As we have already stated previously, the number of ICOs in 2018 is continuously increasing, it is becoming a considerable challenge for ICO launchers to stand out among thousands of projects out there. Usually, it is easier to spot a poor project than a scam one. This is mainly due to the fact that some scammers are professionals in fraud and have enough budget to pump their projects. The new series of articles will show the key elements that ICO launchers must make sure they cover. First of all, one should consider the nuances in the whitepaper (WP) to avoid being qualified as a poor project or mistakenly be identified as a scam ICO.
The days are gone when ICOs could raise few millions of US dollars for having unprofessionally written WPs. Nowadays, investors have become more proficient and have learned a lot from the mistakes they made in 2017. Today, most of the ICO retail investors feel quite comfortable reading a whitepaper and have a clear understanding of its content, including the technical and technological solutions. Indeed, the whitepaper is the most important part of the ICO. If it is not written properly, your project could easily be disqualified. Make sure that you address the below topics.
A brief background and idea. Some projects dedicate more than five pages to the introduction. If you are not able to conclude the project idea in one or two pages, then you must have missed the main purpose of this section. This is intended to be a high-level brief, while details are discussed in the coming sections.
2. The problem you are trying to solve or service you are going to provide
Although most of the ICOs cover this part indirectly, it is of extreme importance to have a dedicated section with a title explicitly indicating the problem to be solved or service to be provided. This way, investors don’t have to navigate through 50 or 60 pages of text but will go directly to the core of the document and make their impression out of it. If you are not able to convince the investors that the problem is worth solving or the services will be needed — they will proceed to the next ICO on their list.
Dedicate enough time to this section in particular and make sure it is written professionally and have enough details to address the initial questions which investors may have. The true reason for running an ICO must be represented here.
3. The detailed explanation of the proposed solution
Explain the idea in simple words for retail investors to understand, yet in enough details for them to get the confidence that the proposed solution is solid and that it will solve the problem in the most efficient way.
Is there enough demand to have the problem solved? Will customers pay their hard earned money for the service? The best way to answer is to conduct professional market research and analysis and represent it in an understandable way, particularly in infographics form.
Is it a must for the solution to be implemented on the blockchain? Explain why. It seems to be taken for granted that any project should be implemented on the blockchain, and it is very obvious why. Surprisingly, the truth is that many projects should not be developed on the blockchain. If you aren’t able to explain the benefits, it may seem quite suspicious to the investors.
Is it a must to have a token on the platform? If yes, then you must address tokenomics. Describe how the ecosystem will function and provide use cases and usability scenarios illustrating the need for a native token. There are thousands of projects which have native tokens unnecessarily — this means that the majority will either be forced to shift to ETH or BTC, or they will eventually fail. Imagine introducing 5,000 new accepted currencies in your country (this is the number of cryptos and tokens combined). Is this practical? Absolutely not! Describe the future of your token after the ICO and what the benefit for the holder is.
4. Product architecture and technology
Thoroughly explain how the product will look like, what functionalities will be available and how the platform will be created, technologically. Having solid solution architecture will indicate the clear understanding of what the team is trying to achieve. Neglecting this part or having it poorly written will alarm the investors that either the team doesn’t know what they are doing or they have no intention to develop an actual product.
Generally, this was the part where the investors’ involvement takes place. They start liking your ICO, start believing in it. Or they don’t — it depends on you and the way of representing the project. If they actually do, then it’s time to go further and present them the method of crowdsale, the roadmap, the team and the legal issues. The next article will review those parts.