What are ICOs?
If you are familiar with crowdfunding then ICO's will make sense to you. Before launching an ICO, the startup company usually comes up with a whitepaper where they detail about the company idea, project roadmap and the intent for token distribution. To win the confidence of its investors, whitepaper also share details why token is needed for the project and Token Distribution Plan (TDP). TDP usually share details about how many tokens will be allocated to company, founders, developers, investors, marketing or to cover any other costs. TDP also provides good insight whether founders have long term plan for the project or just interested in quick buck.
Some ICO companies also offer pre-sale tokens to institutional and high worth investors at a much discounted price, before ICO is opened for the general public sale. Generally, tokens offered during public sale event are much cheaper and offered at discounted prices compared to buying token once its listed on an exchange. Maximum token discounts are offered in the beginning of ICO launch, which sometimes decreases as time progresses. Passionate supporters and investors buy new ICO tokens in the hope that if company idea is implemented and successful, token value will multiply and provide a handsome return of investment. Finally, when the funding goal for a project is met and the project takes off, these tokens becomes functional units of cryptocurrency.
Things you should look for before investing in ICO's:
- Team: How is the team, do they have enough people and the experience of pulling it off?
- Idea: Do you believe in their idea and is it realistic?
- Roadmap: Do they have a roadmap, and how much time do they need to launch their product?
- Hard cap: Unnecessary high hard cap often means they are in for the money. Lower hard cap is usually more profitable because it's easier to multiple your investment
- Bonus: How much bonuses has been given during the pre-sale and ICO? If someone got tokens at a much better price than you do, then you might get burned.
- Tokens for sale: The higher percentage of tokens available for sale, the better it is for the investors.
- Team's tokens locked period: How long are the team's tokens locked? And are they locked at all? It should at least be locked for 1 year minimum to show the investors that they believe in their own project and won't sell their tokens after a short time.
Hope you liked my thread. If I missed something let me know, and I'll update the thread.
Merit points would be highly appreciated.
Good overall summary and advice, you missed off one major thing to look in to and consider and that is the competition. Is someone already doing the same idea or something similar, how are they fairing etc
