Cryptocurrency Evaluation and Why ICO’s Fail

12 minute read

How to Evaluate ICOs

  • The Best Fundamental Indicator - New Inflows

    A third, growing narrative (what I and others are terming the fat monies thesis) has been centered around positioning of Bitcoin (and other crypto-assets) as pure financial commodities. Positioned as a macro trade (possible crisis alpha in the event of a currency crisis), I believe this narrative resonates best with macro traders and institutions as the market is too speculative to evaluate in a bottom-up way and likely relatively overvalued given the lack of utility in most protocols. While the properties of an eventual SoV winner are hotly debated, this thinking frames my favorite fundamental indicator: where are new capital inflows coming from and what narrative (read: meme) are they latching on to?

  • Invest in the ugly duckling — decentralization, product/market fit, and the law

    Product/market fit is complicated for blockchain companies due to the fundamental relationship between decentralized technology and the law. The same was true in the 2000s when people went crazy building p2p file sharing technology. When Napster died, blood was in the water and hungry entrepreneurs flooded the market with decentralized file sharing apps. By mid 2001, Napster was basically dead and Limewire, Kazaa, eDonkey, and BitTorrent were all available for download. If we followed the file sharing market from 2001 to 2006 and treated the companies like traditional early stage software investments, we’d fail to predict that BitTorrent would win the file sharing wars in the end.

  • Neoxian’s Guide to Evaluating A CryptoCurrency

    I just want to note that these guidelines are not all necessarily 100% rules, but strong indicators. If the coin is breaking one of the rules here, be sure that you have some compelling reason for buying it anyway. As always, invest with caution and do your own research.

  • What’s in a whitepaper? A detailed analysis of what whitepapers mean for cryptocurrencies

    A lot of people focus on whitepapers as an aspect of a cryptocurrency, and for good reason. It’s the document that describes in a few short pages what that thing does. But often, a whitepaper can tell you more than you’d learn just by reading the words on the page.

  • 10 keys for evaluating Initial Coin Offering (ICO) investments

    This article will discuss the main keys to pay focus on when evaluating an ICO investment.

  • Evaluating Tokens and ICOs

    My Framework For Evaluating Projects within the Blockchain Ecosystem

  • A VC’s take on evaluating cryptocurrencies

    We’ve therefore developed a rubric that combines quantitative and qualitative metrics to holistically evaluate a cryptocurrency. To start, we identified 23 metrics that fit into six key categories (product, community, code, traction, trading, and network), with the goal of ranking currencies on a scale of one to three for each metric. To determine the benchmark for a metric, we took the top 50 coins by market cap (as of 1/26/18) and aggregated scores for each.

  • What I Look For In Cryptocoins

    The questions I find myself asking, are often around how people will try to start fundamentally valuing coins and currencies, whereas today I think the level of analysis is quite crude. Wealthy retail investors and instituions alike look at inputs like

    • notable founders / early contributors
    • branded institutional backers
    • trading volume
    • technical integrity of the whitepaper and protocol design
    • moderately understandable utility promise
    • and i’m sure a bunch of technical trading indicators that I won’t pretend to understand
  • Our Process for Evaluating New Tokens

    I’ve been thinking deeply about long-term fundamentals of the networks that underly cryptocurrencies for quite a while and decided to publicly share our evaluation process for new token-based networks. This is a process that I’ve shared with the 1confirmation LP base, which includes arguably the best angel investor ever and the top debt investor, VCs, and fund of funds in the world. Historically, investing has been shrouded in secrecy, but I believe that more transparency around crypto investing is much better for everyone in the long-run.

  • Paul Stefan Bohm on whitepaper evaluation

    20 years in, I’m supposed to be a distributed systems/cryptocurrency/cryptoeconomics expert. Many overfunded ICOs have whitepapers that are completely indecipherable to me. Bitcoin is compelling in its clarity. If I don’t get what they are doing after 5 minutes, it’s a No.

  • Is tracking GitHub activity a good way to evaluate crypto projects?

    In this article, you will be introduced to the idea of tracking GitHub activity as a way to evaluate crypto asset projects and whether this approach merits inclusion in a crypto investor’s arsenal.

    Despite the crypto asset market hitting the mainstream in 2017, there remains no true consensus across the sector on how to determine the ‘fair’ value of a cryptographic asset in today’s marketplace.

title: ICOs permalink: fundamentals/icos/ redirect_from: fundamentals/icos published: false last_modified_at: 2019-06-18T11:22:33-23:00

Why ICOs Fail

  • Why Most ICO’s Will Fail: A Cold Hard Truth

    On June 12, 2017, an Ethereum based called Bancor held its ICO. It raised $153 million in 3 hours. No, you are not reading it wrong, 153 million… 3 hours!!!

    If that doesn’t get your brain melting, then how about this? The BAT ICO $35 million in 30 seconds!!! That’s near $1.2 million per second! And if that still doesn’t get your jaw dropping, then how about this? Have you heard of UET? UET had an ICO which raised $40,000 in just 3 days. Admirable if not particularly mind-blowing. Why do we bring it up after talking about Bancor and BAT?

  • 4 Primary Reasons Why ICOs Fail

    According to the stats, the rate of failed ICOs was very high as compared to the successful ones. Launching an ICO is not a good idea. There is a lot of research to be done if the ICO company wants to achieve the goals and stand tall in the market against the other successful ICOs. That’s why it is very important that the people who are thinking to launch a new ICO in 2018 should have the proper planning, research and good strategy to market their ICO.

  • Why are So Many ICOs Failing?

    The quality of an ICO whitepaper is crucial in deciding whether or not a project will have long-term potential. If you’d like to learn more about how to read an ICO whitepaper, here’s our guide to help you get started.

  • How to Read a Cryptocurrency White Paper

    learning how to read a white paper is a critical task for anyone getting involved in crypto. As most investors and observers in the industry know, there are quite a few scams in the space. Moreover, many projects sound good, with the right buzzwords and marketing speak, but they’re not backed up by any follow-through, and they quickly fizzle out. In this article, we’ll take a look at how to spot a good white paper with a valid idea and technical chops to actually execute on the idea.

  • Why most ICOs will fail-Monetago, a blockchain company that never did or will ICO

    That’s one of the many problems facing tech companies that do an initial coin offering before they even build their businesses. And just like casinos, these token-operated tech companies have no hope of ever getting any money from businesses, governments, or banks.

  • Why most ICOs fail?

    Lack of regulatory reporting standards. ICOs are under no regulatory obligation to report on funding figures or on the economic health of the company or the project, which make analytics regarding ICOs difficult to find out. Lack of reporting experience. Teams with lack of experience may feel uncomfortable reporting, considering their tokens are likely on the market and are under high volatility. Lack of Know-How. Some teams do not have know-how to issue a profitability report or to know that they should announce a report at all. Others may have concentrated their efforts on producing the ICO documents without considering the division of labor needed for the wrap-up. Lack of time. There is only one third of ICO’s that were highlighted for no funding report outside of the two months from their ICO end date. This could mean that the companies need more time to complete their reports on raising funds.

  • Reasons Why Most ICOs Fail

    Most ICOs do not actually become profitable—ever. Here’s why most ICOs fail, and how to tell if your investment will be the next to die out.

  • Most ICOs Will Fail

    They say that 90 percent of startups fail. That is an exaggerated statistic, but nonetheless creating a successful startup is hard indeed. I posit that ICOs, alternative cryptocurrencies etc. are much of the same. There are over 1000 alternative cryptocurrencies that have been created throughout the years, yet around 90% of them have effectively “failed”. Furthermore, ICOs are plagued by several risks that startups are not largely at risk for. So perhaps the 90% statistic is not so exaggerated when it comes to ICOs. Let’s explore the likelihood that any arbitrary ICO will be successful.

  • ICO 2.0 — what is the ideal ICO?

    ICONOMI ICO Fundamentals — 1 of 4

  • Why ICOs fail

    ICONOMI ICO fundamentals — 2 of 4

  • 5 Reasons Your ICO Will Fail (and How to Save It)
  • ICOs are Cancer

    I have been involved in a few venture-capital funded startups, so I’m used to getting introduced to entrepreneurs building software companies. It’s fun to see how people are building the future and a good way to give back. Over the past year many of the introductions I get are involved in ICOs, and I struggle with how to politely decline the intro and explain my disdain for what they’re doing (without it coming off as contempt for them).

  • ICOs and Economics of Lemon Markets

    Extract from paper (published here) providing an in-depth analysis on the structural and dynamic economic properties of Initial Coin Offerings.

  • Most ICOs Fail: Tale of Two Worlds

    Some may contend that even failure is beneficial to a project as it raises funds to allow the initiation or continued development of the project and team’s vision. In some cases, that’s a quite reasonable argument, however, in many cases the value proposition of the actual token issued is seriously compromised, perhaps permanently. Also, the level of capital raised from a failed token distribution is rapidly declining, from a median of $4mm in July 2017 to $2mm in September 2017 and 21 (43% of the total) raised $1mm or less from their efforts.

  • 46% of Last Year’s ICOs Have Failed Already

    It has always been assumed that a large number of ICOs will fail, be it at the fundraising stage or when it comes to delivering the actual project. It’s hard to settle on a precise figure, however, as most dubious ICOs don’t exit scam: they slowly tiptoe away, like a sneak thief rather than a smash-and-grab robber. Having completed an extensive study into last year’s crowdsales, can report that 46% of them are effectively dead already – despite raising over $104 million.

  • Stay away from ICOs which…

    ICO projects with the above mentioned characteristics will find themselves in the center of attention. Investigations will be started, followed by class-action lawsuits, frozen bank accounts, panic selling, and valueless tokens.

  • Understanding the Ethereum ICO Token Hype

    This is my attempt to hardsell raising funds on a public chain to developers, investors, and anyone seeking to capitalize on this crucial shift in how businesses can be born.

  • The PonzICO White Paper

    Since the bygone era of exchanging rat tokens for freedom from Bushnell’s gulag arcades, we’ve evolved. The platform is no longer brass controlled by a single entity — but a distributed, decentralized, Web 3.0, blockchain, DLT platform, operating far above the rat race: ETHEREUM. Ethereum itself is rather neat. It can reach consensus on state between different, potentially adversarial parties using clever incentives and cryptography. And yet it’s accessible enough for junior developers to program smart contracts handling millions of dollars. This has posed some problems — the EVM seems most efficient at transpiling developers who make bad Node.js into developers who make bad Solidity.

  • Nick Tomaino on Crypto Evaluation

    If cryptocurrency prices declined by 90%, would this person still be doing what they are doing?

    This is a fundamental question to ask yourself when doing business with people in the industry. Unfortunately, the majority of the time the clear answer is no. - 30 Jan 2018

  • Sarah Jamie Lewis on Whitepaper Evaluation

    OK since I got asked this twice today, and multiple times the last few weeks, here is Sarah’s Saturday Night guide to telling a bad cryptocurrency whitepaper from a maybe-OK one, with the help of real, awful papers.

  • The Crucible

    I don’t think I would ever invest money with someone who isn’t on Twitter.

  • Valuing Productive Cryptoassets

    This post focuses on productive cryptoassets and their respective valuation frameworks. These assets can be modeled similarly to real estate, equity, and bonds. They are distinct from non-productive cryptoassets like medium of exchange tokens and candidates for store of value.

  • Here’s How You Can Validate An ICO Using Your Chrome Browser

    Patrick Kim, decided to use his decade of experience in network security and system architecture to found the Uppsala Foundation. Now the CEO has enlisted the help of some ethical hackers, his sentinels, to launch a blockchain based verification service conveniently available in your browser.

  • Dovey Wan -You need 5 types of talents to build a sustainable crypto project
    1. Phd level cryptographers
    2. Solid system engineers
    3. Creative economists
    4. Interdisciplinary designers
    5. Charismatic community leaders

    There is lots of emphasis on #1 but too LITTLE on the rest

  • Adam Ludwin - 1/THREAD: A few thoughts on “fundamentals analysis” of cryptocurrencies
  • Meltem Demirors on Investor Psychology

    1/ in markets, investor psychology is everything. i shared my thoughts on greed, investor psychology, shitcoin, and market cannibalization at @dezentral_io in berlin and wanted to share some of these ideas here…

  • Complexity Theater

    Complexity theater is when the presentation of ideas is complicated in order to make those ideas seem more valid. It is not limited to the crypto space, but has wreaked a very particular havoc here. Luckily, it doesn’t have to be this way.

  • Introducing a Crypto Benchmark Framework

    TL;DR. The purpose of this piece is to introduce a rough draft framework for benchmarking in the cryptoasset industry.

  • Dan Zuller — 1/ A thread on benchmarking in crypto.