How ICO Bounty Campaigns can manipulate your investment decision

Stefan Perlebach
Apr 6, 2018 · 10 min read
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Investing into the right ICO is difficult!

Too many are out there and too much noise circulates around them.

One of the biggest accelerators for such noise are Bounty Campaigns.

They are the marketing-machines of blockchain projects, used to create attention and build a community before launching an ICO.

But what sounds useful in the first place, can ultimately become a risk to your investment decision.

In the next 10 minutes I will show you why blockchain projects use Bounty Campaigns and how they can affect your decision making.

Finally, I will provide you with 4 Top Tips how to avoid investing into the wrong project by looking at its Bounty Campaign.

Why blockchain projects use Bounty Campaigns?

First let’s try to answer the question, what is the special thing about Bounty Campaigns and why nearly all projects make use of them before and during their ICOs.

I identified 4 reasons why Bounty Campaigns make sense to blockchain projects:

1. Outsourcing Tasks

In the ICO world, Bounty Campaigns can be a great tool for projects to outsource a wide range of tasks at the cost of the project’s token.

Typically, the participants of Bounty Campaigns, so called Bounty Hunters fulfil different tasks for the project. This can be promotion and marketing, content creation, bug hunting, translations of information material etc. In return for their work Bounty Hunters get rewarded with the project’s tokens for each task completed.

What started as an idea to engage curious and interested people in the blockchain sphere more closely and reward them for valuable input, now has become its own industry.

Nowadays, being a Bounty Hunter can be a full-time job for some people and many websites (e.g. are popping up, showing all running Bounty Campaigns and helping Bounty Hunters to find their next job.

2. Building a Community and creating Buzz

The most prevalent target of Bounty Campaigns is to establish a large community around the project and attract potential investors for the presale and the ICO.

In order to do so, usually most tokens of a Bounty Campaign are spent on Bounty Hunters to promote the project and draw attention to it on social media channels. This is mostly done by retweeting posts, liking, sharing, and commenting on platforms such as Youtube, Reddit, Twitter and Bitcointalk or writing articles about the project on Steemit and Medium.

3. Cheap Workforce

The creation of tokens doesn’t cost much in the first place (since they are basically coded out of thin air). Therefore, paying Bounty Hunters for their work in tokens is very appealing for blockchain projects since it allows them to engage a workforce without spending a single FIAT-cent. This can save them a lot of money, especially for the marketing budget.

4. Risk free

Using a Bounty Campaign for marketing purposes and outsourcing tasks to individuals is basically a risk-free approach for any blockchain project launching an ICO.

The work Bounty Hunters are doing is highly unregulated. Thus, if a project doesn’t like the content produced by a Bounty Hunter, they simply don`t pay him or her. Kriptonoob published an article about his experience as a Bounty Hunter, describing this issue:

In such a case, there is not much a Bounty Hunter can do. Conditions for a Bounty Campaign are mostly stated in a corresponding Terms & Conditions document (if provided), leaving the Bounty Hunters mostly with no labour rights and legal claims.

Also, in case the ICO fails (e.g. when the soft cap is not reached), the project will not lose any money from the Bounty Campaign. Since in this scenario there will be no tokens issued anyways, the project doesn’t have to pay anybody who participated in its Bounty Campaign.

How Bounty Campaigns affect your investment decision?

The most important thing what you want to do before putting money into an ICO is a proper research. This includes gathering many different opinions and points of view on a project.

However, due to Bounty Campaigns it can be extremely difficult to gain valuable and authentic knowledge about a blockchain project and its ICO, since the community and creators of the circulating information are mostly paid for their opinions.

Where traditional online marketing can be easily identified as such, paid content, comments and likes by individuals are not that easy to track.

If a project is massively rewarding Bounty Hunters to promote their ICO in exchange for tokens, it becomes very hard to keep an overview of who are the “real” supporters — those who are convinced of the project — and those who are only joining for the rewards.

But don`t worry — there are some ways to find out. And not just this. Usually, the way a project runs its Bounty Campaign tells you a lot about the whole project. Therefore, it is worth taking the time and having a close look at the Bounty Campaign before investing.

4 Top Tips how to avoid investing into the wrong project by looking at its Bounty Campaign.

1. Token Share

You want to invest into a project which handles its resources wisely. One way of assessing this is by looking on the token share that is spend on a Bounty Campaign.

The share reserved for a Bounty Campaign usually ranges from 0,5% to 5% of the total amount of issued tokens during an ICO.

Example INS Ecosystem:

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Source: INS Ecosystem, Token Distribution Chart

If the share is much higher, I recommend to be careful for two reasons:

  • putting a high share of tokens into a Bounty Campaign may indicate that the project is desperate for attention and the offered product or service itself not convincing enough
  • if, let’s say 20% of the project’s tokens are paid to Bounty Hunters, they are very likely to sell there tokens immediately after the ICO in order to cash out. Therefore, the price of the token might drop by 20%

2. Customer Acquisition Cost

I mentioned before that spending tokens doesn`t cost the project anything in the first place and theoretically is cheap and risk-free. However, if the project wants to be successful and economically sustainable in the long run, the tokens will be the currency which indicate the value of the project.

Therefore, it is crucial that each token is spent effectively from the beginning.

One way to identify the effectiveness of spent tokens in a Bounty Campaign is by looking at the acquisition costs. If they are very high it indicates a non-feasible marketing strategy.

To give you an example: The blockchain project conducted a huge Bounty Campaign (28% of their token supply) for their ICO.

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Source:, Token Distribution Chart rewarded its Bounty Hunters very generously. When adding a member to their Telegram group, they did reward this person with 30 VIOLA tokens. Taking the selling price of US$0.20 for one VIOLA token this adds up to $6.

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Spending 6$ for someone joining a projects’ messaging group is a very high acquisition cost and raises the question if it makes economic sense. There is even a formula in order to assess this:

The ability to monetize your customers is calculated by looking at the CAC (customer acquisition cost) and the LTV (lifetime value of a customer). For a viable revenue model, the LTV should be about 3 times of the CAC.

In case of, they would have to make at least 18$ out of each Telegram member, paying for their services or adding a corresponding value to the project in order to be break even. When comparing this price to competitors,`s calculation seems not less than very ambitious.

3. Number of genuine Supporters

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The community and their support for a project is critical to its success. Not just do they push for project forward and provide valuable feedback, they most likely will be the first investors.

Thus, looking at the number of supporters is important before making any investment decision. But be careful blindly trusting perceived swarm intelligence.

There is a big difference between those supporters who are genuinely interested in a project, curious, authentic and critical. And those who get paid by the project to propagandize favourable content about them.

Luckily, often there is a way to find out who is paid for and who is not:

Many projects have an excel spreadsheet where their Bounty Hunters can check their participation status. This document you can use to investigate.

Take the MobileBridge Campaign for example:

They have 1230 followers on Twitter. When I had a look at their participation spreadsheet I saw that 1050 users signed up for the Twitter Bounty Campaign — meaning 1050 from 1230 are paid followers.

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Source:, Bounty Campaign Participation Spread Sheet

Fun fact: Not only you as an investor can be misled by a high number of supporters who in reality are paid-for freelancers. It may even be hard for the project itself to assess the loyalty of its supporters correctly.

Let’s take again for example:

Based on statistics from other ICOs, expected a 50–70% conversion rate of whitelisted users to invest. Their assumptions were wrong. Far fewer people invested and paused their ICO and postponed it to June 2018. claims that the reason for people not investing were mainly the current bad market conditions.

This is probably true to some degree. However, my guess is that overall the conviction of their supporters was simply not strong enough to invest.

My assumption: With an excessive Bounty Marketing Campaign you may increase the number of people signing up for your whitelist, but also lower the conversion rate to those ultimately investing.

4. How much value is the Bounty Campaign adding to the project

Not everything about Bounty Campaigns is bad.

There are definitely some aspects that can add value to a project, helping it to develop and improve. But how do you find out?

First of all, you have to define what you consider being valuable and what not.

What I consider not adding value:

Pay to join

Paying people with tokens to join social media channels I don’t find very useful. A little bit might not hurt and can help a project to get going but as a core marketing strategy with the goal to gain true supporters I can’t see the sense behind it.

Pay to share

The same is true for Bounty Hunters if they get rewarded when liking or sharing posts and comments of the project. In my opinion, either this should be done out of conviction or not.

Pay for favourable Content

In my research I often saw copied fragments from the project`s own Whitepaper that were pasted together into articles published on Medium or Steemit. Mostly supplemented with a few nice words about the project. Bounty Hunters will get quite some tokens for these kind of articles. However, in my view this kind of reporting neither helps the project nor any investor and is simply a waste of time when it comes to creation of value.

What I consider adding value:

Constructive Criticism

Blockchain projects can incentivise Bounty Hunters with token rewards if they suggest product improvements or leave constructive feedback that helps the project to develop and spot problems they might have overseen.

A good entrepreneur wants to be challenged with critical feedback and use it to learn and improve faster than its competitors. Furthermore, this kind of critical reporting delivers a highly valuable source of information to potential investors and shows the commitment, professionalism and transparency of the project. However, most projects will just reward feedback in their favour and Bounty Hunters will usually create content with the least amount of effort that is required to get the reward.


Another valuable Bounty can be put on translations of documents (e.g. of the Whitepaper) or the projects’ website. This work is very important but also time-consuming and I can imagine it is not very easy to find affordable translators for certain languages. Therefore, using a broad community to do this job makes sense for me.

Bug Bounty

A Bug Bounty is another useful reward — offered to those who can help the developers of a blockchain project to identify bugs and vulnerabilities in their smart contracts as well as issues with their software or platform.


A Bounty Campaign tells you a lot about the blockchain project running it.

Therefore, it is worth having a close look at the dimensions of the campaign before making your final investment decision.

The main points you want to look at are these ones:

  • the token-share the project spends on their Bounty Campaign
  • the balance between paid and none-paid supporters
  • the acquisition costs for paid supporters
  • the value a Bounty Campaign is adding to the project

You want to know how to evaluate a whole blockchain project?

Have a look at our Ultimate Guide to review ICOs!

🚀 Interested in Tokenized Securities? Check out our newest project:


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