If an investment opportunity sounds too good to be true, it probably is. Be cautious of promises of guaranteed returns, especially those that are unusually high or consistent. There's no such thing as a free lunch, and if someone is guaranteeing you a specific return, they're likely hiding something. Your intuition should start screaming "red flag" when you encounter such claims. I remember a project called $TIME that had INSANE staking returns and in the end, it OBVIOUSLY crumbled. I have no idea how people even found that it made sense because everyday we spoke about how it just doesn't make sense. For example, if I tell you a coin may 100x, that's speaking in terms of probabilities and statistics BUT if a project is telling you that you will get 100x from simply holding or staking their coin, that's bullshit.
Another red flag is the lack of transparency. Legitimate projects and companies are transparent about their operations, team members, and the technology they're using. If someone is evasive about providing information or seems secretive about their project, it's a major warning sign. Do your due diligence and research the team, their track record, and the project's background. If something feels off or you can't find any concrete information, it's best to move on the side of caution. It's not good if everything about a project gotta feel top secret, especially since they want people to invest in it.
Remember: These red flags don't necessarily mean a project is a scam, but they should raise your level of caution. Always do your due diligence, and if you're unsure, it's better to be cautious and play with small money. DO NOT go heavy in fishy coins or you'll get fucked in the end.
Verify team members' credentials, look for LinkedIn profiles and past experiences. Be wary of anonymous teams. Check the project's GitHub repository for active development and well-documented code. A cheat code: go to the telegram, pretend to be a noob looking for help, ask about these things and show some 'doubt' in the project. You'll see defenders come with sources and information.
Assess the white paper's technical feasibility, originality, and clarity. Avoid "moon talk" - unrealistic claims that sound too good to be true. Look for a realistic, achievable roadmap with tangible results rather than hype.
Study token distribution, vesting schedules, and funding models. A well-designed model aligns incentives among all parties. However, remember that these factors may not matter much in a bull run, and all coins can suffer in a bear market.
Verify claimed partnerships and assess advisor credibility. Be cautious of fake claims or figurehead advisors who don't actually contribute.
Use tools like Etherscan to track token movements and wallet activities. Watch for red flags like unusual token distribution, high token velocity, or signs of pump and dump schemes.
A smart contract code usually stays the same, so if it's fishy from the start, be careful.