First two steps are a
quick glance at the ICO, to avoid wasting time with bad fundamentals:
1. I first look at the field it is trying to change and the main idea of the token (whitepaper). If I don't think there is potential here, I don't waste any more time.
2. Next I check how the token is used:
Is it central to the functioning of the platform / i.e. is this something that wouldn't work without a token? If not ICO is just a way to raise money, so not worth it. If token is only for raising money and handing out profits / revenue share - this token can be classified as a security, so exchanges will hesitate to list it (SEC issues) and I avoid it.
After this it is time to look at the project in
more detail:
3. The team + advisors:
Past work, experience, international team? Unknown team with no experience / proof of past work is a big red flag.
4. Timeline for development and working prototype:
- How far along is the project? Avoid projects just starting out (ICO at a very early stage) unless willing to take additional risk.
- Have they met deadlines for previous steps? If not may want to avoid project - unrealistic planning shows a dysfunctional team.
- And maybe most important in this section - do they have a working prototype before ICO? If not question whether they are really able to develop on promises. I usually avoid ICOs with no working prototype.
5. ICO details:
- What is the marketcap for ICO? No marketcap, no way
If the marketcap is very large consider what marketcap it would have to reach for you to get a desired return (example to reach 10x n initial investment). Is this marketcap realistic for such a project?
- What share of coins are being sold in ICO? Preferably at least 50%. How is the rest distributed and what are the proceed of ICO to be used for?
- Presale? What kind of discount for presale and how many coins were sold? If too cheap and too large share of all coins you can probably expect presale participants to dump once token starts trading on exchanges.
- How is participation structured? Whitelist and individual caps? Will the ICO be used to guarantee wide adoption and decentralisation? Or are they just hunting for whales?
- And finally are you looking for a quick flip or will you look to hold long term because you are a true believer in this project? I invest only in project that I believe in long term, because this is whee the real money is made
This are the basics.
After this, try their slack and other channels to get a feel for the team - ask the difficult questions and see how they respond. This way you will see how thought out the project really is. Are they defensive and avoid answering or are they willing to explain things? Great sign of a good team!
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