The Definitive Guide to Crushing ICOs

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Aldous Holmes
5 years ago
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1 By Victor Lai The Definitive Guide to Crushing ICOs Find the next HIDDEN GEM in cryptocurrency investing

2 Welcome to your ICO checklist. Since you snagged this checklist, you must know that Initial Coin Offerings (ICOs) are all the rage right now. You hear all the news that unproven startups raising astronomical amounts of money in a short period of time. Bancor raised $150 million in under 3 hours. BAT raised $34 million in literally under a minute. The ICO for Status was in such a high demand that it jammed the Ethereum network for an entire day. However, which ICOs will be profitable and which ones are money grabs? This checklist will show you the things to consider when hunting the next hidden ICO gem. Make sure you don t miss a step on this checklist! And before you get started, make sure you re subscribed to my newsletter: crushcrypto.com/newslettersubscription/ as I ll keep you up to speed on the latest ICO analysis. LET S GET STARTED!

3 Step 1 The Business 1 Browse their website, read the whitepaper. Be able to answer the question what does the company do? 2 Join the company s Slack channel, Bitcointalk thread, and Subreddit (if available). 3 Google search their name to see if there is any recent development or articles about it. 4 Find out if there are any competitors in both the centralized and decentralized space it helps if you have industry knowledge. 5 Look at the development roadmap and see how mature the business is. a A project with nothing but a white paper is a lot riskier than a business with existing product. 6 If you are tech savvy and the project is open-sourced, you can take a look at its source code and see its progress. 7 Is there a need for decentralized service? If users are happy using existing centralized solutions, then perhaps there is no demand for a decentralized service. 8 Is there network effect? a Metcalfe s law states that the value of a network is proportional to the square of the number of connected users of the system. b It makes a lot more sense to create a token if network effect is present.

4 Step 2 The ICO Structure 1 Read the whitepaper and find out what the ICO valuation is. a The information needed are (1) the amount of hard cap, (2) the percentage of total token ownership ICO contributors receive. For example, if the ICO is raising up to $10 million and token holders receive 50% of total supply, then the market cap of the ICO is $10 million divided by 50% = $20 million b We created a handy tool for you to calculate market cap: crushcrypto.com/ico-market-cap-calculator/ 2 Is there any inflation for the token? Can the company generate more tokens after the ICO whenever it wants? The higher the future inflation, the more your tokens can potentially be diluted.

5 Step 3 What is the Token For? 1 From the whitepaper, find out what the token will be used for. The two most common ways tokens can generate value are as follows: a Tokens are being used to transact or perform certain functions within the platform. b Profits from the project are being distributed back to token holders. 2 Find out how the token can appreciate in value. Is it from a wider usage of the platform? Or from higher profits generated by the project?

6 Step 4 The Team Behind the Project 1 Search the key team members names and see if anything odd shows up. 2 Do they have LinkedIn profile / GitHub page? How much relevant experience do they have? Are they working full-time in the ICO project? 3 Look at the list of advisors / investors. a Treat this with a grain of salt the scope of work for an advisor can range from talking to the team once on the phone to working 20 hours a week alongside with the team. b Understand that a lot of advisorships are for marketing purposes only. c Just because a famous person is listed as an advisor or investor, it doesn t mean that the project is legit. Always do you own research! 4 How long has the team been together? Have the team members worked together in another project before? If the team is quickly put together, then the ICO has a higher risk of being a money grab.

7 Step 5 Risks 1 Consider what can go wrong with the project. Answer the question if this ICO turns out to be a disaster, what would be the reasons for it? 2 Business risks factors that can sink the business. a Is there demand for the product / service? b Analyze the business risks using Porter s five forces: i ii Product substitution Bargaining power of suppliers iii Bargaining power of customers iv Existing competition v Threat of new entrants 3 Governance risk are the incentives for founders and token holders aligned? 4 How promotional are they? a Check the tone of website. If the website keeps talking about how large the industry is instead of describing in detail what the project does, it has a higher chance of being a money grab. b Do they do any paid advertising? c If they pay for press releases that sound promotional, they are most likely money grabs avoid them!

8 Step 6 What is Your Investment Objective? 1 Before contributing, have a game plan about what to do with the Investment. 2 Do you want to sell shortly after the tokens are tradable (flipping) or hold for the long term? a If you are flipping: i ii Find out how popular the ICO is. You don t want to contribute in a project that cannot be completely filled in 1-2 days after the crowdsale is open to public. Generally, the smaller the fundraising size, the easier it is to fill the crowdsale quickly. iii Some ICOs have a presale period before the crowdsale. Take advantage of them in more popular ICOs! iv Find out when the tokens will be distributed. The longer the lock up period, the less desirable the ICO is. b If you are treating it as long-term investment: i ii Understand that ICOs are extremely volatile they can go up or down by over 30% in a day without any news whatsoever! You need to be able to stomach the swings if you want to ride for the long run.

Coin Governance System

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