active, or simply chasing the reward. Beware of projects that together increase paid use, retention, and intake rates, and that lose traction once the incentive is over.
3) Liquidity: Can I come and go without moving through the market?
Don’t just trust trading volume. What really matters is the depth and consistent spread of the order (how much money is actually sitting in the book, and how stable it is during volatility).
Research from companies like Kaiko shows that depth is a stronger measure than raw volume and can be counterfeited in washing transactions.
Find depth growth at multiple trusted venues and spreads that stay tight even at peak times. If most fluidity is concentrated in a single pool or exchange, or if the amount reported is far greater than the actual depth, it is a red flag. Both are when there is a high risk of shallow fluidity and slipping.
4) Token design and unlock: Don’t ignore the supply curve
Many “jewels” fail not because the product is bad, but because the token design makes them fail.
Classical risks are paired with low float and high fully diluted ratings (FDV). Only a small share of tokens will circulate, but prices assume long-standing growth. Once the vesting cliff arrives, new supply can overwhelm demand and lower prices.
Always check your unlock schedule first. How much circulation is there today? How steep is the cliff? And will future releases surpass average daily liquidity?
Research shows how supply supply is damaged, especially when insiders hold large quotas. A powerful project exposes clear, gradually unlocked schedules with defined budgets for community and liquidity.
5) Security and upgrade path: Audit is not the finish line
Security is where many early investors lose their money. An audit badge is only important if you know who did it, what was checked, when it was done, and whether the issue was resolved. Check the scope and severity of the findings and examine governance. Can I upgrade the code, and who will retain that permission?
Proxies, pause functions, and management keys are standard, but if one person controls them, the entire protocol can be changed overnight. Ethereum’s own guidance, along with companies like Trail of Bits, emphasizes that audits cannot reduce risk, but do not eliminate it.
The most powerful indications are recent multiple reviews, upgrades controlled by time locks and multisigs, and transparent reports of past bugs and fixes. The fewer things are exposed to accidents and complete exploits.
Notes on Airdrops and Points: Do not use momentum to end liquidity
Points and airdrops help you measure early momentum, but do not guarantee long-term viability. Think of them as early user research. They show where builders and communities are focused, but actual testing comes after the launch and incentives of tokens are faced with actual use.
Recent examples show patterns. Eigenlayer’s season 1, “Stakedrop,” had clear rules and a modest initial supply share. It was clear, but it had to continue even after the bill was opened.
Blast moved from non-transferable points to liquid blast (BLAST) incentives, turning their attention to Onchain activity and mobile onboarding. Esena’s campaign sparked a short-term growth explosion. It is useful for discovery, but you will need to have a sticky check when the reward is finished.
For campaign information, please read the official documentation on eligibility, supply share and timing. Then, the following month after the billing, track fees, user retention and liquidity depth to see if activity is retained.
Did you know? Many historically studied open source projects allow the core developer to “waive” the project when it leaves. However, in 41% of these cases, new core developers intervened and revived.
Trust the process
Think of “early” as a process, not as a guess. Start with the builder and code, verify, then use clear fees and revenue data to see actual usage to ensure that incentives are not incorrect with product market fit. Finally, check liquidity through the depth of the actual purchase order, allowing you to run the transaction without moving through the market.
These signals lined up and unlocking the token will upgrade your controls and make your management look solid.
Discipline is the most important thing. The risk remains high, and a single incident can wipe out a strong foundation overnight.
Make a simple GEM scan checklist and be aware that you are ready to leave frequently, keeping assumptions, smart contract size positions, and counterparty risk in mind. In the long run, the process compound – the fear of missing out (FOMO) never does.
This article does not include investment advice or recommendations. All investment and trading movements include risk and readers must do their own research when making decisions.
