What is Initial Coin Offering (ICO) or Token Generating Event?
Basically a company or a team of developers will pitch their idea to the public and ask for money to build their idea into a product. People will pay their hard earned cash to the team in hope of gaining profit after the product is built. You will receive Tokens (=Coin=Cryptocurrency) for your money and you can sell these tokens on secondary markets (crypto exchanges) hopefully at a profit.
However with over 10 ICOs launching every month it's not an easy task to find the profitable ones and more importantly finding and avoiding the scam ICOs.
Here I will try to list my criteria for finding the best ICO's.
i] WHITEPAPER
Whitepapers are like an essay detailing the whole project. This is your bible. first thing you need to do is to familiarize yourself with the concept the team is selling.
What you should be looking for in the whitepaper is:
What is their idea, product, tech
What problem they want to solve
How they will solve this problem.
What is the history of the project
Minimum Viable product (MVP) or a demo
Roadmap
Team and Advisors backgrounds
Token Metrics
1. What is their idea, product, tech
Is it a game changer Idea? How is the competition in their target market? If it’s not a novel idea you should see what is the value of other products in the market and how much room there is for growth.
Example: Quantstamp! They are building a platform for Smartcontract security Audits. There is no universal security audits at the moment for the blockchain.
2. What problem they want to solve
What is this project adding to the world? Do we even need this? Does it even make sense to make this or there other solutions that can be altered for our problem.
Example: Bitconnect and all the Ponzi schemes. Nobody needs that.
3. How they will solve this problem.
Do they really need blockchain tech? Or they just want to grab some easy $$? What is the advantage of their way of doing things over their competition?!
Example: All the bitconnect rip-off and look a likes. Just cash grabs. AVOID!
4. What is the history of the project
While it’s possible that some kids getting together and starting an ICO succeed. A company with stablished business and actual work experience can be a very good assurance.
Example: Ripio Credit network already has it’s own clients. With Blockchain tech they will be borderless. Even if they fail to expand, they already have their previous clients.
5. Minimum Viable product (MVP) or a demo
Never invest in Whitepapers. Never invest in promise of product. The project should at least have a MVP. Try testing the demo. See if you can find any reviews for the products.
Example: Wabi was on app store before ICO. Fully functional App already available.
6. Roadmap
This is very important, if their milestones are too far apart public interest will die down and the price will go down subsequently. Best ICO’s are the ones that will have a big release/Announcement in the span of 2 months’ time around Crowdsale.
Example: Request Network released Colossus ahead of schedule and the price jumped like crazy
7. Team and Advisors backgrounds
You should check each team member’s experience. Do they have LinkedIn profiles? Is it legit or they just set it up yesterday?
Advisors are crucial. They will add value to the project with their relationships and connections.
Example: SingularityNET has more PHD in it's team than Zuma's cabinet! Tongue
8. Token Metrics
Market cap, Total Token Supply, Circulating Supply and token price.
An ICO raising 10 million dollars vs one asking for 30M! If the first project does a 5X it’s marketcap will be less than the other project at 2X! Lower marketcap more room for growth.
Example: Publica with 2 Million dollar marketcap did a 10X
All these criterias are interconnected. While a project can be week in one or two area the overall score should be HIGH. The best practice is to have a spreadsheet with a column for every criteria. For example if we give 4 star to each criteria you should avoid any project that has less than 27 overall score.
27 out of (32=4*8). Any ICO with more than two criteria with 1 star should be avoided.
ii] HYPE
End of the day you don't want to be an ICO bag holder.
A project with hype means more people heard about it and more people will pick it up from exchanges. this also means more people to compete with in the ICO. That's why it's crucial to get into an ICO early. (This is why i'm posting here. To share my findings and hoping someone will share their findings) Let's all help eachother to be the early birds and increase our chance of making the cut.
How to measure hype?!
1. Telegram
number of telegram members on the ICO channel correlate to it's success. However don't get scammed. join the channel. monitor the activity! 10,000 members and 50 new messages per day means big number of those members are fake. Few social media Admins constantly welcoming new members or posting memes also is a red flag.
There should be Active and constructive discussion in the channel. Team members should engage in the conversation. If a CEO keeps posting memes (like boon.vc CEO posting meme contests
) and avoids serious questions get the hell outta there immediately.
2. Social media and website
Check the website toughly! If they didn't bother to create a professional website how they are going to run a successful ICO and business?
Alexa rankings are not very helpful since most ICO websites are not old enough to have proper rankings.
However you can use:
https://www.similarweb.com/
to see where the Incoming and Outgoing traffic to the website is coming from. 50% of incoming traffic is coming from instagram or a russian website?! they bought the traffic. It's a scam.
use:
https://www.twitteraudit.com
to see how many fake followers they have on twitter.
google trends as also very helpful to gauge out the ICO Hype and legitemacy.
iii] Competition *
Lending platforms are great. Privacy oriented Chat Applications are great. Betting and gambling tokens are great e-sport Tokens are great.
BUT there are just too many of them already. Look for ICOs with new Ideas, new use cases. Something disruptive and novel.
Another thing to look for is the market cap of the competitors. If an ICO asking for $15 Million and it's competitors valued 500 Mil. there is a high chance that the token value can easily go X4 short term.
Look at the fiat competitors revenue. For example annual revenue in a business sector is 5 billion dollars dominated by giants. if the ICO manages to snatch 1% of market share it will be successful. Based on all the other criteria you can decide how much of the market share they can acquire and how much the token's value can rise.
iv] Product delivery timespan
Aragon network is what made me a hardcore blockchain fan. Disruptive Idea, Amazing and highly qualified team. everything about this project is All star. But why token price is not moving?!
BECAUSE IT'S A LONG HOLD. network will go live in 2019.
Check the milestones and delivery dates. The sooner they deliver the faster it will go to moon.
iv]Exit Points
Remember in the first post I said you can cash out 200 out of 300.
This is a crucial point and Technical and fundamental Analysis can be helpful. Based on the criteria above you can decide the potential for the ICO and decide for how long you will hold the tokens. Also depending on the amount of profits you are making you can decide the percentage of tokens you want to sell. My friend sold all his Bounty0x tokens for X3 few days later it was trading for +X10 (ouch...)
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I understand that we can't know for sure if the ICO will be able to compete with established brands and industry giants. I understand that projected revenue and token marketcap are not correlated. End of the day tokens are not paying dividend. We are just trying to buy into ICOs and sell the tokens on the exchanges. These are criterias to make a good decision toward
