Initial Coin Offering (ICO)
ICO investing has been a key consideration of many investors seeking outsized returns. Outsized returns can only be achieved however by carefully picking the top quality projects. This is no easy feat and many investors have gone bankrupt trying to accomplish this. Many factors need to be taken into consideration when looking to invest in an ICO. Tokenomics, team members, and competitors are all factors which need to be analysed when considering placing your investment capital into an ICO. With the process of an ICO being to issue a token to fund the development of a project, this project needs to have valuable components for the investment to turn a profit.
These are the main reasons why Cryptolinks added our top ICOs category. From our experience of already being involved in ICO investing, we have identified the key criteria linked to the performance of an ICO. Our ICO reviews include the major points to note regarding a project and after delving deep into each project we decide to review, we assign a star rating representative of the overall strength of the project.
What is the process for reviewing these projects? Firstly, we cover the essentials which include:
● Decentralization edge
● The use case for the token
The decentralization edge looks into why does this project need a blockchain. The founder of Ethereum – Vitalik Buterin – said it best when he tweeted that teams should have a good answer for “why use a blockchain”. A blockchain can be inefficient in a lot of cases and still suffers from major scalability issues. For this reason, it is always a red flag for us if projects are just jumping on the blockchain hype train.
The next essential point is similar. Projects should have a good reason for why they need a token as well as why they need a blockchain. If a project is being built, why can it not just use bitcoin or ethereum. Does the token actually have a proper function within the ecosystem being built and is there a legitimate need for it? If the answer is no and the token is being issued simply to raise funds, this is another red flag for us and it will impact the rating.
Tokenomics encompasses a wide variety of features within the projects. It takes into account the token distribution between the founders of the project, partners, developers, and investors. It also takes into account the supply and issuance model and how this will be tied to the value of the project. These are all important to take into consideration and we always check this out with the upcoming ICO's.
The project could have the best answers for all of the above essentials but a poor team means the project is bound to fail. Countless scams have taken place in ICOs and even legitimate projects have suffered from team problems. After the Envion mining ICO took place in 2018, funds were caught up as legal disputes took place between different team members over the use of the funds. A bad team is sure to have a negative impact on ICO investing. Anybody can look on LinkedIn to see a team but these can easily be fake profiles. For that reason, we make calls to offices to legitimise the team's background and check that all the dots properly connect.
The community is an often underestimated part of the ICO review process. A strong community such as the one behind Ethereum can really propel the performance of a project. We assess the level of a community by assessing social media followings on Reddit, Twitter, and Telegram and we also consider whether the following is legitimate or not as followers can easily be paid for or bots can be coded. We assess this by monitoring for red flags on the discussion that orients around a project. Those bots and paid users can have similar tendencies.
A thorough consideration of competitors is important in traditional start-up businesses. It is just as important in ICO's. Projects need to consider competition in both the decentralized world and the centralized world. What other decentralized projects have been launched to tackle this problem? What is this ICO doing differently than them? What are the centralized competitors that are dominating this business area and does the decentralized proposition have any advantage over them?
Once the essentials are covered, we have a look through the whitepaper and also consider the technology proposed to be used. If the technology is questionable, this will have an impact on the rating. A lot of projects propose using questionable technologies to tackle the scalability problem but this often compromises security. While a lot of people are impressed with the proposed scalability propositions, we highly value security and this will be seen in our ratings.
If you are happy with our ICO research process as detailed in the preceding paragraphs, you can easily use our reviews to get a quick gauge of our analysis on a project. It is advised to go scouting for further information but our reviews will definitely help in discerning what is worthwhile having a look at and what is not.
DISCLAIMER: This information is for educational, informational and entertainment purposes only. Any information and advice or investment strategies are thoughts and opinions only, relevant to accepted levels of risk tolerance of the writer, reviewer or narrator and their risk tolerance maybe different than yours. We are not responsible for your losses. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence and consult the financial advisor before acting on any information provided.