Apeing

Apeing is a term used in the crypto community to describe a behavior where individuals buy a token shortly after its project launch without conducting thorough research. This impulsive action is driven by the fear of missing out on potential gains that could be lost if one hesitates to perform due diligence. Apeing became popular during the 2020 “DeFi Summer,” a period characterized by sudden and unannounced token project launches that resulted in a small group of traders making significant profits.

During the “DeFi Summer,” certain token launches caught the attention of traders due to the massive gains early buyers were able to secure. News of these gains spread rapidly on social media, attracting others who attempted to replicate them by buying tokens from any newly launched project without conducting proper research. This approach, which lacks thorough analysis and due diligence, is what gives apeing its name.

The concept of apeing is closely related to the FOMO (Fear Of Missing Out) mentality, where individuals make impulsive investment decisions driven by the fear of missing out on potential profits. While apeing may lead to quick gains in some cases, it is generally considered a risky strategy, as it is based on speculation rather than careful analysis of the token’s fundamentals, technology, and potential for long-term growth.

It’s important to note that apeing should not be confused with investing or trading strategies that involve extensive research and analysis. Apeing is a speculative approach that often lacks a solid understanding of the token’s underlying technology, team, use case, and market dynamics.

Why is Apeing Risky?

Apeing is considered risky for several reasons. Firstly, when individuals ape into a token without conducting thorough research, they are essentially gambling their money based on the hope of quick profits. This approach can lead to significant losses if the project turns out to be a scam or fails to deliver on its promises.

Secondly, apeing often leads to inflated token prices in the short term, driven by the sudden influx of buyers looking to make quick gains. These price increases are often not sustainable and may lead to a subsequent sharp price correction, resulting in losses for those who bought in at inflated prices.

Thirdly, apeing can result in individuals investing in low-quality projects or outright scams. In the crypto space, there are numerous projects that are created with the sole purpose of enriching the founders, with no intention of delivering a valuable product or service. Without conducting proper research, individuals may unknowingly invest in such projects, leading to significant financial losses.

Lastly, apeing can create a herd mentality in the market, where individuals are more influenced by social media hype and FOMO rather than making informed investment decisions. This can lead to excessive market speculation and volatility, making it difficult for traders to navigate and execute successful strategies.

What is Avoiding Apeing: Research and Due Diligence?

To avoid falling into the apeing trap, it is crucial for individuals to conduct thorough research and due diligence before investing in any token or project. Here are some steps to consider:

1. Evaluate the project’s fundamentals: Understand the token’s use case, technology, team, partnerships, and competitive landscape. Look for projects with a solid foundation, innovative solutions, and a clear vision for the future.
2. Analyze the project’s community: Evaluate the project’s community engagement, social media presence, and overall sentiment. Look for active communities with knowledgeable members who can provide insights and answer questions.
3. Review the project’s whitepaper: Read the project’s whitepaper to gain a deeper understanding of its goals, roadmap, and token economics. Pay attention to the technical details and ensure they are feasible and well thought out.
4. Assess the project’s team: Research the background and experience of the project’s team members. Look for teams with relevant expertise, industry experience, and a track record of delivering successful projects.
5. Check for audited code and security measures: Verify if the project’s code has been audited by reputable third-party firms. Additionally, assess the project’s security measures to ensure that user funds are adequately protected.
6. Seek independent opinions: Consult reputable sources, influencers, and experts in the industry to gather different perspectives and insights on the project. Avoid relying solely on social media hype or anonymous sources.

By conducting thorough research and due diligence, individuals can make more informed investment decisions and avoid the pitfalls of apeing. While there are never any guarantees in the crypto market, taking the time to understand the projects you invest in greatly reduces the risk of falling prey to scams or investing in low-quality tokens.

Remember, successful investing in the blockchain space requires a combination of knowledge, research, and a long-term mindset. Avoid being swayed by short-term gains and focus on projects with strong fundamentals and a vision for long-term sustainability.

Author: Ross Middleton, co-founder and CFO at DeversiFi

Ross Middleton is the co-founder of DeversiFi, a decentralized finance (DeFi) trading platform powered by StarkWare’s scalable technology. In his role, he oversees finances and manages DeversiFi’s project partners and largest customers.

Prior to his involvement with DeversiFi, Ross worked at the Ethfinex and Bitfinex exchanges. Before entering the crypto industry, he spent ten years as a professional energy trader and analyst in London. During this time, he worked on global energy trading desks at companies such as Centrica, Gazprom, and RWE, utilizing advanced proprietary fundamental-backed trading strategies. Outside of trading, Ross is an angel investor and Ironman triathlete. His extensive experience in both traditional and non-traditional asset trading, as well as his connections in the alternative finance space, contribute to his valuable insights. Ross holds a BSc in economics.