There is an understandable concern about trusting agencies that rate token sale projects. This leads to overall confusion, but most notably it contributes to the ongoing negativity surrounding token sales. If there is a lack of trustworthy third party reviewers, who can provide much-needed objective guidelines for investors?
There are several problems related to rating agencies:
- Too many agencies with too many different rating systems, mechanisms, criteria etc.
- Some agencies don’t support their evaluations with data and analysis
- Pure advertising and scores that could be paid for
These problems inevitably cause confusion, which occurs because people don’t understand the way in which projects are rated. There are three major factors which may help to choose an agency for project analysis: 1) the team includes experts with high qualifications, 2) a clear and transparent mechanism of evaluation, 3) independent data which is not related to subjective (personal) points of view.
At ICORating we have developed an easy-to-grasp evaluation and analysis system. Briefly, there are two types of evaluation:
- Analytical — performed by professionals with extensive experience; they provide their own overview of the project, its potential and any inherent problems.
- Independent — projects’ stats and data are gathered and presented to an investor to make his/her own judgment.
Our goal is not to label a project with a rating or a score, but to provide a comprehensive description of it. Let’s review our system in detail.
How does a token sale project evaluation work at ICORating?
ICORating’s specialists have developed an evaluation system which includes the best practices of traditional analytical agencies and 2 years of following the progress of blockchain startups. ICORating’s analysis is built on two types of factor: qualitative and quantitative.
Qualitative factors
- Technical analysis: Is there an MVP ready, or is there a launch planned before the token sale commences?
- Compliance with roadmap schedule: Changes in development deadlines and postponement of alpha/beta versions or testnet/mainnet release are “red flag” signals which should be closely monitored.
- GitHub availability and openness.
- Smart-contract quality checklist: An independent audit, token holder rights, token issuance mechanisms etc.
- Technical aspect of the white paper (or separate tech paper): Does the project really need its own blockchain development? the market relevance of the product/solution from a technical point of view; how realistic/executable the technical aspect of the project is (will it require significant additional funds?); execution of decentralization and a consensus mechanism.
- The team: Successful experience in the target industry and with blockchain-related projects, diversity of team members’ expertise and competence, multinational backgrounds etc.
Aside from mostly technical aspects, qualitative factors also relate to project economics. In particular, the business model, target market and industry, competitors and tokenomics. In other words, ICORating evaluates a project’s value proposition and its potential to solve a real-life problem(s).
Quantitative factors
These relate to a token’s demand forecast and analysis of the intended allocation of funds raised. ICORating’s analysts apply risk-score and hype-score tools for an objective review. Risk-score enables the evaluation of investment risks, whilst hype-score demonstrates the interest level of a project on the part of potential investors. ICORating’s website also provides easy-to-use resources and comprehensive data on market trends, newly launched projects and post-token sale stats. There are several types of report, news digests, a token sale watchlist and a comprehensive database of funds with their general security ratings, amongst other tools.
The market for blockchain and token sale projects is ever changing and could be confusing to follow and base strategic decisions upon. A third party opinion could be extremely useful, but there are strong concerns about trustworthiness. ICORating opted for data analysis and independent stats instead of personal opinions, thus providing comprehensive project descriptions to help potential investors make strategic choices.
Find all our ICO evaluation reports here!
