You can show how to do DD, what are the main points?
Sure. We use only public available information. If we do not find it and the team does not provide it we assume there is none.
Key points:
ICO review procedureResults are here
https://tokensrecord.com/ico-due-diligenceA simplified scheme described below:
Team: who are team members, are their social profiles available. - review linked in profiles if there are any (we usually skip those without public linkedin profiles).
MVP: do they have an MVP available to test. - it is there or it is not there. The next step is to see how it works and does it work at all. If any code available we try to compile it.
Company: is there a registered company already for selected project? - we use several website to check if the company is registered
U.K. registration:
https://beta.companieshouse.gov.uk/ Global
https://portal.kyckr.com/ Development: how recent are development updates uploaded? is there an open github repository? - we do basic code review and latest commits to understand is there any ongoing development or the team just adds comments to increase number of commits per day.
Vesting: what is the vesting period for team/advisors tokens? - whitepaper, token sale section should contain that information. Good thing if smart contract contains vesting logic too.
SmartContract: is there a smart contract available and was it audited by experienced team? - We look at github and review smart contract.
Experience: is cumulative experience of team and advisors enough to complete the project? - compare goals of the project to previous team member positions and possibility of completing the project. We undrestand of course that you can always hire several members after the ICO but key positions should be there and it should not be one man army.
Advisors: do advisors prove they support project? - Do advisers have relative experience necessary for the team to achive goals? We alos have a database of advisors that are joining almost any project that pays with tokens and do not provide any value for the project. But this is our opinion so we do not share it at this moment not to abuse anybody. We do not add it as redflags either. At least for now.
Expenses: does expense plan correlate with road map of the project? - This part is the most questionable because if project is planning to work in US they can not call their investors investors (only contributors) and they do not have to share where they will spend money. But in other cases at least general idea of how money will be spent should be there. One of the redflags is when more than several percents will go towards early investors and
TokenDistribution: are there any risks for investors in token distribution of selected project? - Key things we look here for the team to have motivation to improve project after ICO and not have ability to manipulate price afterwards.
TechDetails: are there enough technical details to understand project? - This part depends on the project. If it is a solely tech project it is good to have understanding how deep team understands tech aspects. For other industry projects we are not so strict because business development is way more important there.
Investor Protection: how protected are investors money after contributing into project? - There should be clear mechanism of investor money protection like escrow or at other ways mentioned in the whitepaper or token sale details document.
Each project should be reviewed individually and getting all green checkmarks does not mean that you should definetly invest into it. Due Diligence process does not include comparing to competitors, market research and doing any forecasts on project possible success or failure. This is represented by Interest Level. Not a financial advise. Right now only few projects are considered intereseting and even them are mostly for flipping.
Things described above is around 20-30 % of the work that should be done. It is a way better idea to have all things being rechecked by the community. That is why we have Red Flags(not to invest) and Green Flags (sort of proved facts about project) which can be rechecked by others. Our idea is that collaborative work can bring this process to a higher level.
