“Life will definitely be interesting” — RSquad CTO comments on blockchain development and launching startups
What’s going on with launching crypto startups? What mistakes do startup teams make, and who deceives them? What changes have been made to IDOs, and is it realistic to get investment support from the community? Roman Nguyen, the CTO of RSquad, dwelled on these issues and the prospects of blockchain technology in an interview given to SeedOn.
Here is the text version of the material which will be helpful to developers, startup teams, investors and those who are just interested in the life of the crypto-world.
As part of your activity, you work a lot with crypto startups, help them attract investments and successfully launch their token. Tell us how things are now in the crypto startup market as a whole?
Roman Nguyen:
- First of all we need to understand that the crypto startup market is directly related to the crypto market as a whole, and we all know what is happening to it right now, but to answer the question more specifically, let’s not touch on trading, farming or the bitcoin rate, but consider such aspects as attracting investments, listing, community development and so on.
- The volume of investments has decreased, it has become more difficult to raise funds with the help of VCs. Nevertheless, there is a community, with the help of which you can raise funds for the development of the project.
- There is objectively a lot of scam on the market, moreover from all sides. Bothfrom the side of projects, and from the side of launchpads, advisors, exchanges and other market participants.
- One way there are projects whose leaders, not only donʼt have experience in launching a crypto business, they donʼt understand how the blockchain and the market work as a whole. This is not bad, since the market needs enthusiasts, but when a project doesnʼt know what awaits it, it o en makes a lot of banal mistakes and spends time, money and resources not on what they really need. As a result, the project meets reality, fails its launch and disappears. No one benefits from this, neither project owners, nor investors, nor the market as a whole — everyone remains in the red.
- It is also important to understand that the crypto startups and investment market has changed over the past year. A year or two ago, you could throw a pack of bucks into absolutely any project at any stage and get a big profit. Now everything is different, projects are performing badly, launchpads refund funds, VCs donʼt invest, and so on. There has been a need to approach the issue of investment more consciously, which has led to the fact that investors of the last couple of years have become more cautious, having been burned in the bear market, and new investors are generally distrustful of the market.
- And IDO as a fact turns from an investment tool into something else — into something between a marketing tool and crowdfunding.
- But overall it’s not as bad as it might seem. Projects will always be launched and are being launched now — as I said, we have hundreds of projects in the sales funnel and the market will someday recover.
Alright, this sounds great and it definitely holds plenty of details! However, in the past couple of years, we have seen in the crypto space quite a lot of scam projects or rug pulls. How can the risks be identified and what is worth pissing about?
Roman Nguyen:
- It is worth being afraid of everything, it is more accurate to approach any issue with a fresh head and without emotions. More specifically, the danger really awaits everywhere and everyone.
- For example, if you are a crypto startup, you interact with a huge number of counterparties — launchpads, exchanges, advisors, market makers, marketing partners. A common problem with all contractors is that they may fail to fulfill their obligations and simply disappear, we are constantly faced with this.
- There are cases of dishonesty of our fellow launchpads, when more tokens are poured into the market than they should have been. Naive projects transfer their tokens to launchpads, launchpads sell them by dropping the rate, a er which they carry out a full refund of funds, thereby destroying the project on the listing.
- Sometimes we see that exchanges scam projects that are listed on them — they do not allow to start or withdraw tokens, steal liquidity, and so on.
- Advisors o en disappear — they promise a lot, but they are silent and do not get in touch, and at the time of the listing of the project they come for the previously promised tokens.
- One way or another, it is important to understand that not all of the above is not an example of a critical scam. There is a scam, and there is a mismatch of expectations. It is very important to correctly assess the risks of your actions, for example, an unsuccessful purchase of advertising will not have such a devastating effect on a crypto project as transferring a significant part of your tokens to a bad counterparty — a launchpad or an exchange.
What can people do to avoid this type of scams?
Roman Nguyen:
- Of course, there is no universal solution. I think that you need to work only with trusted counterparties who have real cases and not be fooled by the promise of mountains of gold — free cheese is only in a mousetrap.
- It is also important to control your tokens, keep track of vesting and its volume, check smart contracts, and so on.
- It may be worth working with launch service aggregators, there are many companies. I mean companies that either themselves provide a full range of services necessary for projects to successfully launch, or have a network of trusted contractors. For example, we at GAGARIN began to provide such services a er we saw that projects really needed help. More than a hundred projects have already passed through us, and we are trying to help everyone not only with the IDO. We have a large number of partners with whom we have been working for a long time, they close everything from market making to marketing and development. And moreover, we are currently working on automating most typical activities. So, in general, I mean that sometimes it is worth looking for companies that have a full range of services, and, most importantly, a proven track record of working with crypto startups.
- Oh, and another moment, list only on the DEX.
You said that due to the decrease in the investment activity of funds, you can try to collect money from the community, how is that?
Roman Nguyen:
- In fact, we ourselves faced this problem, our launch took place in the first quarter of 2022, when the market was no longer in good condition. We went to the funds a lot and knocked on closed doors. One way or another, we developed, built our project and formed a community. When the first IDOs passed, we saw that our community was ready to invest, and we thought — why don’t we try to collect our private round among them?
- Quite quickly, we concocted a fundraising form and posted it on our portal. This led to completely unexpected results — in the first month we raised a significant amount in our private round with the community without the support of funds.
- It seems that in the current realities this is almost the only way if you are not a tier-1 project, it is clear that, for example, Aptos is doing well with funds, but what about smaller projects? Gathering with the community is definitely a good way from all points of view, it allows the project to get closer to the people who believe in it. The project can, for example, release a program to motivate early investors, even before the listing, organize something like DAO and build the project together with its users. Moreover, despite the fact that the investments are small — not hundreds of thousands of dollars, as funds can contribute, but simply hundreds from people, the tokens will fall into the hands of your real users who have followed your project and will probably use it, and not in the hands of venture capitalists who will one hundred percent merge them into the market.
- As I said above, we automate this process for startups. As part of our incubation program, we develop small products that we call Incubation Tools. One of them is the Fundraising tool — an embedded form for collecting investments from the community. This is our personal experience translated into a small product for crypto startups. The project just needs to register, embed the form anywhere on their site and start raising funds. What’s more, it doesn’t cost anything.
- By the way, many projects write such a system on their own. I donʼt understand why, since there are already a dime a dozen providers of typical whitelabel solutions on the market.
Yes, you have already talked about inexperienced owners and how they waste their resources. Could this be the issue?
Roman Nguyen:
- Certainly, I think this is the point. Write everything yourself, do everything yourself — these are o en harmful ambitions of beginning managers.
- All projects follow the same way — they collect investments, list, distribute tokens, and so on. Everyone peeps at each other and comes to the launchpads, but no one tries to write their own launchpad or blockchain purely for themselves. Why then does everyone invent their own bicycle on standard processes?
- When a project comes to us, for example, we always advise them to focus on their idea and not waste time on typical activities. In our incubation tools line, for example, it is planned not only fundraising tool, but also a tool for the distribution of tokens, a claiming portal and a tool for creating and customizing staking pools. All of them are built-in, you just take it and paste it on your site. As for me, it is better for a programmer to write a more secure smart contract, and a designer to make a couple of illustrations than to develop solutions for which there are many on the market and they are almost free.
So after all, how have the IDOs changed in the last year? How has the overall market situation affected your operations?
Roman Nguyen:
- I think the biggest change in IDO is that IDO has moved from being a fundraising tool to being more of a marketing tool. In principle, we came to where we started, when IDO was about guaranteeing liquidity and the uniqueness of participants.
- Now, many projects that cannot collect a private round think that by running a round on launchpads they will raise the necessary funds for the development of a project, but it turns out quite differently. Maybe half a year ago it would have worked, but now, having launched on a large number of launchpads, you will not only be le without pants — you still wonʼt get a penny, since any launchpad now has a program of refunds and investor protection, which is tied to the price project token and liquidity volume.
- This is probably the key change that launchpads, including us, began to take care of the safety of investors’ funds, which does not allow projects to treat IDO as a way to raise funds. In other words, now IDO is more of a cost than an income. IDO is a way to scatter tokens in a small volume into a large number of hands of ordinary users, to get coverage.
- Moreover, the listing itself is now different. Projects need to correctly calculate their tokenomics, monitor the exchange rate of their own token and determine project work plans — then IDO will also be a tool for raising money. The time for giant X’s is over. Xs on the listing were previously due to hype and a large amount of free money in the market. Now many investors have reduced or completely stopped investment activity. Therefore, all Xs are obtained from the project budget, but due to the lack of investments, it is better for the project to give fewer Xs and save funds for further development than to participate in the ATH race and die for the market in a couple of months.
- In general, our conversation turned out to be very narrow — we are talking only about the present and future of startups, but I want to talk about the present and the future as a whole. Still, besides the fact that we have a launchpad, I am also the CTO of RSquad, where we develop on different blockchains, and I would like to add a couple of cents about where the market is heading from a technical point of view.
- It seems to me that now we are at the next round of blockchain reunderstanding, which started with the release of 5th generation blockchains. This year, a number of blockchains were launched, or will be launched, such as Sui, Aptos, Fuel, and a few years ago, TON was launched. New features have appeared that allow blockchains to be faster, scalable and secure, and this is both about the architecture of blockchains in general, and about technologies that change existing blockchains, such as SNARKs, BLS and other zero-proof solutions that are embedded everywhere.
- It is clear that now all this does not have masses of adoption, because it is technologically difficult, there are no ready-made solutions, there is no code base, there are no out-of-the-box solutions. In fact, there are many reasons, both technical, organizational and legal. But we are still moving towards a change in the technological paradigm, a change in the main technological platform. In any case, it will be changed — either by new blockchains or changed old blockchains, since the vector for reducing the finality, the vector for zero proofs, or the vector for increasing throughput has already been set. The key question is whether this will lead the market to the fact that EVM-compatible blockchains will win or new technologies will come. The current situation on the market as a whole is a conditional reshuffle of forces. It can build open doors for new technologies that are sure to come. More precisely, they have already arrived, but it is not clear on what platform.
- We will now observe the growth of technologies in these areas and life will be clearly interesting and fun.
Blitz! Give 5 tips on how to successfully launch young projects and not fail in the first days after listing?
- Take care of your community — these are the only people who are really interested in your success.
- Donʼt develop yourself what has already been developed before you, evaluate the development costs, possible risks regarding the price of services and whitelabel solutions.
- Work only with trusted counterparties, contact service aggregators and advisers.
- IDO is now more about marketing. If you want to use IDO in the current market as a means to attract investments, then:
- review your tokenomics in favor of creating a shortage of project tokens on the listing;
- reduce to a reasonable number of venues for IDO;
- give less Xs to the project budget in favor of maintaining the course at a distance;
- offer the market models for monetization of your project and the utility of tokens, which reduce the price pressure on the token rate;
- pay more attention to the product — the bear market increases the requirements for the product when entering the market.
5. Opt for DEX listing. They guarantee the provided amount of liquidity, no blocking of deposits and withdrawals.
Thanks for the informative replies!
