How to review and analyse an ICO?

Evaluating the viability of the ICOs is in many ways very similar to traditional venture capital investing. The project contributor needs to evaluate many traditional aspects of the project and it’s team. On top of that a risk aware investor studies in great depth the token economics model viability of the project. Since the price of the tokens are usually defined by the supply and demand on the token markets, the team’s marketing skills and efforts may play a big role in the project rating as well.

One of the most important things in any development project is the expertise and commitment level of the team. We recommend only investing in ICOs that work transparently by introducing their team and their skills. Even though many great projects such as Bitcoin have emerged from anonymous teams, the risk of an exit scam in an ICO with an anonymous team has actualized so many times during the recent year that for example us will not be listing any projects that are not revealing at least their project management team. The presented team should have relevant study or work experience, good networks, colleague or client endorsements and they should indicate clear commitment to the presented ICO project. The whole team should have diverse skills represented, and a decent size for project implementation.

The presented solution to be funded should clearly solve at least one customer segment’s everyday problem. The solution should preferably be related to a growing business sector and be very scalable in design. The sector development should also indicate that the demand for the presented solution is growing. If the project does not face much competition or has clear competitive advantages that can be seen as a good indicator of the project potential. The token model needs to fit in well for the service provision or otherwise the ICO should be looking for traditional types of investments instead.

If the ICO has passed these stages of the review the most complex evaluation stage begins. The token economics of the proposal need to make sense just as any traditional investment project. The contributor needs to dig out the information about the total amount of tokens to be generated, the mechanism of how new tokens are created, what is the end of ICO price of the tokens, how big share of the tokens are sold on the markets and what is the total initial project valuation. These figures need to be reflected to the turnover potential of the service – if the potential turnover is clearly higher than the initial project valuation, the tokens might have good value increase potential. This section is many times the weakest performing attribute of the ICOs, since the initial token supply valuation usually exceeds the potential turnover of the service in the first couple of years. It is usually a good sign, if the team will release their own tokens gradually over a couple of years – this is an incentive mechanism for the team to stay committed to the project and develop token value over a longer period of time.

Overall the token model must bring some concrete benefits for the end users and early contributors to make it a justifiable funding model. The team needs to have the required design, implementation and marketing skills to produce the described service. The project roadmap has to be fast to bring quick returns for the early contributors and the plan also has to be realistic so that delays will not cause losing of community confidence.

The last thing to evaluate is the current visibility of the project. Is the team putting in professional effort to engage with its community and to promote the service on the relevant industry sites, blogs and forums? This can be validated by visiting the project’s social media groups, looking at the sizes of the communities, how often the team is updating the channels and how much community engagement do the updates receive. It is good to check through the articles and reviews of the project to see if it has some expert endorsements.

All these bits of information create confidence or suspicions towards the ICO Coin project. It is good to know as much as possible before contributing valuable assets into any project.




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    Ravikash Gupta is a 37-year old Fin-tech and Bitcoin enthusiast living in Mexico. His passion for finance and technology made him one of the world’s leading freelance Bitcoin enthusiast, he is attached with many Blockchain Startups as Advisor.

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