Hype: Community Engagement as a Predictor for ICO success
In the past few months, ICOs have taken off as a form of funding for early stage companies. What started as a trickle has built into a torrent as more and more start-ups set up their own ICOs. Tracking sites such as Tokenmarket and Cointelegraph don’t even begin to capture the onslaught of ICOs that are launching token sales.
Given that there are so many ICOs to choose from, it is increasingly difficult to select the best ones. All of the ICOs have flashy websites and most have decent whitepapers. Some of them have new ideas, some of them are trying to compete against other startups. However, the level of community engagement of a project is a good proxy for investment potential.
In order to look at this metric more closely, I have selected two ICOs and then will analyse each crowdsale using metrics to measure community engagement.
Successful: 0x

The 0x sale was a blockbuster. The tokens were priced at ~4.5 c each and they are now selling for ~40c — a near 1000% increased. Helpfully, 0x has written an illuminating blog post breaking down the participants in the token sale.
Due to the high levels of interest in the sale, the 0x team mandated that all those that wanted to participate in the sale had to sign up in advance. Based on the numbers of signups, they allocated each registered a user a max of 6.67 ETH to use in the sale. Any extra would be sold immediately after the sale end.
The tokens all sold out and the team raised $24 million dollars. Immediately after the sale, the tokens appeared on Etherdelta and were selling for up 10x the ICO price in the days after the sale.
This was a win for investors as there was high demand for the tokens on the secondary market, and those that wished to cash out could do so easily and pocket their gains.
Unsuccessful: OPUS

Unsuccessful is a not the best term here when an ICO can still raise millions of dollars. Yet, ‘unsuccessful’ can also denote a sale that raised less money than desired, and Opus is a good example of this. Opus is a blockchain based music platform that aims to list artists directly on the platform so they can cut out the intermediary. Opus’ crowdsale ended a few days ago. They sold 133 million tokens out of a possible supply of 900 million over a one month period. Tokens were priced at approximately 8000/1 ether (I was unable to find a figure about total ether raised so will extrapolate). This means that approximately $5 million was raised. $5 million is nothing to sniff at, but when looking at the lofty amounts raised in other ICOs, this is much lower. The Opus team clearly had higher expectations.
Opus tokens (Symbol: OPT) have just started trading on Etherdelta, and they are currently priced at approximately 7500/1 ether, a slight premium above the crowdsale rate, but not much. It would have been better to keep your money invested in Ether.
How to measure Hype and community engagement?
To be successful ICOs need to market themselves to potential investors. There are some pretty standard techniques used online to do this.
1#: Bitcointalk Bounties
Bitcointalk is the nexus of online discussion about cryptocurrency related topics. Upcoming ICOs market themselves using the ‘Bounty’ sub-thread in the altcoin forum. A bounty is a gift of free coins to those who complete some sort of task. The most generous bounties come from blog posts and signatures in forum posts. This has become a lucrative opportunity for posters on the forum as they can earn free money just for having a signature advertising an ongoing ICO. This creates incentives for those with ICOs in their signatures to promote the ICO in the hope that their free coins will rise in value.
Since virtually all ICOs use this method of marketing, there is not an easy way to distinguish quality ICOs from bad ICOs. Users will promote all ICOs, regardless of quality. For these reasons, from an investment perspective, Bitcointalk should be avoided.
2#: Media Coverage
Websites in the crypto currency ecosystem will wrote stories about an ICO for a fee. These stories are called ‘Sponsored’ stories on Cointelegraph, but may not be so distinguishable from regular content on other news sites. The bounty campaigns outlines in the previous section also play a part here. Even if a story is not ‘sponsored’ as such, the writer may still be incentivised to cover an ICO positively.
As a result, looking at media mentions in order to determine the potential of an ICO is also fraught with uncertainty due to the incentives that exist. This is also not a good metric to use when measuring ICO success potential.
3#: ICO Rating Sites
There is now a glut of websites offering ICO rating/tracking services (e.g. Tokemarket, ICORating) . These websites attempt to track all ICOs currently raising money or that plan to in a single place. Of course, these websites are not likely to do intensive web research to find crowd sales to list. Rather, organizations wishing to have an ICO are incentivised to reach out directly to these websites to be listed. Organizations that pay or who offer a portion of ICO proceeds are more likely to be listed as ‘hot’ or be given a glowing review by the ICO tracker site.
Once again, due to the incentives that exist in this space, reviews by tracking websites are not a good way to measure ICO potential.
4#: Slack
Slack is a great way to evaluate the hype around an ICO. How can we evaluate hype using Slack? Simple, we need to look at the number of people that have joined the chat room. I can break down the hype factor is four ranges below:
Users in Slack:
>200: No hype around the project. ICO is unlikely to be successful
200>2000: Minimal hype. ICO may be successful but will have to run over a period of weeks
2000>4000: Good hype. ICO likely to sell out prior to the closing date
>4000: Slack room may not be accepting new members. ICO is likely to sell out within a day. May be difficult to get transactions through due to blockchain congestion
Slack Users: Opus and 0x
After the conclusion of their respective ICOs, the slack room for 0x has over 4500 members. Opus has about 1500. The difference is Slack users can also represent the level of success in a crowdsale. While Opus still had a respective number of slack users, it has nowhere near as many as 0x. Opus still managed to raise a few million dollars, but their target was not reached and some investors are disappointed (see Reddit page). However, 0x’s investors are all undoubtedly pleased.
Conclusion
The number of slack users is a good way to measure a project’s hype. The hype generates investor interest and also ensures a token’s healthy life post-ICO on a secondary exchange. This is a very useful metric that all potential ICO investors should use when evaluating whether to invest in an ICO.