Analysing ICOs (applies to crypto investment in general)

[BQ]

The interest in ICO investments seem to be taking off again, and therefore I will write what I suggest one does before investing in a project,
and hopefully, others could contribute with their suggestions!

I posted this in Beginner & Help first, but I realise it's much more relevant in 'Altcoin Discussion'

This should apply to crypto investments in general, not only ICOs
However, depending on the stage of the project you're investing in, some points might not be relevant anymore.
It's still very valid to ensure the idea, the team, and other aspects! 

The idea
The most important thing to consider when investing in an ICO, is the idea itself.
Due to the crypto boom, a large amount of companies are throwing around buzzwords like 'blockchain' and 'crypto'.
For an existing company using buzzwords like these can generate a lot of interest, as seen with the somewhat recent Kodak announcement.
Without investigating their project by itself, it's a good point to keep in mind:
Companies are made to bring in profit, and jumping on the latest hype is a good way to gain interest. It doesn't mean it's a good, or viable, idea.

Now, to the point of projects launching initially on the blockchain:
This is a very good way for a company to raise funding, and it also allows people to get in on, something like 'the ground floor'.
Surely, this has proven very rewarding for many people: just take Ethereum, the second largest most valuated crypto.
One Ethereum was less than 50 cent! That'd be a profit of roughly 1350x in today's prices, or 2750x at the peak.

Ethereum was launched relatively early(2014), in general, the average crypto-investor at that point was probably more technically-competent,
and the crypto projects in general was a bit more technically-oriented than many of today's projects.
This is important to keep in mind, when considering a project.
Does the project actually have a reason to run on a blockchain?
Or, is it only done for easy funding?
Last year, people seemed to throw money at anything, and any idea - good or stupid - could raise millions of dollars.

Yet, quite recently - there was the huge 'Bitconnect' scam, and many many more projects has gone the same path.

When you're investing in a project, any project, crypto or not - it's of course always best to be knowledgeable in the relevant field.
But, it's rarely possible to be, in all fields. Therefore, it's important that you don't fall for the marketing only.
An ICO wants to raise money, and to achieve that, they'll clearly do their very best to justify their existence, as well as why it's worth to invest in it.
Look up various neutral discussions, ask around(perhaps post here on Bitcointalk), to make a better decision regarding the project's viability.
You can also use sites such as icorating.com, forum (Bitcointalk/Reddit) discussions, and so on.
Whatever way you choose to go about understanding a project and it's use, ensure that you don't base your decision solely off one source.
In every crypto project, there's always many voices involved.
People who are holding 'shares' of the project in question, and wish that other's invest to raise their own investment value
People who are holding 'shares' of the project in question, and wish that other's don't invest in order to keep prices lower
Neither of these groups are necessary experts, so even if things sound good, try to verify from other sources.
Look at the bounty section - people are paid in 'shares' to do various tasks such as doing positive YouTube videos, sharing social media content, writing positive comments, and so on.
This means that there's a high likelyhood that any content in relation to a project you're researching, was paid for.
Make sure you look up neutral, relevant discussions about the project, general discussions, possible issues(every project has them), technological concerns, etc.

What gives the coin/token value? Is it a currency token? Is it a token that has is tied to the project itself?
A simple example would be Binance Coin which is used to pay for fees on the Binance Exchange, thus ensuring adoption = value.
Another example could be Nano/Raiblocks which is quite popular, and is only used as a currency.
What makes you believe 'your' coin/token will gain in value?

Be Aware of projects that tell you how much you'll earn.
It's often scams that say things like, 3x in 3 weeks!
Companies should be focusing on their product, not on short-term gains.



What are you paying per token? Has someone else payed less? What can you expect short-term, and long-term?
Many projects has 'private sales' for big investors, who gets to buy tokens at a much lower price.
This could for example be motivated as 'a sure way to reach the softcap', which might be true, but that could also mean you're making a bad investment.
The softcap is the minimum amount needed to continue on with the project.
The hardcap is the maximum amount.

Ensure that you're aware of this, since it's quite common for big investors to simply let the ICO run it's course, and once it's over, they can sell off a large amount at a higher-than-paid price, thus damaging the short-term value, and in extension, you would've been able to acquire a larger amount of tokens for the same price. This is not always the case, but it's quite common.
Look if there's 'vesting periods', for example, any early-investors has their tokens locked for X time to ensure stability.

Another thing to consider is; will a certain amount of tokens be held by the team?
If so, what prevents them from selling off a large amount? Will a contract hold the amount for a certain length of time?
It surely can benefit the development; but not necessarily your investment.
Be certain that you have a clear view of what's coming in the future in terms of the supply.

Whitepaper
Every project should have a whitepaper, describing in detail various aspects of the project.
Examples of this are how the project itself will function technology wise, token economics, finance in general, distribution of funding and such.
Here, it's good if you know what you're reading about - many projects can go into deep technical detail, while it can look good, it's not always the case.

Roadmap
Another very important thing in a project in general, is the roadmap.
The roadmap should give a general idea of when various milestones in the project will be released, such as new project-stages.
Roadmap dates aren't necessarily written in stone, but make sure there's a clear path of how the project will go forward.
Ensure that the project has a roadmap.
Lately, many projects at least has some an early stage prototype - look at the roadmap, was the goals achieved in time?
(observe that it's not super-important that a project releases on the exact day, while it's good if they do, technical projects can come with unexpected issues that delay the project).

The Team
If the project doesn't have a team publicly available, you should take that as a warning sign.
It's up to you how far you decide to dig before you determine if the team seems reliable.
You can look up LinkedIn profiles(can be faked), you can google reverse-image search to see if they're providing someone else's pictures,
you can dig around Github to see if you find active developers, etc - in general, ensure that the team is there, they exist in real life, they're actually involved in the project, and that they seem to be capable for the project.

Competition
The technology behind crypto makes a lot of things possible; what ensures your ICO will succeed?
There are likely other projects working on a similar thing.
Where is 'Your Project' and Competing Projects in terms of development?
An ICO is generally done in a very early stage, meaning a project is often without much actual product.
At the same time, another project, dealing with the same type of product - may very well have released their product by the time 'your project' is ready.
Do you have any reason to believe 'your project' will succeed, while other's don't?

Have a look around the Bounty section, see how many projects are quite the same?
Surely, there can be active competition as well, but one would rather bet on the winning horse.
So, make sure you analyze the horse until you feel very confident in your investment decision.

Scams
There are a lot of scams, and due to the nature of crypto, it's very unlikely you'll ever see your money again.
Especially, if there was never a team! If there's no team, there's noone to take action on, and again - due to the nature of crypto - funds can be untraceable.
Law can't help us, generally, at least - yet - which brings me to my final point.

How will the project handle legal aspects
A lot of the legal machinery can work slowly, and a project can't haphazardly acquire necessary legal documents.
Many projects demand KYC; while many does not demand KYC - which they should, for the legal aspect.
KYC = Know Your Customer, essentially providing things along the lines of a passport picture and various personal information.
This is due to things such as Money Laundering.
If a project doesn't demand KYC, at this point in time, that is in my view, a reason for concern of the project's future, in terms of facing legal issues, and thus the projects legitimacy in general.
Scam projects could very well sell your information.
This also applies for bounties - be careful with what information you provide!
I personally join bounties simply for 'why not', but I never join any project asking for my personal information.

Other hints
Got anything to add? Please comment! 
If projects are involved with teams such as Amazix (takes cares of certain aspects of ICOs, like social media, support etc)
it's often a good sign, because Amazix does their own vetting of projects before taking them on, to determine if they're legit!

Ultimately, it's up to you
It's your money, and ultimately, no one can decide for you.
And, just as well, you can go solely off what other people say.
It's completely in your hands to invest in good projects, and very few people will do this for you.
There are many crypto-youtubers, and as we can see in the bounty section - a lot of people are getting paid from making these marketing videos.
Same with people upvoting Reddit, sharing Twitter/Facebook, writing good comments etc -
be careful, and simply be certain that you trust your investment, or you will likely regret it, sooner rather than later.

90% of Startups Fail.
We can be certain that this very much applies to the crypto sphere, simply due to the nature of ICOs.
Easy funding without much to show for it, means many projects might not even be capable of 'pulling it off'.
Even the great looking projects could have given you worse return than if you simply held Bitcoin.

If you could have gained more only from holding Bitcoin, it wasn't a very good investment.

These are my ideas about ICO investing, I'm certain other users has tons of things they look at, care to share your tips? 

[1714899662]

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[1714899662]

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[1714899662]

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[edundayo]

What are you paying per token? Has someone else payed less? What can you expect short-term, and long-term?
Many projects has 'private sales' for big investors, who gets to buy tokens at a much lower price.
This could for example be motivated as 'a sure way to reach the softcap', which might be true, but that could also mean you're making a bad investment.
The softcap is the minimum amount needed to continue on with the project.
The hardcap is the maximum amount.

Ensure that you're aware of this, since it's quite common for big investors to simply let the ICO run it's course, and once it's over, they can sell off a large amount at a higher-than-paid price, thus damaging the short-term value, and in extension, you would've been able to acquire a larger amount of tokens for the same price. This is not always the case, but it's quite common.
Look if there's 'vesting periods', for example, any early-investors has their tokens locked for X time to ensure stability.

Another thing to consider is; will a certain amount of tokens be held by the team?
If so, what prevents them from selling off a large amount? Will a contract hold the amount for a certain length of time?
It surely can benefit the development; but not necessarily your investment.
Be certain that you have a clear view of what's coming in the future in terms of the supply.

I very much agree with this and this a very important tip, this is very common these days and I'v seen it played out over and over again in the last few months. The reason this year.

More important is that a project/token that checks well against all other analysis factors could still encounter this problem.

I don't want to mention names but for example I missed a token pre-sale recently and while I was mulling over the miss, I became aware (from the telegram group) of it selling far less that the pre-ico price and the community was angry, those that bought during the pre-sale were bitterly complaining and couldn't understand while the Team decided to make the token available on DEX instead of Top Exchanges promised. So, it lost its short to mid-longtem prospect, though the project is still a very viable long-term project with solid foundation and unique idea.

[BQ]

What are you paying per token? Has someone else payed less? What can you expect short-term, and long-term?
Many projects has 'private sales' for big investors, who gets to buy tokens at a much lower price.
This could for example be motivated as 'a sure way to reach the softcap', which might be true, but that could also mean you're making a bad investment.
The softcap is the minimum amount needed to continue on with the project.
The hardcap is the maximum amount.

Ensure that you're aware of this, since it's quite common for big investors to simply let the ICO run it's course, and once it's over, they can sell off a large amount at a higher-than-paid price, thus damaging the short-term value, and in extension, you would've been able to acquire a larger amount of tokens for the same price. This is not always the case, but it's quite common.
Look if there's 'vesting periods', for example, any early-investors has their tokens locked for X time to ensure stability.

Another thing to consider is; will a certain amount of tokens be held by the team?
If so, what prevents them from selling off a large amount? Will a contract hold the amount for a certain length of time?
It surely can benefit the development; but not necessarily your investment.
Be certain that you have a clear view of what's coming in the future in terms of the supply.

I very much agree with this and this a very important tip, this is very common these days and I'v seen it played out over and over again in the last few months. The reason this year.

More important is that a project/token that checks well against all other analysis factors could still encounter this problem.

I don't want to mention names but for example I missed a token pre-sale recently and while I was mulling over the miss, I became aware (from the telegram group) of it selling far less that the pre-ico price and the community was angry, those that bought during the pre-sale were bitterly complaining and couldn't understand while the Team decided to make the token available on DEX instead of Top Exchanges promised. So, it lost its short to mid-longtem prospect, though the project is still a very viable long-term project with solid foundation and unique idea.

you dodged a bullet! 
I actually found out the same not long ago, I was ready to invest but then I found out that their private sale had raised many millions - ok great, but they don't want to tell us how much the private investors paid 
but as long as they make it clear from the start, that there'll be a private sale, it's fine - one has to make their own decision then.

[Vova.vova]

I found out a lot about ICO for a long time, but I didn’t use it. But recently my brother told me about the project Vireo and I decided to try it. And now I’m happy. I got an interesting experience and a good profit. Check it!

[Vova.vova]

If you only recently learned about the existence of ICO, then this post is for you! I want to recommend you a reliable and perspective project, which I use. The project Vireo will make you a good impression and motivate to use ICO constantly! Check it!

[BQ]

I found out a lot about ICO for a long time, but I didn’t use it. But recently my brother told me about the project Vireo and I decided to try it. And now I’m happy. I got an interesting experience and a good profit. Check it!

If you only recently learned about the existence of ICO, then this post is for you! I want to recommend you a reliable and perspective project, which I use. The project Vireo will make you a good impression and motivate to use ICO constantly! Check it!

You've mentioned this 'Vireo' twice now, all I can find on google is 'vireoseeds.com' and it doesn't seem to really align with what you're talking about?

[bigcash2011]

I like most of your points tou raised about icos, i think the most important is that the discount and bonuses in presale or airdrops given away by the project team, mostly we neglect them but they do cause massive dump because people try to take profit by selling their airdrop and bonus tokens that causes dump of price, so we should keep this in mind while investing.

[BQ]

I like most of your points tou raised about icos, i think the most important is that the discount and bonuses in presale or airdrops given away by the project team, mostly we neglect them but they do cause massive dump because people try to take profit by selling their airdrop and bonus tokens that causes dump of price, so we should keep this in mind while investing.

Yea, it's definitely important! It's a bit sneaky in a way because sometimes it's not even mentioned at what price the presale sells at. That's a warning sign!

I updated the text and made it more readable! I hope someone has some input! 

[BQ]

Does anyone else have any suggestions? 

[Gogochen]

Open source code, open source code.
It's easy to overlook the nature of a project, and the quality of open source code and code updates is the key.

[BQ]

Open source code, open source code.
It's easy to overlook the nature of a project, and the quality of open source code and code updates is the key.

That's true, but many ICOs doesn't have any code available, at least not early on?
And, it's difficult for the average person to judge the quality.
But it's definitely a good aspect! Crypto is about transparency, why invest in an ICO who doesn't adopt the fundamentals? 

[othotr]

How will the project handle legal aspects
A lot of the legal machinery can work slowly, and a project can't haphazardly acquire necessary legal documents.
Many projects demand KYC; while many does not demand KYC - which they should, for the legal aspect.
KYC = Know Your Customer, essentially providing things along the lines of a passport picture and various personal information.
This is due to things such as Money Laundering.
If a project doesn't demand KYC, at this point in time, that is in my view, a reason for concern of the project's future, in terms of facing legal issues, and thus the projects legitimacy in general.
Scam projects could very well sell your information.
This also applies for bounties - be careful with what information you provide!
I personally join bounties simply for 'why not', but I never join any project asking for my personal information.

This is an interesting point. So we need to be concerned about projects that doesn't require KYC, but I don't want to give out my personal information either - seems like a dilemma. What should we do then?

[BQ]

How will the project handle legal aspects
A lot of the legal machinery can work slowly, and a project can't haphazardly acquire necessary legal documents.
Many projects demand KYC; while many does not demand KYC - which they should, for the legal aspect.
KYC = Know Your Customer, essentially providing things along the lines of a passport picture and various personal information.
This is due to things such as Money Laundering.
If a project doesn't demand KYC, at this point in time, that is in my view, a reason for concern of the project's future, in terms of facing legal issues, and thus the projects legitimacy in general.
Scam projects could very well sell your information.
This also applies for bounties - be careful with what information you provide!
I personally join bounties simply for 'why not', but I never join any project asking for my personal information.

This is an interesting point. So we need to be concerned about projects that doesn't require KYC, but I don't want to give out my personal information either - seems like a dilemma. What should we do then?

If you are talking about investing in ICOs it seems like you should be comfortable with providing them with your personal information, if they Don't demand it then they're probably not very serious actors to begin with (since it's practically a demand nowadays that they have to collect information to comply with regulation)?
and if you are Not comfortable with providing your personal information to that specific "company", we could assume that the same reasons you have for that, applies to the quality of their project too?
although I guess that's a bit obvious. it's a dilemma indeed.

if you're worried about providing information in general - then there's not much to do I guess!
Sure you might miss out a bit, but not necessarily.. if you do your research and gather a list of "interesting" projects and when their coins/tokens gets distributed, you could likely purchase them at a very fair price early on (when bounty sellers/early investors or others) sells them on some decentralized exchange?

or you could maybe join some type of "small   investment group" (I know there's some sometimes that pool together funds), that way only one person would have to give out their info. 

as you said, dilemma!