4T Method
Guidelines for the ICO analysis
Content
Introduction
The current market of ICO projects is not much different from the classic consumer market, where the main budgets go to marketing. According to various estimates, marketing requires 80-90% of the total budget that the team pays during the ICO. These figures are not very encouraging, because money can now buy a lot, as will be discussed below. Therefore, it is extremely difficult to give an objective assessment of the project. Based on our experience, we will share our recommendations and tools that we use in the analysis of ICO projects.

We evaluate projects using the 4T methodology. The approach is to use four basic criteria:

  1. Theme
  2. Team
  3. Token
  4. Technical part

And now you will learn more about each item with examples.
Theme
After a large number of successfully finished ICOs in the first half of 2017, many decided that they need to organize their own ICO. It's not good or bad, the only problem is that many rushed to this market, not having a quality product or at least a transparent concept. The recommendations will allow to analyze and evaluate the quality of the project, it's theme and everything, that it connected with it.
White paper
White paper contains the most detailed description of the project theme.
Plagiarism
In order not to waste time, it is recommended at first to verify the uniqueness of the texts included in this document. There are several free tools in the Internet for this task (see the annex). Special attention should be paid to the sections that describe the technology, operating principles and so on.

It happens that inexperienced teams or those who are interested only in collecting money, steal other people's ideas and give it as their own. And sometimes they steal all the content together with the design. Example:

Original:
The project that stole the idea:
Soon after the discovery of the theft of someone else's information, the EWA project announced the closure of its ICO.
Openness
The project raises very big questions if its WP is not publicly available and can be shown only to the "chosen ones". You need to understand that the ICO market is primarily about openness. One of the key aspects of Blockchain is transparency. Therefore, if any project goes against these principles, respectively, the team of this ICO knows little about the of the Blockchain Philosophy, and most likely has little idea why the Blockchain is needed in their project.
Market
If WP has passed the uniqueness test, and the team really competently described their ideas, then you need to pay attention to the sections describing the market research and its potential. The concept can be infinitely beautiful, visually and colorfully describe the principles of work, but does the market really need this product? How many people will be potential buyers or users of the service? Are they ready to use the product for the specified price?

It is a common situation for the founders, who are too enthusiastic about their idea, not to give an objective assessment of the market, and here you have to look for actual numbers and statistics to understand how much and who may be interested in this product.
Business plan
Section, which, unfortunately, many can skip now. Surely, it is sometimes almost impossible to predict how the product will develop in the case of startups, especially in the IT sphere. Sometimes the project can "shoot" at a speed that was not planned, but on the other hand, with all the positive scenarios, the product could fail.

Nevertheless, the Business Plan is useful for the project to understand the detailed items of expenses, many of which did not even come to mind at the initial stages. It's very useful for the team itself to build a cashflow. The "unexpected expenses" can emerge at this stage and an understanding of how much funds need to be spent for that period while you work without profit.

If all these calculations are not available, it turns out that the team took softcap and hardcap for ICO just out of thin air, and they have little idea how to spend the collected funds in the future.
Competitive analysis
It's a very important component in WP. If the project has not conducted a competitive analysis, it has no idea what is happening in the market, and perhaps there are several similar projects already. Such research is also important for understanding competitor's strengths and weaknesses. Accordingly, if the competitor has flaws, the project has the opportunity to improve or strengthen these aspects.

It is usually happens, that projects without competitive analysis want to present their development as unique. But a usual Google search shows a different picture. Therefore, it is often necessary to understand the technical details and even go deeper, for example, the topic of oil sludge processing. Thus, the ODMcoin project does not have a competitive analysis in WP, but a superficial search shows that similar projects are more than enough.
Technology description
We analyze how technically competent the idea is presented, how deeply the concept of the project is worked out.

By the way, this same point can be attributed to the "focus" of WP. Where is the most attention in the White paper? What is the highest priority? What items are written in the most detail? Even at the first glance at the White Paper, you can see whether the team is trying to" persuade " the investor to invest in their project due to various bonuses, the calculation of profit for several pages, a description of the benefits, the release of the token on the exchange and so on. Or the project focuses on delivering its value, a detailed description of the technology, its product or service.

If a significant part of WP is devoted to the benefits to the investor, then it can be a warning to believe that the project's task is to raise funds without realizing its idea.

Also one of the most "favorite" team questions that go to the ICO - "Do you really need Blockchain?". In fact, not all projects need a Blockchain to implement their plans. But the team needs to insert this word anywhere, because the market they enter can judge the project by the presence or absence of the Blockchain in the project.
Team
It is not enough for the project to have a quality MVP, a well-thought-out business plan and a sought-after idea. After all, only the team members will be responsible for the implementation of the plan. A team usually consists of two components: a Team and Advisors.
Team analysis
Experience
Here we check experience of a team members and their education. It's good, if there are reviews and confirmed skills, for example, in Linkedin. Here we also check the time of collaboration of key team members. The team created specifically for the ICO project is a very dubious, and there are many of them.

You should definitely check out the company, where the CEO and key team members worked before. You can use different tools, that are available in your region for checking the CEO and his companies background . You can check information by documents, databases, official news & etc.
Social networks of team members
It is necessary to check how long do the social networks of team members exist. In fraudulent projects, accounts are often created specifically for ICO and can exist only a couple of months or even weeks.

You can understand the person's interests, for how long he is interested in Blockchain technologies. With a more detailed analysis, you can even understand a person's motivation, what goals they are driven by, what they want to achieve.
Personal life
It's necessary to find as much information as possible about person's interests, his pastimes, attitude to bad habits. All these moments matters.

You can find a lot data by mail address, phone number, nickname (usually people don't change their nicknames during the life) in online advertising sites, forums. In this way, it's possible to check information that a person does not appeal, but which can be rather useful for understanding him better.

This also includes checking fines of the traffic police and even the base of judicial, regulatory acts and the website of the federal bailiff service. For this you need to know the name of the person, the region and his date of birth. And here the millions of overdue loans may not very well affect the reputation of a person.
Advisors
At the initial stage to filter the scam, you can check out questionable advisors on the profile photo. Take a picture and check it, for example, by Google search on the picture:
With such a search, it may be found that a photograph, for example, is taken from a stock photo sites, and such a person does not exist.

During the in-depth analysis it is recommended to contact the advisors and find out how they are involved in the project. Here it is important to understand that the adviser is not just the one whose name and photo can be placed on the site of his project, but the one who directly advises the project in his area of competence. Each adviser must carry any semantic value.

Unfortunately, it is almost impossible to check under what conditions the adviser joined the project. There are a lot of offers to join the project for different amounts of cryptocurrency even in the Linkedin. Therefore, if a company has a good marketing budget, they can attract an impressive team of advisors. Here one should already evaluate the "quality" of those consultants, and one can understand which advisors are anxious about their reputation and are unlikely to become involved in the project only for financial reward.
Social networks of the ICO
It is customary now to use the maximum number of tools that would reflect the activities, create the image and keep the interested audience informed. For the average ICO project, it is almost mandatory to have minimum 5 icons on your site, which are the links to social networks and blogs.
Bitcointalk
It's a key resource for Blockchain projects. Bitcointalk appeared in 2009, at the time of Bitcoin birth. To this day, this forum is the main place of communication and interaction of crypto enthusiasts from around the world.

It is customary for ICO to create branches in sections of the announcement of new altcoins (in languages, that these ICO supports), as well as branches devoted to the Bounty project.

Here it is necessary to evaluate the interest shown by the audience and the adequacy of the answers of the administrator.

It is believed that it's better to have many pages of the project discussion in the topic thread. It was like this before, until purchased commentators became very popular, whose task is to shill and write flattering comments about the project every day, or at least ask neutral questions, also to create the illusion of bitcointalk users' interest. You can check this by analyzing the participants of the discussion - if you see that the same names usually appear, most likely they are the purchased commentators. You can also go to the user's profile and see what does he usually comment.

The ability of the community manager is to communicate with the interested ones in the project, as well as to give detailed literate and spelling correct answers. It is an important component of the company's "image" on the Bitcointalk forum.

Also, any evasiveness from direct questions or their complete ignoring can be perceived with a high degree of suspicion. Open and high-quality projects cannot have dark sides or uncomfortable questions.

It's important to identify one moment that applies to all social networks and instant messengers. The number of subscribers or members in chat rooms does not mean anything. Now "buying" commentators and those who like and repost posts is not difficult, so it's easy to appeal the audience, especially when the company had good marketing budgets.

It would seem nothing bad. Some want to make money, and companies conducting ICO are ready to pay them for "work". But this "work" complicates the further assessment of the project. It is almost impossible to assess the true interest of the audience. Comments have become so natural that they fit perfectly into the discussion of the project on Bitcointalk. And the very same comments and answers to these comments are also written by project marketing specialists. You can see she same situation with posts in social networks, articles in blogs.
Telegram
Unfortunately, viewing and analyzing the history of messages can do little for analysis, especially since chat administrators can delete any messages they don't like. As mentioned above, the illusion of interest in the project can be created quite easily with the availability of funds. Moreover, you will not even have the opportunity to check the level of openness of the team and the ability to answer direct questions. Now it is quite common to ban an objectionable chat participant and delete his questions to which there are no answers. Therefore, for the experiment, you can join the chat rooms and ask questions from the series: "Do you need Blockchain in your project project?" And look at the reaction of the moderators. Also you could ask about the founders past, their experience. But much better is to ask questions about different facts about the team & their past companies, if there is any negative information in the Internet. Questions about the technical aspects are also very good.
Facebook, Twitter, Vkontakte and other
Since in these social networks it is easy to cheat subscribers, searches using the hashtag in the search bar can bring interesting discoveries - #projectname. We do not take into account official news from the company itself; we only check independent reviews, comments, and criticism.
Social network summary
Summing up on social networks, on the one hand, we can say that pumped social networks show that the team invests in the project to the maximum and wants to get a good result. And in general, if it coincides with a team with a good reputation and a high-quality concept, there is a high probability that the project after the ICO will try to fulfill its promises. After all, too much effort and money has already been spent. On the other hand, the situation is very strange, because the people who invested in a project, for example, for its strengthening and developing at the pre-ICO stage, but as a result, most projects decide that it is easier to invest money in marketing and create an illusion that everything is good. An investor gets an illusory picture due to his money on social networks, where it seems that a large number of people are interested in the project, and thus he calms himself down, that everything is good for the project and it is "waiting for a bright future." For our own money, we deceive ourselves.
Publications in the media and blogs
Usually the team proudly puts all the articles mentioning their project on their website. Here again, there is a big risk that the articles were paid for and, accordingly, there will be written only "convenient" and positive facts about the project. Therefore, we will be more interested in searching on Google or Yandex in particular in the "Search" section. Sometimes such a search can be very helpful in analyzing the project. For example, you can trace the "life cycle" of the company. By the way, the appearance in publications is not always in the hands of the project. For example, the development of the project could be mentioned several years ago in several media, then there was a pause for a couple of years, and now several articles have been written on the project on cryptocurrency portals. This case may indicate that the old development, which did not find funding in public or private sources, but using the market's hype now, decided to organize an ICO, hoping that cryptocurrency private investors are less competent than a highly specialized funds.
Coin
Token Roles
An important aspect in the ICO analysis is to carefully examine the token. The first thing you should pay attention to is the roles that it performs in the project. It is good when the coin appeared as an integral and necessary component of the project, and not when the token is being tried to be artificially introduced into the project.

For ourselves, we find and write out the roles that the token is given.

For example, you may consider the use of a token in an ODMcoin project. Once they did not have an ICO, and they collected only $ 167,000, although in 2018 they are going to try again.
ODMcoin Token Roles
  • The ODMCoin token gives you the right to receive a BIC (Blockchain Industrial Club) token, which will include companies whose activities are focused on the development of the Blockchain and advanced industrial enterprises.
  • BIC Token gives the right to information privileges of the club.
  • The ability to purchase products at a discount; the acquired ODMCoin token is provided with real goods, which is "protected" by the value of the contract for for the processing of oil sludge in the situation of currency fluctuations."

There is enough a quick glance to understand that the token project is not mandatory at all. But since the Blockchain "requires" it, it is necessary to invent different usages of a token.

Of course, the token fits the infrastructure projects most logically and harmoniously, but the real business has the greatest difficulties.

SEC
SEC - the Securities and Exchange Commission has equated tokens, which promise any return, to securities. Does WP come up with such things as investor or profit? Unless the project is registered with the SEC, and this is now not so often the case, and it will certainly be indicated in the document (see also "stop words"). Unless the project is registered with the SEC, and you find such formulations in White Paper, this indicates a possible lack of legal support for the project, which can be very bad in the future.

You can independently do a Howey Test. There are a number of sources that offer to independently evaluate the project by this method.
Stop words
White paper should be checked for the stop words:

  • Investment
  • Other investment vocabulary
  • Profits
  • Passive income / Gains / Dividends
  • Participation / Common development
  • Token will be listed on exchange
  • Bonus / Discounts / PreSale
  • Utility / Security token

Crowdfunding terms and words:

  • Equity crowdfunding / Securities crowdfunding
  • Any formulations related to obtaining passive income from investments in projects on the platform
  • Statements related to the use of tokens or platform mechanisms for generating income by analogy with securities

If you have discovered any of these terms, it could be a warning that the project can turn out to be a scam.
Distribution of funds
Now most of the projects say, that 10% of all raised funds will go to the team. This is almost a "classic distribution". Then it is good, if not more than 2% will go to bounty and various kinds of promotions and bonuses. And then the most interesting. If this an manufacturing, then normal, if 50% - this is the purchase of equipment. In this case it should be written what kind of equipment and materials the company in going to buy. Otherwise, the team thinks that - "at first, we get the money, and after we'll decide what to do with it". And this is one of the main sections of WP - how exactly will the project allocate funds? Are they going to implement plans or is the team on their mind only collecting money and disappearing?

But, if it is a product, and it is specified that about 70% -80% will go to marketing promotion, here it is worth checking more attentively. Because, at least, there should be a plan, where most of the funds collected on the ICO will go. What does marketing and product promotion mean? If you take the average check for ICO - $ 5 million, it is about $ 3.5 million. It is an impressive amount only for marketing. Here you just need a detailed plan, where the funds will be spent. Otherwise, the project can hardly be trusted. Also you need to evaluate whether the team will have enough money to realize their "Napoleonic" plans and create a product, whether it will be an infrastructure solution or a portal, or a manufacturing.
Technical part
No don't need to be a programmer to independently analyze the technical component of the project. The "Technical part" includes the project MVP, its code and ICO smart-contract.
MVP
Most of the ICO projects, which took place at the end of 2017 and the beginning of 2018, had only a concept and, as a rule, an absent MVP.

MVP - minimum viable product. Moreover, many believe that if this is a portal, then it is enough to draw this portal, code HTML for it it and launch it into the Internet. No, this is a very serious mistake. The key to MVP is a preliminary market analysis and an understanding of how much this market needs your product. The fact that the project team believes in the need of its product (and it happens that not even the whole team sees the demand for the product being launched) is great, but it's not serious to enter the ICO market now without analyzing target group, its willingness to pay for a solution or use the product on other conditions, a detailed competitive analysis without making a competent business plan.
A number of the above points were "let pass" by the audience during the last year. But not now. Cryptoinvestors have become much more demanding of projects, the general level of knowledge in the field of blockchain and ICO in particular has increased. The quick charm of the project has been replaced by a close and thorough study of the details; investors began to ask tricky questions, more carefully check the skills and competence of the team. Therefore, it is necessary to conduct a deep and objective analysis of MVP, not paying attention to the "beautiful packaging", to find out how the team thoroughly approached the development of the product and its technical part, and also whether there was a research on how useful their development will be.
Github
In all ICO projects, at least there is a smart contract, as the maximum code at the Github. A link to Github is usually locatedion the ICO website along with other links to social networks.

It is not necessary to be a programmer to superficially analyze the code of the project. For example, let's take the code of the Universa project, whose code is their main work, judging by the announced large-scale plans. And they had plans to surpass Bitcoin and Ethereum:

https://github.com/UniversaBlockchain/universa

You can see when the sources were created. At the time of writing this article - it is 8 months. Latest commit tells us when the last time any changes were made. Therefore, it is also possible to draw conclusions on how regularly the code is operated and changes are made.

The issues section is useful. Where other coders ask questions to the project. There you can get an idea of the technical part of how the team members answer questions and how deeply they understand the subject. If it's not at all clear, you can ask technical questions yourself on bitcointalk or on the Github.
Appendix
Analyst work algorithm
Site analysis
  • Check the site domain. Based on the information received, you can find additional information about the team.
  • Transparency and necessity* of the stated information (* lack of water, buzzwords and other things).
  • Check the uniqueness of the content (the tools for this are given below).
Team
Team analysis on the indicated links on the website in the "Team" section + detailed analysis of the key team members
  • Experience in the companies. Reputation of companies.
  • Information about a team member in search engines (portals, newspaper mass media, etc.)
  • Criminal records, fines, arrears, as private person.
  • Criminal records, fines, arrears, reputation of a legal entity where a member of the team is/was a founder / director.
Social networks and the Internet
  • Social networks and forums analysis: Bitcointalk, Vk, Fb, Twitter, Reddit and others. Frequency and quality of information, prompt response, etc. are evaluated.
  • Evaluation of social networks by the project hashtags in social networks.
  • Blogs and posts dedicated to the project.
  • Chats in the telegram of the project itself. You should check the audience activity, what questions are asked, how administrators react to it. It is advisable to ask direct questions about the project and see what the administrators will answer.
  • Search for additional information and feedback on search tools in the largest cryptochats.
White paper analysis
  • Uniqueness check
  • Brief description of the essence of the project
  • Problems that the project solves
  • Solution proposed by the project
  • Assessment of the focus of WP - what is the most attention paid to (problem solving or investor benefits)
  • The presence of competitive analysis and its objectivity. In any case, you need to monitor similar projects / ideas. At what stage they are, realized / not implemented, the interest of the audience.
  • Evaluation of the "Market" section, as well as an independent analysis of the project idea and its potential.
  • Why do we need a Blockchain project and do we need it?

Technical part
  • Analyzing the smart-contract project
  • Is there a MVP? What stage is the project at? For how long does it exist?
  • "Reality" of road-map. Are there resources for the realization of all conceived goals?
  • Code analysis and comments on Github.
  • How much attention is paid to the technical part of the project in WP? The quality of the information presented.
Token
  • What functions does the token perform?
  • Token model.
  • Are any manipulations with the token mentioned (reserve fund, burning, redemption)?
  • SEC or not? Test Howie.
  • How much does the project want to collect. How the funds will be distributed.
Additionally
External ratings (ICOFisher, ICOTracker and others).
Useful tools
Menaskop, Irene M.


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