How to evaluate an ICO?

in ico •  last year  (edited)

bank-banking-bitcoin-315788.jpgEvaluating ICOs can be a full-time job. There are many factors to be considered. ICO blockchan system is new and so it lacks standard.
One needs to start its personal analysis with reading the white paper. So here are some things, one needs to look for-
The whitepaper is written in proper English, without inconsistent layouts and styles.
There is real utility for the token – one should not be able to replace the token with fiat and accomplish the same functions.
Source code for the protocol is available via open source.
The project uses key blockchain principles, such as open and decentralized technology.
A clear case for why a blockchain is critically necessary for the solution.
Viable token economic model for how token will be used and how demand for that token will be derived.
Smart contracts for token sale have been published and audited by credible code auditors.
A credible team who can execute on the project, supported by credible advisors and top tier legal team.
The project is committed to transparency, sharing all its work on social media for the community to review and evaluate.
Before we help a blockchain team to get their idea in motion, we need to ask fundamental questions to test if the idea is suitable for a blockchain solution and if it can be transformed into a functioning business.

  1. What particular problem eliminated?
    Successful projects develop communities, products, or services that enhance the lives of their customers by removing a problem.

  2. What is the size of the market or community and can they be reached?
    Market potential:
    • What is the value proposition?
    • Does the product solve a problem?
    • Is there a demand for such project?
    • Does it get discussed in relevant blockchain communities?
    • Does the project have any announced partnerships?
    • How about the competition?

  3. Does the idea appear to be financially viable?
    As a purchaser, who will exchange an existing crypto coin or token for a new coin that will potentially give you access to some future service, you need to look at the white paper and online presence

  4. What is the experience of the team; how they worked on previous blockchain projects and do we know their identities.
    • What are the team’s technical? Are there more business people on the team or more days?
    • What is their education?
    • Track record: any previous projects?

  5. What is the initial response from the cryptocurrency communities on various forums

  6. Where is the team organized? Luxemburg, Switzerland, Singapore, etc.

  7. What percentage of the coins is retained by the team and what percentage is held back for future development

  8. Valuation

  9. Process; airdrop, escrow accounts, etc.

  10. And of course the product. What is working now? And what would cause the coin to increase in value?
    Now, some major things, that need to be noted.
    • How was the project funded by that point? (VC, Private, etc.)
    • What is the token supply, what are they going to spend the raised funds on? (if it’s only on marketing it doesn't sound good)
    • Is there a cap on the crowd sale? (if not why is that? are they greedy?)
    • Are they putting too much money on marketing and less on development and hiring of talent?

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