Dissecting the ICO: What a Successful Project Looks Like

dissecting the ico

Do you feel confident enough in assessing an ICO where you can pour your hard earned money into? Even if you had the time to spend every day researching your new favorite ICO, read the white paper, and “make sure the developing team is real,” given the ever increasing popularity of the ICO market it is becoming near impossible to research every new ICO out there. Luckily, after reading this article you’ll be more than comfortable when deciding if an ICO is actually deserving of all the attention it gets.

ICO Public Information: 5 components to help make sense of it all

Startups use ICOs to raise money, and although the goals of these companies are extremely diverse, they should all share one important thing: making a majority of their companies’ information publicly available. A company that withholds financial information, or that fails to release even a semi-cognizant white paper, has a much higher potential of being a scam. Use this information as a litmus test before investing your money, as it will be time well spent.

ICO fundraising

What exactly does their white paper say?

To give it to you plain and simple: do not invest in a company that doesn’t have a white paper, especially if they have a polished website that claims the impossible. When looking over this document there are five things (at the very least) to check for:

  • Roadmap: Have they laid out a clear and reasonable roadmap with achievable goals?
  • Vision Statement: Do they know what they are trying to achieve, specifically? Or is it absurdly vague with something along the lines of “trying to change the world?”
  • Spelling, formatting, and grammar: although these aren’t certain indicators of a scam, a white paper that is hastily written, littered with spelling and grammar issues, and terribly unorganized tells volumes about the company.
  • Sales, sales, sales: The entire white paper is a sales pitch, and even worse, you get the feeling that you need to buy RIGHT NOW or you will miss out.
  • Numbers: Do they provide solid data with links to reputable sources? Are their market predictions based on verifiable research? If the numbers seem too good to be true, they probably are, especially if they are promising guaranteed ROI.

ico platform

Preferred platform?

It is no secret that Ethereum is a secure platform to base ICO tokens on, but is it the only choice? The general rule of thumb is no. Just because an ICO is using a platform besides Ethereum shouldn’t be an immediate red flag. Mobius raised $39 million on the Stellar network afterall. However, it is a red flag if the ICO is using a platform that doesn’t have information readily available, or if it has suffered extensive problems in the past. This information can be found through Google or by using the community as a resource.

Just because an #ICO is using a platform besides #Ethereum shouldn’t be an immediate red flag Click To Tweet

To trust or not trust the community?

Consensus from peers builds trust, but in the digital age that consensus is easily faked or bought. Reputation is priceless, and finding the appropriate forums to search out information is key. Bitcointalk.org is a widely recognized and trusted website for hosting such forums, but it is still up to the reader to discern truthful information. A few tips:

  • Check out a user’s postings – Do they have a long history of comments, are these comments clearly biased, and have they presented useful information on various ICOs in the past?
  • Search the thread for keywords like “scam,” “MLM,” or “con” and read why the users feel this way. Cross verify their comments with their posting history.
  • Is the ICO offering benefits for posting positive comments? This information can usually be found in the white paper, which can help the reader decide if comments are genuine or part of a “hype-train.”

All of these examples can be seen in action at the Bitconnect Bitcointalk forum. First, we have a senior member questioning the validity of the ICO who is, unsurprisingly, ignored by Bitconnect in that discussion. We can also see information about promotional bounties (it is common for ICOs to do this), but being aware of it helps see through the hype to the real information. And of course, we all know how Bitconnect went on to be exposed as a ponzi scheme, but still on that first page of the comment thread we had community members pointing that out before it even launched. Don’t blindly trust the community, but don’t blatantly ignore what credible members are saying either.

team ICO

Who is behind the project?

The team behind the ICO is one of the most important aspects, but also one of the most overlooked details by casual investors. Who are they, what is their track record (both with ICOs and in other fields), where did they go to school? Have they founded any successful startups in the past? Does the team have the experience and knowledge to achieve what they are setting out to do? For a detailed guide on scouring through the past and potential of an ICO team, check out our article on the topic. And remember, if an ICO doesn’t even bother to list their team at all, it is almost certainly a scam.

After the dust settles, who owns the tokens?

Before addressing the distribution of tokens, it is necessary to question the need for tokens in the first place. Why is this ICO releasing its own token instead of using an established coin? Validate the necessity of a new token unique to the company by increasing your knowledge of tokens in general, and after that, understand that token distribution paints a picture of the future of the ICO and gives insight to the team’s intentions for the future of the startup. It is important to note that there is no perfect token distribution sales structure, but that doesn’t mean we can’t glean any information from the ICOs planned distribution pattern.

Double check opinions on #Bitcointalk, find data sources in the #whitepaper, and diligently check to make sure that the token distribution makes sense Click To Tweet

A well-thought-out balance is key: a percent of tokens going to the team to keep them motivated, but not too many tokens that the ICO won’t reach its funding goal. Total market quantity also needs balance: is the cap open or hard, and are there individual caps on purchasers to prevent an uneven distribution of tokens? Essentially, what you are looking for is sound reasoning behind the decisions of token distribution. Double check opinions on Bitcointalk, find data sources in the white paper, and diligently check to make sure that the projected numbers make sense.

ico platform

Listing Platforms: All the information in one place

The quantity of information needed to diligently evaluate an ICO can be daunting. From white papers to team backgrounds, verifying social media accounts, and investigating forums, searching through a variety of ICOs can easily take up far more time than intended. Having this information consolidated and verified not only saves time, but it also allows for ease of access when sifting through numerous ICOs in one sitting.

ICO tracker

ICO Portals: The researcher’s best friend

ICO portals are the perfect way to view consolidated information about one without having to search their website, Google, or random forums. There are a couple renowned portals to choose from, but if you seek one that has a very user-friendly design, offers unbiased data, and presents that data in a crisp, readable fashion then Coinschedule is your best bet.

ICO portals are the perfect way to view consolidated information about one without having to search their website, Google, or random forums Click To Tweet

Coinschedule

coinscheduleBeing one of the most well-known tools in the industry when it comes to helping users find the information they seek about ICO crowdfundings, Coinschedule is often viewed as the starting place when researching new ICOs. However, it should be noted that Coinschedule is not a financial services company and does not, under any circumstances, provide investment advice.

The ICO list is the key of Coinschedule, sorting ICOs into categories and clearly indicating how close they are to their funding goals. The filter option is perfect for finding ICOs focused on specific industries (from arts and music to artificial intelligence/machine learning, and everything between), and also for sorting ICOs by the platform they are hosting their tokens on. Users who don’t want to research new blockchains can opt to only see ICOs that are on established blockchain platforms. It should be noted that the rankings (platinum, gold, etc.) are not Coinschedule’s opinion about the ICO, but instead the package level purchased by the startup.

Two other key features of Coinschedule are the Stats and Events pages. The Stats page gives insightful data on ICO sales data going back to 2016 and broken down into specific markets, months, and highest-raising ICOs. The Events page features a continually updated list of cryptocurrency-related conferences happening around the world, providing investors and enthusiasts the opportunity to meet influential people in the industry and learn about new ICOs and technology before they become public knowledge.

Testing our validation methods with Shping

shpingWhen first visiting the Shping website, it’s easy to be impressed by the clear, concise design that prevails throughout the entire website, from the easy to access introduction video to the quick find tabs leading to the white paper, news, bounties, and information about purchasing coins. However, for as flashy as the website is, finding the information we need in order to diligently evaluate this ICO wasn’t easy, and many of the figures and facts we searched for were hidden behind a veil of cute, albeit uninformative, images.

Referring back to our investigative information above, let’s run Shping through our testing methods to see how they check out. We’ll be using the Shping page on Coinschedule for ease of access since everything we need has already been gathered there.

  • White Paper – The roadmap is readily available on page 33, and the data can be verified using the sources on page 6. A clear vision statement is presented with plausible market implications, and the white paper doesn’t read like a sales document. It is instead presented in a well formatted, professionally implemented, and research-grounded plan.
  • Shping has chosen Ethereum as their platform, and will be releasing their tokens using the ERC20 protocols.
  • At the time of this writing, the Bitcointalk forum for Shping is only boasting four pages of comments, however, they all seem to be in a positive light from both new and veteran users.
  • Through the Coinschedule page it is easy to look over the team and click through to their social media profiles, thereby validating their previous work experience and skills.
  • Lastly, we have a plethora of useful links to their various social media outlets, their GitHub repository, and various forums. Underneath the links is an easy to read description of the token sale token distribution, making it crystal clear who receives what after the sale has finished.

Other ICO platforms to check

coinCompletely trusting one platform, no matter how encompassing it may be, is never a good idea. Which is why it is recommended to find ICOs that strike interest on Coinschedule, and then research them further on other ICO platforms such as Icoalert, Listico, and Icorating. Icoalert is perfect for finding out about new, upcoming ICOs. They even offer email alerts when new ICOs launch. Listico prides itself on great customer service and an active social media presence, meaning users can receive data through Twitter, Facebook, or even the website itself. Icorating strives to give an unbiased rating of the ICO based on numerous factors, such as the technical features of its platform, the business model, the team, and the strengths and weaknesses of its decentralized infrastructure, whereas Coinschedule excels at presenting a large collection of information. It chooses not to present any opinions on the quality of the ICOs themselves but instead leaves the interpretation up to the user, allowing them to form their own opinion.

Conclusion

Investing in ICOs can be risky, but it doesn’t have to be dangerous. Appropriate research through a study of different means helps to guarantee that your opinions are shared among the community. Consensus between a diverse peers typically increases the chances of success. Whether diligently reading the white paper, spending hours on forums discussing every member of the ICO team, or pouring time and energy into market research before buying tokens, proper preparation will help ensure a more successful investment.

 

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