The Internet is teeming with SEO articles with a bunch of tips on how to evaluate ICO projects. Some are detailed, copyrighted, and others are plain water. The founders of the $ 10 Buffett telegram channel as participants in our blockchain conference in Moscow shared with us their criteria by which they rate ICO projects. I decided to check whether scam can be calculated in advance by these criteria. I will check on the two completed tokensaley: one became a famous scam, and the second has not yet shown signs of such.
But one approach is boring and not enough, so I took four more from the Internet and tried to figure out which approach is the best for determining scam.
Under the cut a bunch of tables.Approach # 1: 20 criteria for evaluating the ICO project from Artem Popov and Alik ArslanovArtem Popov and Alik Arslanov - the founders of the $ 10 Buffett telegram channel. This is a project in which guys buy tokens of different blockchain projects every month and share their results. At the same time, they warn that the information provided by their channel is not financial or legal advice, but only the personal opinion of the authors. Here are the criteria that they use in the selection of ICO-projects for investment:
1. Does the product solve the real problem?
2. Is it a global or local problem?
3. Is there really a need for blockchain and ICO?
4. What is the token in the project and what is it for?
5. What will ensure token turnover?
6. Is the timing of the tokensale dragged out?
7. Hard Cap and Soft Cap delta.
8. How many hard cap? If a lot, how will they do?
9. Does the project make startups or entrepreneurs with experience?
10. How many percent of tokens are sold, how much does the team take for itself, in what parts does it get?
11. Is there MVP and is demand tested? Or an idea from a series of “caps for raccoons on the blockchain”?
12. What is the action plan after the ICO? Who and how will deal with post-marketing and market formation?
13. What is the budget for this plan and is there an understanding of how this is done?
14. HYIP level around the project. Community size and activity.
15. What will they do with those tokens that do not sell?
16. How do marketing campaigns gather at the ICO itself, how geographically diverse is the audience?
17. Is there a KYC procedure? How organized?
18. Minimum and maximum entry threshold.
19. Is there already support from people and companies from the field in which the project is being implemented?
20. Who and how is responsible for legal and financial security?
Approach # 2: Evaluating the ICO from Nick TomeinoThese criteria are taken from the
article on the cryptocurrency news portal bits.media. The portal, in turn, borrowed them from the
publication of Nick Tomeino, the founder of 1confirmation - a venture capital fund for early stage companies. The material is only six points and a lot of reasoning. But they can be singled out as separate questions following the example of those that Alik Arslanov and Artem Popov are asking themselves.
1. Are blockchains and project tokens really needed?
2. Is the project information open?
3. Is there a blockchain beta?
4. Is it possible to exchange tokens for project resources?
5. Is there any hardcap fees?
6. Do the founders own 10-50% of tokens, and is there a ban on their sale for three years?
Approach # 3: Criteria from Evgeny LavrinenkoNext come ten points from the founder and CEO of the PlayBets gaming platform, Yevgeny Lavrinenko. They are described in the portal
article anycoin.news. The material also contains a lot of reasoning and quite general tips like "rate the scope of activities." I tried to concretize the questions in each of the points.
1. Do I need a blockchain project?
2. Does the project solve the real problem? Is there a roadmap, whitepaper, presentation and links to social networks?
3. The project is created by novices or a team with experience?
4. Is there a MVP?
5. Are there any similar solutions on the market?
6. Are blockchains and project tokens really needed?
7. How are tokens distributed? Is token emission limited? Are excess tokens burned after ICO? How does the company plan to go public? What ensures the growth of the token?
8. How detailed are the goals and stages of development in the roadmap?
9. How active is the project in social networks and profile forums?
10. What are softcap and hardcap? What will they spend money on? Is there an Escrow? Do smart contracts lie on github? Are there any discounts at different stages of the ICO?
Approach # 4: Assessment tokensale from vc.ruThe site vc.ru also has
an article on the evaluation of ICO-projects. At the very beginning, the authors write that the material is nothing more than the translation of an article from the ICOGO.biz forum. It was not possible to get to the original article, so the author is unknown. But let's see what the portal for businessmen vc.ru writes.
1. Is the project a start-up or a company with experience switching to a blockchain?
2. Is there a MVP?
3. What is the experience and reputation of the team?
4. Is token emission limited? Is the distribution of tokens in parts or one at a time? What is the role of the token in the project? What part of the tokens are left to the authors?
5. Are there any errors and mutually exclusive provisions in the whitepaper? Is there competition in the market?
6. How active is the project in social networks and profile forums?
Approach # 5: Criteria from ICO TIMEStunned news portal ICO TIME also presented
an article about ICO. There is a lot of water here about the difference between ICO and IPO, the legal status of tokensales, and the criteria themselves are indicated by a short list at the very end of the article. I will consider them.
1. Is there a MVP?
2. Is there whitepaper and are the rules and conventions open?
3. Is the company registered as a legal entity?
4. What is the reputation of the authors of the project?
5. Is there an Escrow? In other words, are the authors ready to guarantee the fulfillment of obligations?
6. The project is created by novices or a team with experience?
Project Evaluation by Criteria
I will try to evaluate a couple of ICO-projects according to the above criteria. The choice fell on two projects: one - who had become a scam, the other so far proves that everything is in order. I specifically chose those in which both the site and the whitepaper remained (in cases with scam projects this turned out to be more difficult). First we take on the ICO project, which is not scam - Faceter.
All conclusions will be displayed at the very end - after the tables.
Faceter
The authors of the
Faceter project
intend to create a decentralized network of "foggy" calculations in order to recognize faces (and certain objects) using video surveillance systems. A kind of "Big Brother" on a global scale. The media wrote that as a result of the Pre-sale, $ 10 million was raised in 10 seconds. Total project has collected $ 28.6 million
I check the project for each of our approaches.
Approach # 1| Does the product solve the real problem? | Yes. |
| Is it a global or local problem? | Worldwide. |
| Is there really a need for blockchain and ICO? | Not. Face recognition systems live without blockchain. |
| What is the token in the project and what is it for? | Payment tool for the purchase of video surveillance services on the Faceter platform. |
| What will ensure the turnover of the token? | Demand for video surveillance services. |
| Is the timing of the tokensale dragged out? | Not. Standard 10 days for presale and one and a half months for tokensale. |
| Hard Cap and Soft Cap - Delta. | Soft Cap = $ 5 million, Hard Cap = $ 40 million. |
| How many hard cap? If a lot, how will they do? | $ 40 million are planned to be spent on video cameras, integration with the systems of “smart” houses and augmented reality glasses, car recognition. |
| The project is done by startups or entrepreneurs with experience? | Team members are predominantly experienced. |
| How many percent of tokens are sold, how much does the team take for itself, in what parts does it get? | 40.8% in free sale, 30.8% - operating reserve, 15% - to the team (ban on sales for 2 years), 6.9% - bonuses, 6% - remuneration of advisors, 0.5% - bounty. |
| Is there MVP and is demand tested? Or an idea from a series of “caps for raccoons on the blockchain”? | Demand is verified. MVP could not be verified - there is only a demo video. |
| What is the action plan after the ICO? Who and how will deal with post-marketing and market formation? | A fully functioning version of Faceter will appear no earlier than the end of 2019. Prior to this, development is planned. Who will be engaged in post-marketing - could not figure out. |
| What is the budget for it and if there is an understanding how this is done? | Could not figure out. |
| HYIP level around the project. Community size and activity. | HYIP at level: $ 10 million on pre-sale collected in 10 seconds. The size of the community on Facebook is 36 thousand subscribers. Activity failed to find out. |
| What will they do with those tokens that do not sell? | Burned. |
| How do marketing campaigns collect on the ICO itself, how geographically diverse is the audience? | Attend international blockchain events, develop accounts in social networks and forums. The geography of the audience could not be determined (theoretically, the whole world). |
| Is there a KYC procedure? How organized? | Could not figure out. |
| Minimum and maximum entry threshold. | Minimum purchase is 1000 FACE tokens for 0.0872 ETH. Maximum - unknown. |
| Is there already support from people and companies from the area in which the project is being done? | Could not figure out. |
| Who and how is responsible for legal and financial security? | CEO and Director of Business Development. How exactly - could not figure out. |
Approach # 2| Do we really need a blockchain and tokens for the project? | Not. Face recognition systems live without blockchain. |
| Is the project information open? | Yes. |
| Is there a blockchain beta? | Not. |
| Can I exchange tokens for project resources? | Not. |
| Are there any hardcap fees? | There is. |
| Do the founders own 10-50% of tokens, and is there a ban on their sale for three years? | Owned 15% of tokens with a ban on sales for two years. |
Approach # 3| Do I need a blockchain project? | Not. Face recognition systems live without blockchain. |
| Does the project solve the real problem? Is there a roadmap, whitepaper, presentation and links to social networks? | Solves the real problem. Roadmap, whitepaper, presentation (onepager) and links to social networks - there is. |
| The project is created by novices or a team with experience? | Team members are predominantly experienced. |
| Is there a MVP? | MVP could not be verified - there is only a demo video. |
| Are there any similar solutions on the market? | There is. |
| Do we really need a blockchain and tokens for the project? | Blockchain is not. Tokens - only to finance the project. |
| How are tokens distributed? Is token emission limited? Are excess tokens burned after ICO? How does the company plan to go public? What ensures the growth of the token? | 40.8% in free sale, 30.8% - operating reserve, 15% - team, 6.9% - bonuses, 6% - remuneration of advisers, 0.5% - bounty. Emission is limited. After ICO, extra tokens are burned. Plans to enter the stock exchange are unknown. The growth of the token is ensured by the speculative nature of the coin and the demand for it. |
| How detailed are the goals and stages of development in the roadmap? | Not so very detailed: at least there are no temporary steps. |
| How active is the project in social networks and profile forums? | Highly active. |
| What are softcap and hardcap? What will they spend money on? Is there an Escrow? Do smart contracts lie on github? Are there any discounts at different stages of the ICO? | Soft Cap = $ 5 million, Hard Cap = $ 40 million. The money will be spent on product development. Escrow is missing. The source code is posted on github. There are discounts on different stages of ICO. |
Approach # 4| Is the project a startup or a company with experience switching to a blockchain? | The company was founded in 2014, so rather a company with experience. |
| Is there a MVP? | MVP could not be verified - there is only a demo video. |
| What is the experience and reputation of the team? | Negative reviews about the reputation of individual team members could not be found. The team consists mainly of experienced specialists (with experience in his field of nine years). |
| Is token emission limited? Is the distribution of tokens in parts or one at a time? What is the role of the token in the project? What part of the tokens are left to the authors? | Limited Distribution occurs in parts during the week after the closure of the ICO. The role of the token is a payment tool for the purchase of video services on the Faceter platform. The authors keep 15% of all issued tokens. |
| Are there any errors and mutually exclusive provisions in the whitepaper? Is there competition in the market? | Competition is present in the market. Mutually exclusive provisions in the whitepaper could not be found. |
| How active is the project in social networks and profile forums? | Shows high activity. |
Approach # 5| Is there a MVP? | MVP could not be verified - there is only a demo video. |
| Do whitepaper and open rules and agreements? | Whitepaper in stock. Rules and agreements are open. |
| Is the company registered as a legal entity? | The company is registered in Seychelles as a limited liability company. |
| What is the reputation of the authors of the project? | Positive. |
| Is there an Escrow? In other words, are the authors ready to guarantee the fulfillment of obligations? | Escrow is missing. |
| The project is created by novices or a team with experience? | The team is mostly experienced professionals. |
Pincoin
Now another ICO -
PinCoin . History shows that this Vietnamese project turned out to be a scam. In April 2018, the Vietnamese company Modern Tech, which is responsible for launching two ICOs: PinCoin and Ifan, quietly took away $ 660 million collected on tokensales. How much exactly PinCoin was able to assemble - it was not possible to find out. But it is known that the company began to pay commissions to its investors in their own tokens, which cannot be cashed anywhere and in any way.
PinCoin promised to become a blockchain platform for an advertising network, an auction, an investment portal, a payment system and a P2P marketplace. I will try to understand the project according to our criteria.
Approach # 1| Does the product solve the real problem? | Not. There are a lot of advertising networks, auctions, investment funds, payment systems and marketplaces. |
| Is it a global or local problem? | There is no problem at all. |
| Is there really a need for blockchain and ICO? | Blockchain is not needed, because all platform components can work without it. ICO is also a dubious story. |
| What is the token in the project and what is it for? | In the whitepaper poured "water" on the use of tokens. In fact - just a means of payment for services within the platform. |
| What will ensure the turnover of the token? | Demand for platform services. |
| Is the timing of the tokensale dragged out? | Not. December for pre-sale, January - for ICO itself. |
| Hard Cap and Soft Cap - Delta. | Hard Cap - $ 200 million, Soft Cap - $ 50 million. |
| How many hard cap? If a lot, how will they do? | Hard Cap - $ 200 million. There are no specific statements about the use of all $ 200 million. |
| The project is done by startups or entrepreneurs with experience? | Team information is missing. |
| How many percent of tokens are sold, how much does the team take for itself, in what parts does it get? | 23.5% - reserve, 15.0% - system development fund, 15% - future sales, 11% - crowdsale, 10% - to consultants, 10% - to founders, 8.5% - for pre-sale, 5% - development fund community, 2% - bounty. The distribution of tokens is immediate, activation - at the end of the crowdsale. |
| Is there MVP and is demand tested? Or an idea from a series of “caps for raccoons on the blockchain”? | MVP is missing. How proven the demand - could not figure out. |
| What is the action plan after the ICO? Who and how will deal with post-marketing and market formation? | After ICO, development of a mobile PIN application is planned. Who will be engaged in post-marketing and the formation of the market of bidding is unknown. |
| What is the budget for it and if there is an understanding how this is done? | 30% of revenue goes to marketing, 30% to technical development, 10% to safety, 10% to overhead, 10% to develop business, 5% to administrative expenses, 5% to comply with legal compliance. About the "understanding" - is unknown. |
| HYIP level around the project. Community size and activity. | HYIP level could not be determined. By indirect indications (such as collecting $ 660 million with the Ifan project), we can say that the HYIP is rather big. The Facebook community has 66 thousand subscribers. Activity is average. |
| What will they do with those tokens that do not sell? | Not specified. |
| How do marketing campaigns collect on the ICO itself, how geographically diverse is the audience? | Could not figure out. |
| Is there a KYC procedure? How organized? | Could not figure out. |
| Minimum and maximum entry threshold. | The minimum amount of entry is $ 100, the maximum is $ 20 thousand. |
| Is there already support from people and companies from the area in which the project is being done? | Could not figure out. |
| Who and how is responsible for legal and financial security? | Could not figure out. |
Approach # 2| Do we really need a blockchain and tokens for the project? | Not. |
| Is the project information open? | Relatively, yes. |
| Is there a blockchain beta? | Not. |
| Can I exchange tokens for project resources? | In the future, yes. |
| Are there any hardcap fees? | There are - $ 200 million. |
| Do the founders own 10-50% of tokens, and is there a ban on their sale for three years? | Owned by 10%, there is no ban on the sale. |
Approach # 3| Do I need a blockchain project? | Not. |
| Does the project solve the real problem? Is there a roadmap, whitepaper, presentation and links to social networks? | Does not solve real problems. Roadmap, whitepaper, links to social networks - are present. No presentation. |
| The project is created by novices or a team with experience? | Information about the team is missing, could not be determined. |
| Is there a MVP? | Not. |
| Are there any similar solutions on the market? | Yes, in abundance. |
| Do we really need a blockchain and tokens for the project? | Blockchain is not. Tokens - only to finance the project. |
| How are tokens distributed? Is token emission limited? Are excess tokens burned after ICO? How does the company plan to go public? What ensures the growth of the token? | 23.5% - reserve, 15.0% - system development fund, 15% - future sales, 11% - crowdsale, 10% - to consultants, 10% - to founders, 8.5% - for pre-sale, 5% - development fund community, 2% - bounty. Emission is limited. Excess tokens are not burned. Plans to enter the stock exchange are unknown. Growth is driven by the speculative nature of the token and the demand for platform services. |
| How detailed are the goals and stages of development in the roadmap? | Time steps are described in some detail. |
| How active is the project in social networks and profile forums? | Activity is above average. |
| What are softcap and hardcap? What will they spend money on? Is there an Escrow? Do smart contracts lie on github? Are there any discounts at different stages of the ICO? | Hard Cap - $ 200 million, Soft Cap - $ 50 million. 30% of revenue goes to marketing, 30% to technical development, 10% to safety, 10% to overhead, 10% to develop business, 5% to administrative expenses, 5% - legal compliance. Escrow is missing. There are no links to GitHub. There are no discounts. |
Approach # 4| Is the project a startup or a company with experience switching to a blockchain? | Startup |
| Is there a MVP? | Not. |
| What is the experience and reputation of the team? | Information about the team is missing, could not be determined. |
| Is token emission limited? Is the distribution of tokens in parts or one at a time? What is the role of the token in the project? What part of the tokens are left to the authors? | Emission is limited. Distribution occurs at once. The role of the token is a means of payment for platform services. The authors keep 10% of tokens (plus a reserve of 23.5% of the total). |
| Are there any errors and mutually exclusive provisions in the whitepaper? Is there competition in the market? | Errors and mutually exclusive provisions could not be found. Competition is present in the market. |
| How active is the project in social networks and profile forums? | Activity is above average. |
Approach # 5| Is there a MVP? | Not. |
| Do whitepaper and open rules and agreements? | Whitepaper in stock, all the rules - in it. |
| Is the company registered as a legal entity? | Yes. Responsible for the project Vietnamese Modern Tech. |
| What is the reputation of the authors of the project? | Could not figure out. |
| Is there an Escrow? In other words, are the authors ready to guarantee the fulfillment of obligations? | Escrow is missing. |
| The project is created by novices or a team with experience? | Information about the team is missing, could not be determined. |
findingsPinCoin TokenSail does not even withstand weak criticism on any of the approaches, except # 2. There is no MVP in the project, not a word about the team, but there is a high level of activity on social networks and a promise of 40% return on investment every month. Nevertheless, the authors managed to fool the people with impressive money.
Faceter looks much more impressive, why the project should be treated with more attention. The team is experienced, the goals and distribution of funds are described in some detail. But they are very confused by the high level of HYIP and the fact that it is impossible to check the project MVP properly.
Which approach is better?
As you can see, approaches # 1 and # 3 contain the most questions, making the picture of ICO a little more understandable. In the first, there is no question of Escrow, but there is a question of legal and financial security, which somehow compensates for this. But approach # 1 is the only one where there is a question about the KYC procedure.
Approaches # 4 and # 5 are a kind of “minimal set” of questions that a potential investor should ask himself. The evaluation criteria are not very numerous, but everything is rather important. It is possible to single out approach # 5 as the only one where an investor should ask himself about the verification of a legal entity.
In approach # 2, there is no question about the experience of the team and MVP. Nothing is asked about the distribution of tokens. The approach can be considered the most untenable.
How the experts evaluate and launch ICO will be described by the startupers themselves (and already experienced businessmen) at the Smile-Expo blockchain events. The closest will be held in
Georgia (June 20) and
France (July 18): there are separate panel discussions devoted to the ICO theme. Following the conference will be held in
Sweden ,
Ukraine ,
Azerbaijan ,
Switzerland and
Belarus .