A whitepaper is arguably the most important document for any crypto ICO. However, the style and contents of whitepapers can vary drastically. We reached out to several crypto industry leaders to find out what they look for when reviewing a whitepaper. Read their quotes and gain valuable insight regarding what aspects of a whitepaper are considered to be the most important, and what some red flags might be. This post is updated monthly, so be sure to check back to see who else has been added and what their suggestions are for reviewing a whitepaper.
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- Ami Ben David, Co-founder and managing partner of SPiCE VC: "We specialize in tokenization, so my initial focus is first to see if the project is suitable for our specific investment criteria - in our case, I'm checking if it is delivering a key building block of the blockchain / tokenization ecosystem that we know is missing, or has room for more players and massive growth, or is it a new revolutionary protocol with some following, or a tokenized business which has a unique edge in the market because of the use of the blockchain or the smart use of a token economy. If the basics are not there, its a quick No for us. But if the story does meet our focus criteria, we look at the team (which we need to talk to anyway to form an opinion), what is their story and the way they choose to tell it, and I try to compare the big vision and big words with how much they actually achieved in terms of execution in the time they had to spend on the project so far. If it all makes sense, I schedule a call."
- Ofir Beigel, Owner of 99Bitcoins.com: “I make the same suggestions to crypto investors and blockchain startups alike. Look at the team, the tech, and the market. Additionally in the white paper look for an alignment of interest. What are the long and short team motivations for all stake holders? Are the interests of the founders and advisers in parallel with the large investors and are they in line with the users of the platform, protocol or service? Even before the blockchain the old adage of "follow the money" provided an enormous amount of insight. For example: Are the issuers offering discounts or bonuses? Are they transparent about this and are they putting in vesting or lockout periods? Some founders check the box saying "yes we have a vesting period so investors cannot flip the token." But when that vesting period is only three months and the first deliverable is four months out, that is pretty much worthless.”
- Lou Kerner, Partner, CryptoOracle: “While we take a holistic view of projects, for CryptoOracle, the team is the most important aspect of the Whitepaper. We actually use machine learning/AI to help us evaluate teams. We are also very focused on the problem being solved and the role the tokens play in that solution, starting with, does the solution really require a token (and blockchain)? Then we look at token economics to ensure the token economics align the different players in the ecosystem. Governance is critical for decentralized projects. We also look for realistic roadmaps. For the most part, poorly written Whitepapers are more hurtful to projects than well written Whitepapers are helpful.
- Motti Peer, Co-CEO of Blonde 2.0: “We receive hundreds of whitepapers, and as most investors with little time, I review many of them. With this being said, if the whitepaper does not immediately state the company’s purpose and process, chances of continuing to read them are slim to none. With so many white papers, it’s crucial to remain relevant by stating and emphasizing the clear message of the company and its product. This is the difference that can make or break successful projects.”
- Yaniv Feldman, Co-founder & Chairman, Cointelligence: “Today’s whitepapers are different from what they used to be in the past. Satoshi’s whitepaper was nine pages and was almost entirely technical. Today’s whitepapers are 30-80 pages long and are full of marketing info, roadmap, team and investor offering. While Bitcoin is very different from today’s ICOs, I still try to focus on what matters. I try to understand if the company is solving a real problem, for a real, big-enough, relevant market, instead of just building a “decentralized” solution to the same problem other have solved centrally without any relevant additions (besides so-called decentralization) or a made-up problem that doesn’t really have a real-life, big enough use case to sustain the existence of such a project. Most project fail at this level. If a project passes the first stage, I take a brief look at the team and try to understand if their token economics structuring makes sense (how many tokens, inflation rate, built-in incentives to stakeholders, consensus mechanism, etc).”
- Eric Turner, Research Lead, Messari: “Whitepapers are still the best way to gauge how well a project will execute. I have learned it is best to skip to the end and see who is leading, advising, or investing in the project. With that in mind, start from the beginning and don’t skip the “fluff”. This is often dismissed as marketing speak but can give you a good idea of how realistic the project is. High hopes are to be expected, but if a project thinks they can overtake multiple existing markets or only want to offer a slight change to existing solutions, you should put on your skeptic hat. Be more skeptical if the team and advisors have limited experience in the space. Give the technical details a good read but realize that anything too technical is a distraction. A great whitepaper will address the “why” and the “how” of a project. Most projects today want to be the AWS, Uber, Airbnb, eBay, Facebook, etc., of the decentralized world. The “why” is how you will be better than these solutions. The “how” is even more important. The best whitepapers will give details on how their solutions will outpace competitors, gain a community, and incentivize developers. A detailed roadmap is something to look for. Even though whitepapers are early-stage ideas, having a defined timeline for development is important. If you really want to understand a project look at who is running it and map that against how feasible it is they can execute on their goals.”
- Melanie Mohr CEO and founder of YEAY, Creator of WOM: “When reviewing a whitepaper, I look for the following: simple, concise language that cuts to the point quickly - there’s absolutely no point filling up the word and page count for the sake of the thud factor. A well articulated and watertight vision - I need to see a clear and inspiring concept that I can get behind. Credibility and expertise - I need to feel faith in the team behind the idea. User experience - does it have a good UI/UX? Technical detail - what's actually being built and what's the go-to-market strategy. It's easy to say "this is x, built on the blockchain, to disrupt y" but how will it actually do this?”
- Martin Wos, Co-Founder, Co-CEO and CVO of Block Stocks: “Firstly, the validity of the business model. The model should make economical sense. If an idea already exists, not important if off- or on-chain, a new idea have to be 10x better. Just because an idea is decentralized, does not attract clients. Think from a client's perspective. Then, start looking at how the technical components (technical whitepaper) and the token sale structure. Under which conditions does the currency appreciate in value and why? What are the underlying drivers and do I fully profit from it or are there any constraining conditions? Also do research about existing business models. What are the differences, advantages and disadvantages of similar business models.”
- Evgeny Ponomarev - Co-founder and CEO of Fluence: “First of all, you have to understand the difference between the Whitepaper and Primer. The first is a technical document while the latter is for pitching. Since the decentralized technology landscape is yet full of “terra incognita”, don’t expect the team to answer all the questions, but at least they must understand the challenges that exist and the obstacles they face. The best way to understand how a proper whitepaper looks is by reading ones made by great, successful projects: IPFS and Filecoin, Plasma, TrueBit, Polkadot — these served as an inspiration for our team.”
- Dr. Omri Ross, CEO of Firmo Network: “When reading a whitepaper, I always look for academic rigor. Is the paper describing an existing product or does the team have the skillset to execute on the vision depicted in the paper? Does the product cater to a relevant niche and is the business model and go-to-market-strategy carefully designed to suit the customers needs? If the product is distributed or decentralized, has appropriate measures been put in place to provide a feasible governance model?”
- Sharon Shineberg, In-House Blockchain Maximalist at Blonde 2.0: “When I first read Satoshi’s white paper, I could not sleep many nights. I was up restless and obsessive over bitcoin. In my experience, I can only compare this occurrence to the ‘rabbit hole effect’ from Alice in Wonderland. From afar, there’s a dark hole in which another world exists; once you’ve stepped foot in the hole, there is no turning back. Curiosity is contagious, and this is the exact effect I am looking for when reviewing white papers.”
- Dror Futter is a Partner at the Rimon, PC law firm: “Whitepapers should provide a description of the regulatory compliance of the token. At this point in time, any ICO claiming to be a “utility token” should be viewed very skeptically. Potential token buyers should be very leery of overinflated legal claims. For example, many ICO’s claim to be issuing “SEC compliant” tokens with little explanation of the basis of this claim. This is critical because at this time, there is not a single ICO that has received the express approval of the SEC. In other instances, whitepapers identify the prestigious law firms ICO’s have hired and leave it unclear what advice they received. Our firm was approached by an issuer three days before their ICO after their global law firm withdrew from the representation. Their whitepaper still said they had consulted with the firm – which, while technically true, was also misleading. Potential token buyers should also look for details about how the tokens will trade after issuance and what the issuer will do to ensure ongoing regulatory compliance. While ICO issuances have gotten all the press, the after-market trading poses as many regulatory issues.”
- Jonathan ben Shimon, CEO of Matchpool: “It is more important to look at the formation and the architecture to determine whether it is original or not. I care more about new architecture and existing technology than about those who are trying to force the economy on our business.”
- Liron Langer, Chief Investment Officer at Nielsen Innovate: “Based on experience and involvement in subsequent projects, the most important factor is the team, and in particular, do they have true understanding in Blockchain technology and DLTs (Distributed Ledger Technologies), and fully comprehend the token usage, utility and value model and whether the cost of the challenge they address significantly lower than the benefits the adoption will provide. In addition, it’s important to look at what the team has achieved so far, the use of funds and how the economy will interact with the token once it hits the market. I am glad to see that the market evolves slowly but surely, towards addressing real challenges in a much more professional manner.”
- Jon Buck, President, B&B Content Management: “Think of a young person going on their first date. They spend hours making sure that they look their very best - picking outfits, fixing hair, agonizing over every detail. Why? They want to attract the person they are meeting. The same is true with a whitepaper. Investors who look at a whitepaper are ‘dating’ the company. To attract the best investors, the whitepaper has to look its best. Typographical errors, broken English, punctuation and grammar mistakes - these are like massive red flags to investors that the company is not mature enough to even clean up on a first date. If a whitepaper is clean, well written, properly edited, with excellent grammar, it shows a care and consistency that makes a company investment-worthy. Companies that don’t take the time to produce a professional whitepaper only prove that they are not professional, and generally, destined for failure.”
- Adi Karmon Scope, Founder of Fractal Boutique: "When I review a whitepaper, I'm most interested in the token economics section. The reason is that a company must justify the creation of a new token, if it would like to embark on the ICO route. If I'm convinced that a new token is indeed needed, then this means that the idea and eco-system are much larger and more valuable than the company itself which is conducting the ICO. Most of the whitepapers I read are vague about their economy and lack lots of details about how they're planning on creating intrinsic value to their token. A healthy economy is about creating new value, which is captured via the token and not about only creating artificial scarcity."
- Chad Pankewitz, CEO of Coinage: “Evaluating crypto and blockchain companies can be done in a similar way to how a venture capitalist would evaluate an investment. Here are a few things that we look for when reading a whitepaper: Will the company's main product be useful? What problem will the company solve? Do they have a great vision for their company and for their products in the market? Is the product and the technology truly great? Do they have the team to execute the vision? Does the project have traction - in terms of product readiness, users, community, and revenue? Who are their competitors? To be able to do our own research, I want to be able to understand from their whitepaper where they fit in the market; such as, are they a cryptocurrency, blockchain platform, or a protocol? Furthermore, if they are a cryptocurrency, are they a privacy coin, a stable coin, to be used for fast payments or just a storage of value? The more drilled down the categorization is, the better we can understand the competition and evaluate accordingly. Last but not least, longevity is one of the factors that you want to be certain of after reading a white paper: Will the product and company have a good chance of succeeding over the long term in this space?”
- Adi Ben-Ari, Founder and CEO of Applied Blockchain: "There’s an old joke about the physicist, the chemist, and the economist stranded on a desert island with a single can of food. How are they to open it? The economist’s answer is, ‘Assume we have a can opener.’ The joke should be updated for the Cryptoeconomist. Check the technical and token economy assumptions made in the whitepaper, look out for bold assumptions about technology that doesn’t exist, or gaps in the token economy model. A few more important areas to consider are the idea and solution that they are proposing, is the company creating something new, or just building an existing technology? Also, in regards to the token, whilst reading ask yourself, does this solution need a token? Is what they are proposing really a blockchain solution from the ground up, or simply a regular tech startup looking for funding by issuing a token? Most tokens are generally created as a utility token, so the question needs to be, does this serve as a true utility or has the token been added to the solution so they could raise capital through an ICO? And lastly, in terms of competition, is this solution part of a dozen others that are already successful, or is it different enough to add value to the blockchain ecosystem?"
- Tai Kaish, CEO of Wemark: "Traditional investors get a chance to do their due diligence by meeting the founding team and asking in-depth questions. The whitepaper is often the only way for ICO investors to evaluate the company, its product, and future plans. When reviewing a whitepaper, investors should compare the associated risks of the project, to the potential gain. Projects will usually outline the market size and opportunity early on. Realizing the risks, however, is something each investor has to do on his own. Each key factor presented in the whitepaper (team, product, token economies, roadmap, competition, etc.) might hold potential risks and prevent the projects from reaching its goals. Following deep research, investors should support projects that demonstrate the lowest risk along with the biggest potential outcome. It's great when teams get technical and explain how their protocol works with code samples and architecture flowcharts. It's easy to get carried away in technical descriptions, but it's crucial to understand why people will want to use it, not just how it works. For some projects - marketing, sales and UX are more important than expertise in smart contracts or blockchain development."
- Johnny Kolasinki, Head of Media at XYO Network: “The first thing I look at when reading a whitepaper is the project's purpose. Are they solving a real problem? Does a blockchain-based solution to this problem make sense? I've seen projects that had amazingly innovative implementations of blockchain technology or DLT; however, they were trying to replace existing platforms without actually addressing any flaws in the models that are already in place. If a project is going to compete with existing technology, it needs to clearly lay out how it will either augment or improve upon what's already out there.”
- Mark Vermeeren, Global Marketing Manager of MobileBridge Momentum - “For us, one of the most important aspects of a whitepaper is that it correctly communicates the value of the service or product. No matter how well written, how awesome the design of the paper is, or how cool the graphics used look, the offer needs to be strong. Additionally, the reasons indicating “why blockchain” or “why an ICO” should provide an understanding of the product or service’s USP, and specify the way it changes the paradigm of its respective market. Naturally, investors and crypto enthusiasts will consider funding a project whose likelihood of success is high; so, in order to properly assess the value proposition, it is important to also detail the competitive advantages, and the specifics that relate the strengths of the solution to the market dynamics.”
- Darvin Kunaiwan, CEO of Crowdvilla: “The first thing that I would look for is the problem area that the project aims to solve. After that I’ll look at the detail surrounding their token economy: what does the token represent, how will the token retain value and how will the token be distributed initially. I’ll come up with my own conclusion on whether this type of token will be considered as securities or otherwise, which then allows me to see whether the project is being done in a legally responsible way. Next I’ll look at the team - not so much on finding hyped up factor (personally I don’t believe ex-big mnc matters much in this case) - but more towards seeing that there are indeed real people fronting the project, and that it is not an elaborate scam. Finally, if applicable, I’ll look at their basic approach from the technical point of view, on whether it makes any sense in achieving what they set out to do.”
- Avishai Shoushan CEO of Carats.io: “When you review a whitepaper there are several crucial issues that must be addressed. For us, the things that are most important for reviewing the project through it's whitepaper is the order of the content, while looking for the known entity, team and partners who stand behind the project and the token. Another important criteria is the token usability, while asking if there is a real need and use for the token, except for fundraising. The last aspect is the technology and value standing behind. In which stage the company is in, regarding technology if it is deploying, alpha, or beta and what will the token bring considering it's long term value, beyond of speculation.”
- Ran Avidan, Founder & CTO of Mobilechain: “The first thing I look at when reviewing a whitepaper is 'The Team' section. Do they have past experience building and creating a new business in the targeted industry? The Mobilechain team has a lot of experience in the mobile industry, so we try to focus on that in our whitepaper. The next thing I look at is the solution itself and if blockchain is really needed to solve the issue. There needs to also be business potential in the idea. Like every investment, I expect to see a bit of market research and thought into how the solution will make an impact.”
- Barak Ben Ezer, CEO of Neema: “My advice for reading a whitepaper: I’m more interested in projects that solve the three underlying barriers to adoption: (1) interface, volatility and solving the legal status of crypto (what we are doing with SOV.Global), (2) looking for impressive team more so than impressive advisors, (3) explain to me what you’re doing in the first paragraph. The more concise and clear the better. Long convoluted is explanations and lots of fluff are a red flag. I’ve noticed that geniuses are typically people who can explain very complex issues in very clear terms. Satoshi’s bitcoin white papers from the 2009, was nine pages of pure gold. Less is more.”
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