A New Tool for Consumer Token Projects: The Transparency Scorecard
It’s not like any other rubric you’ve seen before.
Last week, The Brooklyn Project community introduced the Consumer Token Framework so that projects and individuals can have a distilled template for understanding and considering many of the issues that can impact a project’s success and regulatory compliance — issues such as token design, project governance, token distributions, sales and marketing practices, use of token sale proceeds, token inventory management, token safety and audits, conflicts of interest, consumer protection and legal compliance.
Many innovators and consumers in the token ecosystem are all too familiar with the difficulties of managing these issues for a token project. Are white papers clear in their discussions of governance, project roadmaps, and use of funding? Have the smart contracts and code been audited and deemed secure? Are projects capable of achieving the grand visions of their marketing materials? Many founding teams are unaware of the rules and transparency issues to consider, while regulators are left struggling to determine whether, when, and how various rules should apply. Our intention with The Brooklyn Project is to provide a framework to help establish trust between the initiators of consumer token projects, their collaborators, the purchasers of the tokens, and the public at large.
This week, The Brooklyn Project is happy to announce the development of a “Transparency Scorecard” to further help projects and individuals navigate the choppy waters around consumer token projects. The Transparency Scorecard rates the quality of statements and documentation describing how a project is approaching the important topics identified in the Transparency Goals of the Framework.
The ratings don’t assess the quality of approaches chosen by projects; instead, they grade the completeness, clarity and consistency of how a project describes its approaches. For example, “We don’t have a plan on this topic” counts as a clear and complete explanation. While it may reflect poorly on the project not to have a plan for a given topic, that is not the concern of the Transparency Scorecard. A good transparency rating can still be earned. In contrast, saying “We have a plan but won’t tell you”, or being vague and inconsistent about a topic, would be penalized in a Scorecard.
First One Up to Bat: A Project Called Civil
To give you a sense of how a project’s transparency can be evaluated using the Scorecard, take a look below at how ConsenSys used the Scorecard format to evaluate Civil (CVL) — a journalism platform on the Ethereum blockchain. They used primary source information including the project’s whitepaper and website, as well as secondary sources like the Civil project page on the Token Foundry website and Civil’s Medium page to evaluate completeness, clarity, and consistency of the project’s described approaches.
The Civil project received an overall transparency score of 9.2. Admittedly, this might be a biased assessment. ConsenSys is a substantial investor in Civil and, for now, the only contributor to the scorecard. Do you disagree with anything in the scorecard? We have opened up the scorecard for public comment. Anyone can weigh in on the grades or the structure.
Applied Insights: Supporting Projects, Protecting Industry Participants, and Improving Practices
Using the Scorecard to evaluate Civil made clear that this process can help projects and their advisors and communities make conscious decisions about how to approach and describe the principles and practices outlined in the Framework. Without the Transparency Scorecard, it is easy and common for projects to overlook or lose track of these issues. For example, the Scorecard process helped Civil identify areas where they changed their approach and needed to update their whitepaper or other documents. Any entrepreneur or lawyer who has worked on a token sale knows it can be hectic and full of stress. It is easy to lose track of issues, especially ones where there is not yet a plan of attack. The Scorecard can serve as a “north star” to help everyone stay on the same page about what they need to address.
We also expect Transparency Scorecards to make it quick and easy for anyone in the industry — consumers, entrepreneurs, investors, etc. — to understand a project’s choices. We hope this leads to a more informed industry, which in turn will serve the important interests of investor and consumer protection as well as facilitate an open dialogue on improving industry best practices.
Next Steps: Help Us Improve
In order for this to be an open, collaborative, and successful effort everyone interested in this space should provide feedback:
- Take our survey to provide feedback on the Transparency Scorecard idea;
- Visit our collaboration app to provide feedback on the substance and structure of the Civil scorecard; and
- Visit theBKP.com or join our telegram channel.
It’s your turn to start filling out some scorecards!