The study was implemented in the format of game focus groups, in which the respondents were required to
The audience of the study is investors in crypto projects with different crypto investment experiences and levels of investment from the CIS region. For the study, a sample of available respondents (N=100) was formed, among which groups were formed for conducting gaming sessions (N=16, +6 people for conducting a test session).
In total, 4 sessions of focus groups were held within the framework of the study: test + 3 research groups.
Crypto investment experience
Up to 1 year
1 to 2 years
From 2 years and more
Before the start of the focus group, the respondents were given a universal task - to maximize profits through the distribution of investments between projects from the proposed set of projects (10 text descriptions for each session). To do this, all participants were awarded 200 game tokens (the equivalent of $25), distributed in two portfolios:
The aim of the game for respondents was to identify the most profitable projects for long-term investment (1 year).
The results of the investment at the end of the game were converted into rewards for participation (thus, the maximum reward for 1 participant would be $50).
The database of descriptions of crypto projects for all games has 40 descriptions in key areas selected by experts. Among them:
For each session, a quasi-randomized sample of 10 projects was formed. Each random game set of projects included all areas and all levels of profitability. Each project was assigned an identification number (from 1 to 10).
1. Do the bases for distributing the amounts of a public fund and a private portfolio differ?
When comparing the amounts themselves distributed privately and publicly, the discrepancies are insignificant. However, when compared with the game’s dynamics, the following pattern is noticeable - the respondents, when reviewing their portfolio, tend to approach the group’s choice.
Evaluation of each session showed that changing the decision brought each investor an average of 15% benefit. Along with this, investors describe the group decision as a useful reflection:
Apparently, he came to this conclusion while speaking (Respondent No. 5)
Assertion in own choice (Respondent #22)
I analyzed the project more closely (Respondent #21)
Changed the ratio of numbers (Respondent #16)
And in connection with the acquaintance with the opinion of other participants:
Discussion of projects together with the team, disclosure of some topics in the discussion (Respondent No. 9)
Focus group participant indicated as reliable (international, high volume) (Respondent #11)
In 10 [project], I did not take into account the stage of the project. Therefore it was distributed in 5 [project] since the projects are essentially a bit similar. (Respondent #13)
Group discussion. Listened to the opinion of other participants (Respondent No. 14)
Discussion, learned more about the first token (Respondent #18)
At the level of the conducted groups, there are no significant differences between the amounts distributed both in the public round of investments and in the personal round. However, subsequent coordination of the choice in accordance with the group decision allows using third-party expertise to make a more informed investment decision.
2. What do investors proceed from when forming an investment decision, in addition to information about profitability?
One of the most important and determining factors in making an investment, regardless of the type of market, is market data. However, in addition to them, when studying projects, crypto investors also pay attention to:
Partners, team, audits, user base (Respondent #1)
Funds, roadmap, team, idea (Respondent #4)
The sixth [project], I think, is cool, because, firstly, there are obviously good developers there, that is, a normal team. If a normal team, then this is already 50% of success, in my opinion, and it is a fancy DeFi exchange. So this is what I was talking about. Various leverage and all these gadgets of centralized exchanges. In DeFi, it will be very interesting for professionals and allows, firstly, anonymously, and, secondly, as if in theory it solves a lot of things. (Respondent #4)
Social weight, community support, strong personalities, development according to the roadmap, active life, emotional background around the project (Respondent No. 15)
What is the project related to, in what area, per team, openness, capitalization, emission (Respondent No. 8)
[What do you pay attention to?] How much does he understand the principle of operation of the prop and how much the user needs it (does it evoke emotions, does it bring benefits, does it respond intuitively) (Respondent No. 2)
What problem does the project solve? (Respondent #20)
But there are 30 thousand coins in total. I remind you that our goal is to earn more grandmas [limited issue, approx. researcher]. (Respondent #2)
Yes, but here, on the other hand, the cryptocurrency is not mined through traditional mining, and you get, roughly speaking, more money for putting money into the project. (Respondent #6)
The project does not respond to me 10, because, firstly, it is a little difficult for me. In general, I am such an investor, where I need to be clear. (Respondent #3)
In short, I would vote for it. Well, why did I explain? Because, as it were, this is something that is not on the market - this is uniqueness, this is the development of a decentralized history and a normal team. (Respondent #4)
The most common barriers for crypto investors based on the results of the focus groups are:
This is generally against the policy of the crypto, and I am strongly against such projects[…]. If you support the promotion of projects that do not have any technology behind them, this is downright collapse and failure (Respondent No. 2).
By the way, about games - my personal attitude is that they, as it were, also do not carry much benefit. (Respondent #6)
For example, I am still against anonymous teams that we do not know, who can generally scam and take money at any time. (Respondent #6)
It is probably not worth considering projects that do not have any known partners at all or have not been audited at least some. (Respondent #5)
Let's look at project number 6. Decentralized exchange, Ethereum, there are standard tools on the platform. It seems to me that this is just an ordinary classic DEX, of which there are many, and you should not expect anything supernatural from it. (Respondent #5)
And secondly, I don’t see a direct problem as a user of cryptocurrencies, which would help me here in some way. (Respondent #3)
3. What are the factors of interest in crypto projects starting in 2021?
An assessment of the distribution of investments by different types of projects demonstrates overwhelming interest in three types of projects: Exchange, Blockchain and Gaming.
The preferences of project types are almost identical when comparing group and individual investment decisions, which allows us to conclude that there is a limited number of sustainable investment justification models, the main of which are:
When making individual investments, respondents were asked to explain why they chose a particular project. Although the justifications were made individually without communication between the participants, the statements of investors are combined into several stable stories.
Justifications for private investments allow us to draw the following picture of expectations from projects on the crypto market:
The mentioned factors of interest concerning the types of projects are arranged as follows:
PoH is a strong advantage for cryptocurrencies (Respondent #3)
Proof of History (PoH) seems like one of the promising blockchains to me (Respondent #6)
support projects that form a decentralized economy and support the idea of developing emerging markets :) I think such tokens will be in demand in the future and in large numbers. (Respondent #11)
You can deploy your own blockchains, a very technological company, the creators are trustworthy. (Respondent #10)
Focus on the economy, okay. Conducted ICO, attracted investments (Respondent No. 12)
The project is obviously at the take-off point. A high degree of readiness to interact with traditional finance allows it to become a leader in the industry in the shortest possible time. (Respondent #14)
The project was also funded by Binance Labs, Galaxy Digital, Greenfield One, Libertus Capital, Dragonfly Capital, FTX, IOSG, LAUNCHub Ventures, and Divergence Ventures. (Respondent #3)
The team has been holding on for a long time (since 2014), the exchange has not been hacked before, which means it has quite good security, and a large number of currency pairs should provide good profits for the exchange itself if they advertise themselves correctly. (Respondent #12)
Because memecoins are on the wave of popularity of Shiba and Doge felt pretty good, I guess it’s worth leaving part of the portfolio for them, based on unexpected growth (Respondent No. 4)
There is no logical explanation, just wanted to; group tokens will be distributed in a smart way, I want to distribute mine in a stupid way (Respondent No. 15)
The user base has over 1,000,000 token holders. The token works on the principle of distributing the commission as an incentive, thereby stimulating regular holders. + gaming platform in the plans (Respondent #8)
For me personally, the direction of games responds. […] Because I have this understanding that people, no matter what the market is bearish or bullish, they will still play one way or another. Well, tokens are now being distributed there - to the gaming industry - quite quickly, so game projects are [interesting] for me; I have now focused on them. (Respondent #3)
Among the factors seen in all types of projects as a rationale for the purchase, the following stand out in particular:
The reliability and mechanics of the blockchain are designated as the most important for projects in the Blockchain and Exchange areas and are found only to justify the choice of projects from this area.
Tip: Positioning a product as investment-attractive can be built through the formation of “rational narratives” (understanding the “target action” as the only correct one) through the most appropriate grounds for each type of project:
4. How is a group investment decision formed?
For the period of the group investment decision, the same negotiation scenario was reproduced in all gaming sessions:
At the same time, step No. 1 was implemented mainly by two dominant strategies for discussing projects - “ culling ” and “ examination ”.
The examination strategy is a detailed analysis and discussion of each submitted project. Among the advantages of this strategy:
Among the disadvantages of such a strategy:
The culling strategy is the search and identification of outsiders among the submitted projects. The benefits of this strategy include:
Among the disadvantages of such a strategy:
Tip: With many projects, it would be better to follow the “culling” strategy. While choosing a single metric for comparing projects (for example, project technology flaws, audience size, etc.), the main thing is that these are transparently defined and comparable criteria).
Communication when discussing projects was generally cooperative in nature, largely because the participants had a common goal of communication - to make a profitable investment. The most stable oppositions of comparison are the sustainability of the project and its prospects:
A series of focus groups conducted demonstrated two tactics in determining the amount of funds for each investment: balanced and aggressive.
The first tactic is a balanced investment tactic for distributing funds, according to investment rationales:
The second tactic involves a more aggressive way of distributing the funds of the fund:
That is, how do we distribute 40/30/30, right? Let's put 40 in the third one, which is the number 3 [MEME], and 30 each in 6 and 9, because they are basically the same topic [DeFi and Exchange]. (Respondent #4)
Shares of the general fund for distribution as a whole are similar to the distribution of individual decisions:
I-th selected project
II selected project
III selected project
I-th selected project
II selected project
III selected project
To reach an agreement on group investment, the respondents used different persuasion narratives, which should be taken into account when making an investment decision:
For example, in the presented dialogue, two opposite ideas about the “rational investment decision” are broadcast:
As a result of the gaming session, the project, which was considered as an "unreasonable investment", radically outperformed competing projects, which were recognized as more suitable for investment (100% vs 34% vs -69%). At the same time, each of the settings used can demonstrate effectiveness (and thus confirm its truth for the investor) in a specific case, but in another case, it does not correspond to reality.
Thus, the role of collective decision-making in making investments (as well as the collective investment itself) is a common and controversial phenomenon in the crypto market, especially in the CIS region.
The main value of this style of decision-making for investors is to reduce the expected risks compared to the sole choice of projects:
Risk was reduced through group discussion (Respondent #5)
A group investment must be first of all reliable, but it must also bring profit in the long term. Risks are minimized. Participants' decisions are justified (Respondent #8)
There is a risky and reliable investment (Respondent No. 11)
Reliable (Respondent #12)
Based on the results of the focus groups, the vast majority (90%) of investors expressed a positive attitude towards the discussion of projects by the group and the results of such discussion. When evaluating group investing, respondents noted the following attributes of “successful group negotiations”:
1) Involvement in the discussion and participation of as many interested investors as possible
Collective decision with the arguments of each (Respondent No. 3)
The opinion was collective. Participants agreed in communication (Respondent #7)
The variety of factors about projects was taken into account even in the presence of a small amount of information, as well as the wishes of everyone with more were taken into account (Respondent No. 13)
2) Having an informed/argumentative discussion
Many reasoned decisions (Respondent #2)
One head is good, but 5 is better) besides, there were adequate arguments in favor of the Selected projects (Respondent No. 14)
Substantive discussion (Respondent #19)
Rational arguments (Respondent #20)
Substantive discussion, good logical arguments (Respondent #21)
There were worthy and logical arguments that coincided with the description of the projects (Respondent No. 22)
As a result of a good discussion, I learned more about coins and made such a decision (Respondent #18)
3) Feedback received with individual preferences
The choice of the group coincided 70% with mine (Respondent No. 1)
The reasons for choosing the team are the same as mine (Respondent #4)
Coincides with my opinion by 90% (Respondent No. 6)
Yes, because our thinking logic coincided (Respondent #9)
Tip: group discussions in the field of crypto projects and investments is one of the most popular tools for interacting with an audience of users/investors, which can be used to build up a community of projects.
The most successful (in the context of its perception by investors) strategy for consolidating a group decision/opinion can be achieved through involving the audience in a dialogue, disseminating targeted information and developing feedback on it.
Accounting for all votes and a single-level decision-making structure is not without drawbacks: the risks of the group are much higher than the risks of individual investors. Biases and prejudices can significantly suppress the effectiveness of targeted actions (in our case, investments). In turn, for projects interested in the rapid growth of the audience, this opens up new opportunities. At the same time, support for the DAO principles, in cooperation with investors, will thus emphasize the importance of each of the participants and increase the transparency of the project.
While consolidated group action has been shown to be superior to sole decision making in experimental study design, it is important from the investor's perspective to always be aware and understand that group decisions can be wrong, even if the investor is convinced otherwise:
The majority opinion is usually reasonable. (Respondent #10)
5. Are high-tier and mid-tier projects recognized by investors?
Checking the distributions clearly demonstrates the ability of investors to distinguish high+mid projects from low+fail categories, while project descriptions have been debranded and masked so that they cannot be correlated with real projects:
Changed their mind
Didn't change their mind
A similar distinction is also noticeable when studying the justifications for investing in projects of these categories: the justifications for projects in the high + mid categories are more specific and focused on assessing the current state of the project. At the same time, low + fail is focused on projective assessment, a review of prospects and emotionality.
Development of DeFi space. Wide and unique functionality , which will clearly be in demand. Top team (Respondent #4)
The tokens of this exchange allow trading with leverage , without the need to trade with margin (Respondent #5)
Greater willingness to invest in protocols (Respondent #6)
The search for the most efficient routes is one of the most popular directions at the current gas price (Respondent No. 2)
Deflationary model, NFT available, security audited, plan for x5 by users (Respondent #14)
The gaming industry is interesting. (Respondent #3)
risk asset. Growth possible through pop cultural phenomena and digital content (Respondent #12)
Now hype, then - an extravaganza of opportunities for instant transfer of ownership of anything, even for something that cannot be transferred now :) This is, after all, a new river of opportunities on the blockchain! (Respondent #20)
Since memcoins were doing well on the wave of popularity of shiba and doge, I suppose that it is worth leaving part of the portfolio for them in the expectation of unexpected growth (Respondent No. 18)
However, it is much more difficult for respondents to distinguish between High tier and Mid tier projects, which is also confirmed by the sessions' data (see results No. 1). It is likely that the group discussion also serves as a tool to help make this distinction.
Tip: Project descriptions with more actuality on the actual state of the product and its near term mobilizes investors for a greater likelihood of investment.
Supporting communication with users in a clear and accessible language allows one to reveal the project's benefits more clearly. The community for most crypto projects is one of the most valuable and necessary resources for generating users.
For investors, participation in communities can become a useful tool for studying and immersing themselves in the crypto market, focusing not only on project profitability indicators, but also focusing on ways to retain users and investors through a well-functioning and understandable mechanics, an ethical and responsible team, as well as a well-established affiliate network.
The basis of effective positioning is built communication with the user. If the user is not ready to invest in the project, they can be involved in a dialogue, try to find their persuasion narrative and work it out through a description of the applicability limitations and weaknesses of the argument, choosing the most effective and confirming narrative in favor of the project. Absolutely reasonable solutions do not exist - information is limited, so projects have to either limit it or add its missing fragment.