About how and why we evaluate ICO cryptocurrency projects

Digital Rating Agency is a member of the group of companies operating in the Russian financial market. We prepare analytical reports of crypto projects based on our long experience in composing such materials. Rating reports are needed both for ICO projects and for investors. We’ll explain everything below.

What reports are like

As a result of the research, the report is a 4 components product:

1. Project audit
   All sides of the project are being examined, problems with the presentation of material, concepts, tech, financial model, competitive environment, etc. are being revealed. Recommendations on correcting mistakes and shortcomings that can downgrade the rating of the project from investors’ point of view are provided. The audit allows to identify weaknesses that can be an obstacle to the successful ICO conduction in advance.
2. Rating report and score
   The result of the rating research is a detailed report, Fraud Rate evaluation and score of Investment Attractiveness.
3. Presenting to funds
   Based on the results of the rating research, we hand on our reports to partner funds for further study by investors directly.
4. Promotion of the report and information about the project (promo)
   When the final version of the report is done, we publish it on our resources, make investor base newsletters, and make publications in partner media.

However, rating doesn’t guarantee a good score, but if the client doesn’t agree with the result, this rating remains non-public and we won’t publish it in our resources. As a result, highly rated projects will attract more attention of large investors.

When the report is completed, Digital Rating Agency sends it to the team of the rated project. If the client is not satisfied with our expertise, it becomes a non-public and doesn’t appear on our website until defects identified in the project are fixed.

Public evaluation appears on the Digital Rating Agency’s official website, in social networks, and in Digital Rating Agency’s information channels (Facebook, Twitter, Telegram, Medium, Bitcointalk). Also, it’s spreading throughout the media.

We form a constantly updated project queue for the rating (Watching List).

Ways of getting into the Watching List:

• The project itself orders a rating expertise;
• The investor orders the evaluation of the project;
• The project has aroused experts’ interest and we are ready to do a free express evaluation;
• The project conducts an active PR-campaign and resembles a fraud one.

How we make the report itself

When it’s time to work on the project, we begin to explore all available official materials, as well as information in social networks and the media. On the basis of the collected data, we form a questionnaire, which differs from the project to project, depending on the specifics. Some of the questions that require comments are sent to the project team, and if we receive feedback on it, answers will be reflected in the report. If the team ignores questions, there will be only our point of view.

Our report includes the assessment of the following aspects:

1. Qualification of the team (does the team have people with great experience in the specialized field);
2. Current and potential relevance of the idea (the appropriateness and demand for project’s idea);
3. Discussion of the project in the media (whether there is a positive information background around the project and popularity among private investors);
4. The presence of well-known advisers (whether the project could attract public figures);
5. Participation of large funds or well-known companies (whether there is a demand for a product among investors);
6. MVP and marketing (whether there are any factors that allow to assess the practical progress towards project implementation);
7. Road map (whether the team’s picture of achieving the goal is realistic);
8. Budget (whether the financial plan is detailed and proper);
9. Many other indicators.

On the basis of the questionnaire, analysts form a basic version of the report, which discloses and evaluates the answers, describes the competitive environment, advantages and disadvantages of a project. After that, the report is supplemented by comments from our lawyers and tech specialists.

The resulting alpha-version of the report is passed to the rating committee, that thoroughly discusses the material and evaluates it, after that the correct report is returned to analysts for adjustment. The rating committee consists of several experts and they can vary depending on the specificity of the rated project. The main task of the rating committee is to honestly evaluate the project. The members of the rating committee are people with vast experience in the project related fields. The chairman of the rating committee ensures the project review procedure.

By this moment, we already have a deep understanding of the project and can assign a Fraud Rate, which is the announcement of a full report. The Fraud Rate reflects answers to the following questions: do they have enough capabilities and intention to turn their ideas into reality? Do they cover the risks for investors? And do they make illusory promises?

After the final text version of the report is generated, it’s passed to the proofreader, and after all to translator and designer. When the report is fully prepared, it comes to investors who use information to make investment decisions. The investors add their comments and corrections to the report and then we publish it, after that the report published in open sources.

As a result of the project evaluation we have:

1. Rating — rating scores in descending order A1, A2, B1, B2, C, D (where А1 is the highest level of investment attractiveness, С is the lowest one, and D is a default, which means that the digital asset is no longer needed by anyone. At the ICO stage, the score of the D is not applied);
2. The Fraud Rate reflects the degree of conscientiousness of the project team: do they have enough capabilities and intention to turn their ideas into reality, do they cover the risks for investors, and do they make illusory promises. The Fraud Rate can be Low, Medium, and High, where Low means a good score, and High is real risks of fraud of one kind or another;
3. Full report in form of text or presentation with verified data (in the case of a paid order).

Teams launching the ICO need the independent audit and the presence of a good rating the most. An external project analysis of high quality is able to identify the weak and unfinished sides of the project and save money that would otherwise have been wasted. Individual investors find it difficult to understand the huge number of ICO projects, and all are somehow guided by external benchmarks. Large investors also actively use independent ratings to get a “second opinion”. Having a good evaluation can significantly increase the size of the funds raised by ICO after all.

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