The team of the Waves Lab incubator for blockchain startups audits many projects planning for their ICOs. In this article, we explore the importance of the white paper and share our recommendations on how to prepare this crucial document.
Your White Paper combines a detailed presentation of the project and a business plan in one document. It tells ICO participants about your startup, shows the company’s competitive advantages, describes the business model, and presents your road map for development.
The task of the white paper is to dispel any doubts on the part of prospective ICO participants by answering the questions:
- What is the essence of the project?
- Does the project’s positioning align with its business model?
- Will the project become a viable business and when will that happen?
- What problem does the project solve?
- How does the project differ from its competitors?
- What is the project’s role for the blockchain community?
- Has the project developed a working prototype or is it just a concept?
- What is the role of ICO project tokens in its business model?
- What is the plan and timeline of the project’s development?
The structure of a white paper is not pre-determined. Each team creates a white paper according to their own needs and preferred approach.
The project founders will ideally prepare the white paper themselves because no contractor will be able to describe the startup’s business model better than its creators. It is best if the white paper is translated into a number of languages, including English and Chinese. To do this, it is better to involve professional translators or community members you trust.
To help you prepare this material, we have compared the structure and contents of the white papers for seven projects. We offer some key recommendations for a stage-by-stage creation of your white paper, as well as our conclusions based on this research.
Provide the reader with introductory information about the project
The first section of the white paper takes 1–2 pages and does not contain much specific or detailed technical information.
The task of the introduction is to inform the ICO participant about the essence of the project so they want to study it more deeply. This section also describes general characteristics of the target market and its problems. The introduction may contain a definition of specific terms that are peculiar to the project niche, in order to make the white paper more understandable to the reader.
Let’s consider the structure of the introductory section using the example of Simdaq, a platform for teaching crypto trading. The paper briefly covers the functionality of the project: the use of historical trade data from various exchanges, the community of crypto traders, and the development environment and testing of trading bots. This effectively constitutes a summary of the white paper’s sections, each of which contains a more detailed description of each of these areas.
Describe the Product
In this section the paper explains more about your technical solution. This description shows the team’s competence, and also shows that the project is ready to provide its solution for ICO participants to evaluate. The ICO organizers present this data in the form of infographics and diagrams for illustration purposes.
If the introduction does not explain specific terms, it is important to define them in this section. Try to make the section as clear as possible by describing the project’s overall concept. Start with general principles, and then give more technical details. Explain your advantages over competitors.
For example, Paytomat is a decentralized platform that helps small and medium-sized businesses accept payments in cryptocurrencies by using QR-codes. In their white paper the creators of the project answer questions related to their target audience, the nature of the ecosystem, the way POS is integrated, and the purpose of blockchain within it. In this section the reader can get a full idea of how the project operates.
Analyze the Market
Here the authors of the white paper analyze the market the project intends to enter. It is necessary to carry out your own research and identify trends. The analysis of a five-year period is enough to define market trends.
It is a good idea to supplement this section with graphs and use actual data. The project must refer to proven and reliable sources. For example, these can be reports of the ‘big four’ auditors: PwC, Deloitte, KPMG and E&Y. Try to make the section as objective as possible, so that readers can see how promising the project is.
Show how the project solves industry problems
This section describes industry-specific problems. Give reliable figures that show the nature and urgency of the problem. However, don’t artificially inflate the problems to overstate the project’s potential. It is necessary to look beyond the startup itself and to look at its work and market situation as neutrally as possible.
Data about relevant industry problems and project solutions helps white paper readers to understand how promising the project is, how well market problems are understood, and how similarly the ICO organizers and participants see the market.
Provide information about tokens and project economy
Describe the principles of the token’s operation, its role in the project’s business model, and the process of distributing tokens among ICO participants. The authors of the white paper should present the data in the form of diagrams and graphs to help readers understand it as easily as possible.
The reader must understand the economy of the project. After reading this section, there should be no questions about such matters as how the token is issued, when and under what conditions it can be used, how the project will distribute tokens among the participants of the crowd sale, and so on.
For example, Simdaq, a platform for analytics and simulation of crypto trading, provided information that the SMQ token would be used to pay for subscribing to a simulator for historical trading data, paying for content, paying to test trading robots, and contributing to the prize fund of a decentralized tournament. For convenience, the Simdaq founders presented a summary table that shows the initial price of the token, the issuance volume, the minimum and maximum cap, and the asset distribution process.
Describe the project’s monetization strategy
In the section about monetization, describe the project’s plans, specify the indicators the team intends to use, and introduce the plan for achieving them. For illustrative purposes, use tables and graphs that will allow readers to see stage-by-stage development.
Your monetization plan is interesting for experts and future participants of the ICO. This section shows how viable the startup model is. You should explain how much your market capitalization might be, how fiat funds impact the project and the token, why the ICO organizers forecast a given capitalization, and future token value.
Share your Road Map
In the Road Map section, you should record the key events for the startup and their deadlines. The section can be stylized as a chronological diagram that is more visual than text-based. The service user should be able to print out this section and understand what and when things will happen in the project.
The Road Map will allow monitoring of the successful progress of the project. In addition, it will constantly remind developers about the ultimate goal.
- Development and launch of user interface for programming trading algorithms
- Integration with exchange platforms
- Launch of educational course for developers of trading algorithms
- Launch of interface for investors
- Prepare and conduct ICO
- Launch of cryptocurrency exchange algorithms, and
- Increase in users.
Introduce your Team
Specify the project members and their achievements and skills. Don’t forget to find a good picture and include a link to their LinkedIn profile.
This section is important for the community to form an opinion on the project. The task of the section is to show that the project has the best specialists available. Participation of people who are well known in the industry increases confidence in the startup.
In the Our Team section RewardMob, a platform for mobile cybersports, gives the name of every member of the project, their picture, current position and work experience.
How to liven up your white paper
The white paper is an obligatory element of your project that will be used to place information on ICO trackers and other sites. However, it should not contain only boring text that is difficult to read. Add graphs, images, infographics, and diagrams for illustrative purposes.
Don’t post too many pictures. The white paper is a business document rather than an entertaining post for social networks. In the future, journalists will use it to write further materials, and marketers and PR will prepare presentations and speeches for conferences. Therefore, it is better to use more graphs that will diversify your text and give clear images for communicating technical data.
When preparing the white paper, CoinTelegraph suggests starting with general information without technical terms in the introduction and continue with more detailed materials towards the end of the document. Not everyone is interested in the most technical components of the project. It is important for unqualified ICO participants to read more general information about the startup and make a decision.
In its article about preparing a white paper, the CoSchedule project recommends using professional language that is abundant in facts and data. At the same time, the document should be focused only on the market problem the project plans to solve.
The white paper should address even the trickiest questions that ICO participants might ask. However, at the same time the content of the document should also be available for media representatives, lawyers and the startup’s own team.