Community-Driven Crypto Projects: How Do They Work: Which Are the Best?
Have you heard about community-driven crypto coins? These projects are drawing new attention daily, and for good reason. If you’re reading this, you most likely want to learn more about them and how they work. In that case, you can rest easy.
We’ll explain everything you need to know about community-driven cryptocurrencies and their importance. We’ll also outline some of the best options for investing in these tokens. Continue reading for all the details.
What Is a Community-Driven Coin?
Community-driven coins are tokens powered by people who believe in them. These people are the community. Typically, the more investors hold onto a particular cryptocurrency, the higher its value. That’s why some community-driven coins experience significant price increases as more enthusiasts join.
The main difference lies in the central authority when comparing community-driven vs. traditional crypto projects. Even though they’re decentralized, most mainstream tokens were launched by teams. These teams decide what’s next for the coin. With community-driven projects, however, it’s different. The people behind the token determine its future, so everything is done collectively.
Why Are These Projects Important?
If you’re new to community-driven coins, you may wonder if they’re an excellent crypto investment. Our answer is yes because these coins are essential to the crypto ecosystem. How so? It all has to do with decentralization.
The main reason Bitcoin and early altcoins quickly became popular was that they had no central authority. Today, most cryptocurrencies claim to be anonymous, but that’s not always the case. However, there’s minimal debate on decentralization with community-driven coins.
Since a group of people controls them, there’s less risk of scams and manipulations. Every user can contribute to what happens next, keeping things transparent and open. It’s safe to say community-driven crypto coins are important because they emphasize the initial idea of the blockchain.
DAO Projects
We can’t discuss community-driven coins without mentioning Decentralized Autonomous Organization (DAO) projects. These are blockchain-based entities operating through smart contracts. They allow members to make collective decisions rather than those of a central authority.
There are different DAO voting mechanisms, and each has its role regarding community governance in crypto. Here are the main ones:
- Token-based Voting: In this system, the more coins you have, the stronger your influence on decisions. Some key examples include Uniswap and MakerDAO.
- Quadratic Voting: This system option aims to reduce the influence of large token holders. Hence, the DAO projects make each additional vote cost progressively more tokens, resulting in more balanced decision-making.
- Delegate Voting: As the name says, holders can delegate their votes to others. Usually, they assign them to people who are more informed or active in the project’s governance.
There have been many DAO success stories in the crypto market. Uniswap is a good example, with over 75% of users in the decentralized exchange market.
Notable Community-Driven Projects
How do community-driven cryptocurrencies work? From our experience, identifying the right project is crucial for successful investing. We’ve done the market analysis, and here are the best community-driven coins to go for right now:
DigiByte (DGB)
The first here is DigiByte, a fast and secure blockchain that launched in 2014. It boasts a block time of just 15 seconds and advanced security features, which makes it reliable for microtransactions and digital asset storage. It’s predicted that this project will reach a maximum of $0.008 at the start of 2025.
ReddCoin (RDD)
This coin was designed for tipping and social media integration. In other words, it allows users to send and receive tips for content quickly. That makes it a top choice if you’re active in online communities. Backed by over 60,000 users, price predictions seem pretty optimistic, and holders can record good gains before 2025 runs out.
Verge (XVG)
Verge is a popular privacy-focused cryptocurrency. Its high user anonymity with advanced technologies like Tor and I2P will delight you. Based on our findings, analysts predict that Verge can increase more than 5% as 2024 draws to a close.
Ravencoin (RVN)
With Ravencoin, you get a blockchain platform specifically for asset transfer. The project has a massive focus on tokenization, so it’s widespread among DeFi and NFT enthusiasts. Ravencoin is growing, and it can hit over $0.2 by 2030. We rank it as one of the best for long-term investment.
SafeMoon (SAFEMOON)
Notably, SafeMoon (SAFEMOON) tokenomics made this token famous. It rewards holding and penalizes selling through a 10% transaction fee. Since its launch, SafeMoon transitioned from V1 to V2, reducing its transaction cost to 1% to attract more buyers.
The token is highly volatile, so many people ask: Is SafeMoon (SAFEMOON) a good investment? Despite the changes, the project is expanding its ecosystem with a new wallet and decentralized exchange, so its value is expected to increase by more than 7% toward the end of 2024.
Conclusion
Learning how to invest in community-driven crypto coins shouldn’t be difficult. We’re confident this guide has simplified things, and you will find the niche easier to navigate.
Additional Considerations
It’s easy to pick one out of our best community-driven coins and make your crypto investment. However, there are extra factors to consider before finalizing. Check them out below:
Security Concerns and Privacy Coins
Verge, Monero, and ZCash, among other community-driven coins, were launched to focus on privacy. While they’ve held up, there are also risks of vulnerabilities. We can specifically look at the risks and benefits of Verge (XVG) as an example.
Firstly, the token is one of the best for anonymity. However, it has been hit by multiple 51% attacks, leading to hundreds of thousands of blockchain re-organizations. This undoubtedly raises significant concerns about Verge (XVG) security. Plus, since these networks are entirely anonymous, it’s difficult to trace the malicious parties.
The Evolving Regulatory Landscape
Currently, projects by decentralized autonomous organizations have varying regulations around the world. For instance, in the US, the legal recognition of DAOs varies by state. Utah and Wyoming have enacted laws to provide legal frameworks on the matter. These laws give DAO projects legal recognition and permission to operate.
Meanwhile, the UK Law Commission doesn’t believe that DAO crypto projects require a separate legal framework. Instead, they’re to be regulated under existing rules.
We believe the future of cryptocurrency and community-driven projects depends on laws from notable countries like the two mentioned. So, as an investor, it’s wise to follow the news. If proposed regulations are favorable, we could see more DAO projects and community-driven crypto options.
Alternative Investment Options
With our explanations so far, we’re sure you can now decide whether community-driven coins are worth banking on. We’ve also touched on the pros and cons of DAO-based projects. If your conclusion isn’t supportive, you can go for other opportunities. Here are our recommended alternative investment options in the crypto space:
- DeFi Projects: This involves platforms like Aave, Compound, and Yearn Finance. You can use these platforms to lend, borrow, and earn interest on crypto holdings without intermediaries.
- Established Cryptocurrencies: This is as simple as investing in well-known coins like Bitcoin, Ethereum, or Ripple. They offer long-term growth potential.
- Stablecoins: Coins like USDC and USDT are pegged to fiat currencies, ensuring low volatility. While their prices do not fluctuate as rapidly as others, they’re essential in a crypto investment portfolio as a hedge against bear markets.
- NFTs: You can purchase non-fungible tokens and gain digital ownership of assets. These include art, collectables, and even digital properties. Of course, you can sell these assets whenever you want.
- Staking: If you’re a fan of coins like Ethereum 2.0 and Cardano, you can stake them for rewards. However, note that it’s a long-term investment, as ETH staking returns around 3.6% per year.
Read More
Check out our Vave Casino blog to learn more about community-driven crypto coins and DAO projects.
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