With the current oversupply of ICOs in recent time, and collapse of many big projects, the ICO market is now very dynamic, and need careful consideration before investing. You can still get a high return on your investment because a good project is always around, but the bulk of the ICO projects are scams that can result in considerable losses. This is why you need to read this article if you investing or consider investing in ICO because we have come with the right facts to help you analysis various ICO before investing.
The larger the ICO is the better?
Most investors think they have the better chance of future profits for larger projects. And this is because of the fear of missing out. This can result from project with the large community and potential investors. This may lead to an irrational decision that may lead to loss of hard earned cash at the end of the day.
Why do large projects fail?
One of the major reasons why large projects fail is because of large investors called whale Wales who may buy between $ 1 million – $ 5 million, and usually get unfair advantages above the other investors. This is because they can dump their token at any time which can lead to an apparent loss for smaller investors. Assuming they are offered the discount of -60% and price drop to -30%, they will still be getting 30%return on investment, while you the private investor loss -30%. These shady transactions can lead to the project failure. A good example is Tezos ($ 232M) project.
Below are the few rules of ICO investment:-
- Focus on Project with Value and not Hype
You can earn from any good ICO. This ranges from the $ 2M to $ 10M projects. Google was funded with $ 1M USD. If the team involved in a project is good they will easily get investors and funders. But if the team involved in a project is idiots, its very sure will squander million dollar funds. This initial financing is much needed by the most team to realize their project. Then later they can scale up their operating income by the size of their organization. Larger project sells to Wales which will cause pump and dump risk, a smaller project can also sell to Wales, but less likely.
- Critically analyze the team and make sure they are already successful
You must make sure the founder have a profitable company, if not please do yourself a favor by stepping aside! They must be business oriented and proven their ability from other successful projects handled. Otherwise, it will be like throwing money to someone that doesn’t know how to manage it and we all know the end of such action. By choosing successful and business-oriented teams you are quite sure of the success if such project.
- Avoid projects with large unclear possibilities
The concept of ICO is to come up with cryptocurrency that would be beneficial and applied on a large scale. This is only achievable by directing the value to the retailers and consumers. Your token should be issued immediately after the end of the ICO. And there should be perceived possibilities in all aspect of the project.
- Make sure there is a reasonable hard cap
The increase of ICOs it is becoming increasingly common that a lot of projects don’t reach hard cap. This is generally not an issue as long as the increased amount is more than $ 2M, a group of a smart team do better in the long term with $ 2M than a bunch of confused team with $ 300M. Therefore, it is very imperative that the token holder destroys all unsold tokens after token sales. This will ensure that the token sold to match the market and help balance the market. The total supply should be low to avoid future offers, to curtail oversupply and allow up to an estimated increase of 500% – 1000% within a year.
- Ensure the Project is Blockchain Oriented
Most developers start their ICO because they want their own piece of pie and not necessarily because they want to develop such project using Blockchain technology. Ensure you go through the whitepaper to make sure the part of Blockchain technology is intact and add value to end users. Otherwise, it would mean that the ICO is only meant for the purpose of cashing from gullible investors. They should have a disturbing character because; it won’t be easy to enter established a market; regardless of the value you are adding to the market and your marketing strength. The project should be based on viral destructiveness and value that calls the attention of the retail users.
- Ensure that the founders are engaged with the community
The founders of the project you are trying to invest your hard earned money should be accessible. The best project you will want to invest into is those you have easy communication with the CEOs and founders of the projects on their social media and telegram community. Avoid projects where everything is managed by community managers and you have to go through different people to speak with the founder or the CEO. These are just employees and they do not care about you or money. An investment must be personal because it minimizes the risk. Also, make sure that the founders are bent on making the project a success, and not only for the funding during ICO. This way you can be sure that the founders have your interest at heart, and manage whatsoever you invest effectively. Though the founders may not be able to guarantee the profitability of their project, they should be able to strive to make sure their token is high in demand.
Conclusion: What is the ideal ICO project?
The best ICO project you can invest your money should meet the following criteria:
- They should be within $ 2M – $ 10M with a low offer of no more than 4 Ethers per backer.
- Founders and teams should be business oriented with a portfolio of successful projects executed
- The direct use of token and unique value directed toward the retail use after ICO
- The project should be a blockchain-based with a disruptive character
- The teams and funders should be accessible, via Telegram and other social media channels to ensure your money will be managed effectively.