How I evaluate Crypto and Metaverse projects before investing

The metaverse is all the rage nowadays. From Axie Infinity to Facebook, both the crypto sphere and Silicon Valley are talking about it. And there is a good reason.

With COVID confining everyone into their four walls, everyone was looking to find an escape over the last year and a half. Some were fortunate enough to live in the countryside; others found escape in their screens.

While I'm personally not really interested in having a digital version of me running around the Sandbox, I can't deny the trend.

No surprise, my interest was peaked when I heard about Metahero in late September. "The gateway into the metaverse" with "ultra-hd meta-scanning technology."

But before I ape into a project in fear of missing out, I have to do some due diligence.

Do I understand the project?

That's literally the first question I ask myself when evaluating a project. If I don't understand what the project wants to do, I'll either have to learn or drop the project.

Warren Buffet calls it the Circle of Competence.

An investor needs the ability to correctly evaluate selected businesses. Note that word 'selected': You don't have to be an expert on every company or even many. You only have to be able to evaluate companies within your circle of competence.

Having worked in the tech industry for more than 15 years, I'm pretty confident Metahero fits into my circle. I understand what the metaverse is supposed to be. And I even did some 3d modeling many moons ago.

Yes, I understand the project, and I see a growing demand for the technology.

Is the team competent?

The next question is all about the team that's driving the project. The last thing I want is to invest in a venture that hides behind anonymity and get the rug pulled out under me. Not to say that sometimes anonymity is a benefit: Looking at you Satoshi.

Google is your friend for this one. In the case of Metahero, we have the following team:

Robert Gryn

On his LinkedIn, I learned, before his plunge into crypto, he built a company called Codewise.com. Youtube videos, news articles, and interviews - his story checks out. He even made it on the Forbes 100 Richest list in Poland.

Wolf Digital World

From a technology side, Metahero works with a company called Wolf Digital World. After seeing some videos on the MVP, I didn't feel the need to extensively research the technology.

As a bonus point: WDW announced a partnership with Sony. That gave a lot of credibility to the project in my books.

How is the technology disruptive?

3d modeling is a very time-intensive activity. J-P Kivistö, on this Quora answer, estimates about a week if the artist has a 2d concept sketch. The more detailed a 3d avatar is, the longer it'll take to model it.

In contrast, taking a ton of pictures and having software do the modeling for you takes minutes. Game studios spend tens of millions on creating games; movie studios can spend hundreds of millions. Not all of that money is spent on 3d designers, though.

Let's say a gaming company is creating a new game with 100 in-game characters. It takes a 3d artist around 40 hours per character; that's 400 hours. Based on salary.com on average, a 3d artist makes about $50 an hour. That adds up to $200,000 for the characters.

On the flip-side, Metahero charges $200 per scan. That's 1/10th the price and takes 1/10th the time.

What are the Tokenomics like?

That was actually the first red flag I ran into with Metahero. When I initially researched it, I found a lot of information about paying fees to buy and sell the token. An incentive to hodl the coin, I guess. But I'm not a fan of schemes like that. It reminded me a bit of SafeMoon. Have they made it there safely yet?

In any case, they had just changed it so $HERO could be traded freely without penalties.

As per CoinGecko, about half of the max supply is currently in circulation; the rest are locked up for company reserves, strategic partners, team, advisors, and others. Relatively standard and something I expected from a "more traditional" company-like utility token.

What's the landscape like?

Depending on which markets you look at, the future looks pretty bright. Even Facebook just rebranded to Meta and has been working on similar technology.

So there is competition, that's a good sign. One of the things that impressed me about Metahero was its modular concept and its scalability aspect. While Facebook's, nope Meta's, reality lab is really impressive. It doesn't seem scalable, movable, or accessible to the people.

What are the risks?

It could go to zero. Any venture, any company, any investment could potentially go to zero. The smaller and unproven the business, the higher the risk.

With that out of the way, the only other risks I can see are poor management/marketing/partnerships, delays in technology releases, and losing the competitive advantage. None of them raise red flags.

One more thing goes for all projects: people tend to buy the rumors and sell the news. I've experienced that with Metahero and the unveiling in Dubai. The price rose from $0.10 to $0.14, leading up to the conference. Followed by a sharp drop to $0.09.

Always buy before the rumor comes out or after the news event happens.

Conculsion

I did end up buying $HERO twice. Following most of my rules, I bought about $500 worth at $0.10. And after the price started to rise, I bought again for $500 at $0.12. I'm still new to the crypto market and am making the same mistakes. My only hope after outlining this process is that I'll make fewer mistakes the next time :)

And, while I don't plan to ever join the metaverse, I think it is the future, and I'm glad I'm somewhat exposed to this through $HERO ✊.