How To Analyze ICOs
With the massive proliferation of blockchain technologies, startups have a new way to raise capital – initial coin offer (ICO). During ICO, companies offer a wide range of investors their own cryptocurrency (tokens) to finance a project.
The ICO face of any project is his site, so the assessment should start with him. As a rule, the site contains information about the project, contact details of its creators and an offer to purchase tokens.
The most important thing to learn is the White Paper of the project. The white paper should reveal the whole essence of the project, from the general idea to the technical details. It must clearly and clearly state the goals, identify the business plan, the main markets that the product is aimed at, as well as the stages of financing. Project objectives should be logical and achievable.
A good sign is the presence in the White Paper of a part of the code or a link to the repository and technical details of the project.
A bad sign is the vagueness of the wording or a clear misuse of terminology, which is often used to hide the lack of meaning.
The project team
A well-chosen team provides about half the success of the project, so it is important that the site contains information about its members with a detailed background and contact information. Even better, if this team, or at least one of its members, already had successful projects in the field of blockchain.
In addition, the sites of reliable ICO contain a roadmap, which describes the stages of funding, the tasks for which it is necessary, as well as the timing of their implementation. Here you need to pay attention to whether the objectives of the roadmap are consistent with the overall objectives of the project and whether they can be implemented within the planned time frame.
If you are confident in the reliability of the company and the viability of the project, you can proceed to the study of the tokens themselves. First of all, it is worth understanding what possibilities the token offers and how it will be used in the project ecosystem. For example, the startup token Eros offers holders a part of the profits and a discount on the project services, and also serves as the local currency for payments.
And the tokens of the ICONOMI digital asset management platform will be subsequently simply bought out by the company itself with a premium. Both of these options provide the value of coins while projects are operational.
If this is all right, then you should pay attention to the distribution of shares between investors and creators. A company should not place too large or too small a portion of tokens on ICO As a rule, in good projects the share of investors is 70−80% of all coins, the rest remain with the team. This scheme provides a good balance between attracted investments and the interest of the creators in the further development of the project, increasing its chances of survival.