1.2.0. What Project Owners Do to Bounce Back
When a crypto project remains at the Bottom of a Financial Wave and does not rise up again, the crypto is said to have entered a jail. If it persists in jail, it discourages traders and investors.
This is why many people often get discouraged at the Plateau Season of the Crypto Market. The Plateau Season is the sideways swinging of price movement.
For a genuine project, no Developer will want his crypto project to remain permanently at the Bottom of a financial wave. To reverse the trend, Developers often do the followings:
(a). Further Development and Innovation
For many genuine crypto projects, the Winter and Plateau seasons are when many Developers are building and innovating on their crypto projects. They build new features into the crypto projects and tend to reduce the size of staff in order to focus more on project construction.
These new added features attract new investors and traders to the project.
Thus, one way you can know if a crypto project is a good one that will not end up in jail is to check the use cases and the ongoing development around the project.
Use case refers to the relevance of the functionalities of the crypto to human needs. That is, if people have seen that a crypto is useful and services specific needs in their lives, they will want to buy into the crypto.
(b). Circulating Coin Reduction
The circulating supply of a crypto impacts on the price and ultimately the undiluted market capitalization. Remember the equation:
Undiluted Market Capitalization = Circulating Supply x Market Price
To come out of a dry Plateau Season, Crypto Developers often utilize the technique of the Circulating Coin Reduction (CCR), which refers to the act of decreasing the circulating supply of a coin or a token.
There are three techniques decreasing Developers utilize to reduce the circulating supply of a crypto:
• Halving Technology
• Coin Burning
• Buy Back
The impact of Halving Technology, Coin Burning or Buy Back is that the crypto suddenly becomes scarce. These have been discussed in Course 2 Lecture 4 as well as in the Secondary SOC Class 2 Module 3.
The effect of that scarcity gradually becomes noticeable as it becomes more and more difficult to access the crypto. As such, the price of the crypto gradually increases as more and more retailers are buying the crypto that has now become scarcer than it was few months earlier.
(c). Advertisement
Developers who persist in their advertising efforts even during the dry Winter and Plateau seasons will gradually drive attention to their crypto project.
One of the most powerful advertisement in the Crypto Market is giving out free coins as incentives to the crypto community members. Such free incentives can be as airdrops, referral bonus, coins for winners of a contest, etc.
As such, most Developers of young projects often allocate some percentage of coins in their tokenomics and kept them aside for community incentivization.
However, note that despite good advertisement, a crypto project may still not catch the attention of many users if the project does not have a good use case that services specific needs of people. Without a good use case, such a crypto project may remain in prolonged jail and ultimately die off, making investors to lose their capital.
Therefore, when doing your own research (DYOR) regarding which crypto to invest your money in, always look for one with good use case. Multiple use cases are an extra bonus for efficiency.
