10 Types of advisors for a crypto project
Crypto advisors are an important component of any web 3 project. They can help to extend your team in order to fill any expertise gaps that may not be filled by founders, officers, and internal staff. Finding the right crypto advisors can help a new or existing project to attain a higher level of credibility. The credibility of a crypto project is crucial and one of the top factors that investors and crypto enthusiasts alike look for when choosing which projects to add to participate in and potentially add to their crypto portfolio’s.
Here are the top crypto advisory positions you should consider adding to your project:
- Token economics advisor
- Financial advisor (specializing in digital assets)
- Legal advisor
- ICO advisor (token distribution advisor)
- Fundraising advisor
- Marketing advisor
- Web 3 programming advisor
- AI/ML advisor
- Cybersecurity advisor
- Business advisor
Additional advisors depending on your projects niche:
- NFT advisor
- Country specific advisors (ambassadors)
Let’s go into a bit more detail about why each of the advisors mentioned above are important. Together each of these advisors brings an important piece of the puzzle. Candidates should have a track record of proven success in the digital asset space and bring with them credibility that can in turn elevate your projects status.
Token economics advisor
The token economics advisor or ‘tokenomics advisor’ is an extremely important advisory position to fill. Even if you core team members that are experienced with token economics this aspect of a crypto project is important to the overall success of your project. A lot of foresight needs to be considered when planning the variable’s and weightings of smart contracts which will govern a projects native token.
If a project does not create a sustainable tokenomics model for their project, the project will likely fizzle and die out similar to the fate of 99% of the crypto projects that have ever existed. Some popular variables that need to be considered are the total initial supply of a token, how new mint is governed and released, the reward rate for things such as staking, lockup periods, transaction fees/burns, slashes, and so forth. All these variables need to be carefully crafted. If the reward rate is set too high and it out paces your projected growth (token demand) then your token value will drop quickly from those selling their rewards.
A primary goal should be to create a sustainable model were supply and demand work together. Consider all the areas of your project where the token adds value and where you can create buy pressure that at-least matches the sell pressure. Perhaps you may want to include variables that fluctuate based on the usage of your application that help to keep your token value in check.
Try to find a token economics advisor that has an experienced track record advising projects that are still running smoothly. This can be an indicator that they actually know what they are doing and you can bounce ideas off one another to discover all the variables that can help to create a sustainable token economics model for your project.
Financial advisor (specializing in digital assets)
A financial advisor is a professional who provides guidance and advice on various financial matters such as investments, insurance, taxes, budgeting, etc. Financial advisors help projects assess their current financial situations and develop long-term goals that fit their needs. They then recommend specific investments and steps to meet those objectives while taking into consideration a projects risk tolerance and time horizon.
The crypto space is a global industry and each Country has its own laws and regulation for digital assets. Consulting with a legal team that is familiar with your country and your intended countries of operation is important. If a project is not compliant with the law then you are creating a very short sighted project and will deter accredited investors and participants from partaking in your token events.
A legal advisor can help to get your project in the right side of the law. Some things to discuss are the regulatory clarity of your token as to whether or not it falls under the category of a security token or a utility token. You should discuss the terms of your token sale and any limitations to who can participate in it.
Setting the token and digital asset aspects of your project aside you still need to consider the legality of operating your venture as a business and any liabilities you may be liable for and the obligations that you must adhere to while conducting your business operations.
Try to find a legal advisor that is familiar with digital assets and the countries in which you plan to operate.
ICO advisor (token distribution advisor)
An ICO advisor should have experience in helping to promote and execute a token distribution event. There are many different ways to go about a token distribution event. You could have a fair launch, you could have a percentage of the token supply set aside for your team and advisors, you could have tokens allocated to advisors, you could airdrop tokens to your early community, you can have multiple rounds, etc. The way you go about your token distribution event depends on the type of project you are working on.
A project that fits the mold of an ‘anti-greed platform‘ may choose to perform a ‘fair launch auction’ which allows all participants to get the same chance and everyone is on a level playing field. A true fair launch means that there are no private sales, no team allocation, no way to get tokens outside of the methods that are available to everyone. A strategy that can be used when conducting a fair launch to help fund your projects development is to simply use the digital assets which were raised (for example ETH) to fund development and operational costs opposed to your own native token. When using your own native token to give compensation to advisors and team members you are creating selling pressure that your future community has to overcome.
Most crypto projects will choose to perform a token sale which includes allocations that go to advisors and team members, as well as hold private sales for VC firms to scoop up early tokens. This is a great way to collect funding and many projects have seen great success. The use of a marketing budget and crypto KOLs can play an important role leading up to and around the time of a projects token distribution event.
A ICO advisor may have connections to launchpads and exchanges which can help to give your project an early boost. The more widespread your token distribution event is in combination with fair and sustainable token economics, the more decentralized your project will become. Decentralization is key and very important to achieve in order to not allow centralized governance to occur.
Looking to get funded? Why not take on an advisor that helps to cover not only their own compensation but potentially helps to fund the early stages of your project and maybe even create the strategy to fund your project for the long haul. A fundraising advisor can help to create a strategy and also to facilitate the strategy in order to gain donors, sponsors, backers, and other types of revenue inflow for your project.
Common strategies for fundraising that a fundraiser advisor will likely suggest is to apply for all the relevant web 3 grants, government grants, and reach out to the key people in your industry who are known for participating in philanthropy. If your project falls into the category of a non-profit organization then you will stand a better chance at attracting funds from governments and philanthropists. If your project is not a non profit but still in need of funds, then a better route will be to reach out to potential VC firms and sponsors.
Venture capitalists will want equity so this is something that you will need to be willing to offer to entertain the idea of the big VC firms participating in your project as investors. If you do have capital that is up for grabs you will need to have a solid business plan and idea that you can share to the key people at these firms.
Sponsorships is another way to raise funding. Similar to VC’s, sponsors are also looking for something in return. You will need to show the sponsors why the sponsorship is valuable and what benefits they get for providing your project with funding. Try to think of ways that you can showcase your sponsors to your community. A sponsor/backer section on your site can help to deliver branding and show the support that your project has. When choosing sponsors it is important to be selective, you should reach out to and only accept sponsorships from those who fit your brands image. Do some research and see if any of the sponsors you are considering have bad press or a past that does not mesh with your company morals and vision.
Just like in traditional financial markets and for web 2 brands a marketing advisor can play a key role in a projects growth and overall success. A marketing and growth strategy should be a long term plan which can be divided into more easily attainable milestones. These milestones become things that you can share as updates and keep your community informed as your project progresses. It is important to create a marketing strategy that fits your budget and does not exhaust your company resources.
Finding a marketing advisor for a crypto project is one position that should not be overlook and one that should not be handed out to untested or inexperienced candidates. Take your time and see who is genuinely interested in your project. A marketing advisor that understands your project and believes in the overall objective of your organization will do a better job than someone who has experience but lacks interest in your projects vision.
Web 3 programming advisor
An important advisor position, or in the case multiple advisory positions has to do with the architecture and development of your projects code base. The blockchain space is rapidly evolving and there are many niches within it. It’s important to find advisors who are keeping up with the times and who are familiar with emerging trends. For example a new technology that will be very important for blockchain projects over the coming years is ‘zero knowledge’. Finding web 3 programming advisors that are able to predict future trends can make or break your projects longevity. This could be a good question to ask when you are screening your web 3 developer candidates – “what new trends do you see in the crypto and blockchain space in regards to programming in the coming years?”.
Web 3 programmers is an extension of web 2 programmers. They will need to have the same knowledge and skills as web 2 developers with the addition of web 3 knowledge and experience.
Similar to a web 3 programming advisor, the AI/ML advisor should be familiar with emerging trends. Artificial intelligence and machine learning has seen a huge spike in global interest in the last few years. A growing trend in the blockchain space is the integration of AI into decentralized applications. Having an AI/ML advisor on your projects team can be a huge advantage over your competitors.
Cybersecurity is a crucial component that needs a skilled professional to weigh in on. A web 3 programming advisor and AI/ML advisors or internal staff may already be familiar with industry best practices related to cyber security. However, it does not hurt to consult with a specialist who soles job is to ensure security for other projects and online businesses. Find a cybersecurity team that is known to have a reputation for advising other top firms in your space.
Similar to cybersecurity is to ensure that all you code and smart contracts have no vulnerabilities. You should hire a 3rd party auditing firm to go over your code and give it their stamp of approval. You can also open up this task to your community and offer bounties for any vulnerabilities that are found. This should be done before your project is released to main-net.
A business advisor is often an advisory position that is overlooked. A business advisor can wear many hats and it depends on your needs and expertise gaps. A business development advisor is someone who you trust and who you can bounce many different ideas off of. A bonus is if they come with connections and a network that you can utilize to help build a stronger business and network for you own project.
Ways to compensate crypto advisors
There are a few ways that you can go about incentivizing crypto advisors to be a part of your crypto project. If you are a new startup and short on capital then paying out of pocket might not be the solution for you. Fortunately, in the crypto space there are other ways to go about incentivizing team members and advisors.
Token allocation for advisors
You can create a token economics plan that gives allocations of your native token to advisors. It is often seen that anywhere from 2%-5% of a projects tokens are allocated to advisory roles. One issue with this is that it creates potential selling pressure of your token by those who you take on as advisors. Other investors may catch wind of this and see it as a red flag.
Using funds raised for advisors
If you are not interested in giving advisors token allocation of your native token, you can create a strategy that uses the funds raised from your token distribution event. This allows you to create a more fair token allocation of your native token while still being able pay for advisors that help your project thrive.
A cost saving strategy that can be used is to pay for your advisors is to agree to a contract where they will help on for an hourly rate when their service is needed. This allows for you to still expand your team and add credibility while keeping your costs low. This strategy can work well for any advisory roles that require feedback only every so often. For any advisory roles that you require more time from, perhaps a longer term contract with some sort of incentivized payment structure can be implemented based on their success or contributions. An example of this is a ‘fundraising advisor’ who gets compensated hourly with the opportunity to earn commission from any funds raised (say 3% of the funds they help to attract).
Experienced advisors play an important role in informing the decisions of early stage projects in the crypto industry. These advisors can provide strategic direction, advise on changes needed in business operations and help develop long-term strategies. Experience advisors possess experience that provides accurate data, analysis and valuable insight. The advice of experienced advisors helps organizations create a strategy framework that takes into account the ever-changing web 3 landscape. Furthermore, experienced advisors make sure new projects are successful by providing support throughout each stage of development. Working with experienced advisors can help maximize an organization’s chances of success.