Cointelligence's ICO Rating and STO Rating System
Here at Cointelligence, we feel that there is a growing need in the entire crypto community for an impartial and accurate ICO rating and STO rating system. The rating system must be one that is not influenced by ICO/STO makers and advisors or bribes. Moreover, the rating system must be as accurate as possible in order to gain trust from the crypto community.
Here at Cointelligence, we feel that there is a growing need in the entire crypto community for an impartial and accurate ICO rating and STO rating system. The rating system must be one that is not influenced by ICO/STO makers and advisors or bribes. Moreover, the rating system must be as accurate as possible in order to gain trust from the crypto community. The rating system, developed by our team of pre-screened and fully vetted crypto experts, offers an impartial rating system designed to give an accurate view of the project and its underlying ICO or STO. Click here to see this system in action in our new ICO/STO list.
What makes our system impartial and which measures do we take to keep it as such?Current ICO rating and STO rating systems contain weaknesses, including the impartiality, validity, and potential for corruption of the raters. To counteract these weaknesses, Cointelligence is taking the following steps:
- Impartial Raters – Our experts are thoroughly vetted, and we have a second layer of paid employees that go over ratings as well as makes sure the raters are not connected to the projects in any way. Additionally, the identities of the raters are kept anonymous in order to prevent solicitations or other actions, which may adversely affect the impartiality of the raters.
- Valid Raters – Another issue with ICO/STO rating sites is that almost anyone can become a rater. At Cointelligence, we thoroughly vet our applicants and test their knowledge and understanding of the crypto ecosystem and blockchain technologies prior to bringing them on as a rater.
How do we determine the rating?We measure the quality of each token using the following criteria:
- Data Integrity– We look at the website and the whitepaper of the ICO/STO to check the validity and the quality of the information provided in both.
- Team Identification – Each member of the team is researched via their social media accounts and activities. We also look into the team members’ past experience with other projects (GitHub for developers and social network profiles for other positions), as well as recommendations each member receives from the crypto community.
- Vision – Our raters look into how well-defined the vision of the project is, how realistic it is, and the long-term plan that outlines how the vision will be realized.
- Product – The product is examined to see how well it aligns with the vision as well as how mature it is (POC/MVP/Working Testnet/Mainnet).
- Marketing – The marketing efforts for each project are examined for both quality and quantity of publications on social media and news websites.
- Social Engagement – This part focuses on the quality of the community members who follow the project on different social networks, as well as their level of engagement and sentiment.
- Legal Entity and Company Registration – Confirming that there is a legitimate company behind the project.
Below is detailed information regarding each criterion we look at when determining an ICO rating or STO rating:
1. Integrity and Complete Data:As a foundation, an excellent crypto project must have both a decent website and a decent whitepaper. The website must contain the general vision of the project, details about the investor offerings and different stages of the token sale, and the team behind the project. The ICO/STO's whitepaper must contain an in-depth vision of the project, a step–by–step long–term execution plan of that vision, technology overview, product use cases, a detailed explanation of the token economics and investor offering, a token distribution plan, and the future use of proceeds. Together, these two parts are worth up to a total of 7 out of 10 points in the ICO rating/STO rating criterion. The other three points are devoted to data validity. Having a full website and whitepaper doesn’t mean that the data written within them is authentic. This is why the authenticity of the data must be validated. The data validity score is given after an evaluation process occurs, consisting of checking for plagiarism and false statements, as well as checking for old and irrelevant data. The point division for this criterion is as follows:
- The quality of the website – 0 - 3 points
- The quality of the whitepaper – 0 - 4 points
- Validity of information – 0 - 3 points
2. TeamThe Team criterion is divided into two parts: The team’s level of anonymity and the team’s professional qualifications.
- Anonymity –This field is worth up to four points in total. When seeking to raise capital, a project should want to publish the people behind it. Having a published team on either the website or whitepaper is crucial for the process of assessing the team’s skills and experience. Hiding the team’s or individual member’s identity, or not having links to their social media accounts, can cause our raters to give an ICO/STO zero points for this entire criterion. An anonymous team is one of our biggest warning signs that an ICO/STO might be a scam.
- Skills and Past Experience – This field is worth up to six points in total. One of the main factors in estimating the project’s potential is the team’s qualifications and level of expertise. In order to evaluate this sub–criterion, we go through each members LinkedIn page, GitHub, professional sites, and blogs, in order to see their past experience and recommendations, as well as how relevant their experience is to the ICO/STO.
- Publicly presenting a team with social media links – 0 - 4 points
- Skill level and past experience – 0 - 6 points
3. VisionThe vision is the idea behind the project, the future token, and the product. This criterion also refers to the long–term plan that details how the project will fulfill and realize the vision. Simply having a clearly defined and well-explained vision is worth up to two points in an ICO rating or STO rating. However, a vision must also be achievable. We evaluate the “achievability” in two aspects:
- Theoretical – Basing the vision on logical and relevant market assumptions, as well as whether the technology needed exists today or will exist in the near future, shows how achievable the vision is.
- Practical – It is important to also define a vision based on the occurrence of certain market characteristics, geographical aspects, and regional politics.
- The quality of the vision’s definition and explanation– 0 - 2 points
- The likelihood the vision will be attained – 0 - 4 points
- The long–term plan – 0 - 4 points
4. ProductThis criterion is meant for both “first versions” and the main product that the project intends to release. Some projects are still raising funds to create the first product while others already present a working product. Our raters use the following sub-criteria to score the actual product:
- Vision Proximity– We evaluate how close the product is to the vision, as it is explained in the project’s white paper.
- Maturity – A project that can already present a product has many advantages. One advantage is increased credibility due to the fact they that they have invested in the creation a product. Additionally, having a created product brings the ICO/STO closer to fulfilling their vision. A working product can also be a measure of the team’s ability to execute.
- Proximity to vision – 0 - 4 points
- Product and project maturity – 0 - 6 points
5. MarketingHere, both the quantity and the quality of the project’s marketing efforts are tracked. The quality and quantity of the marketing efforts are determined based on all the posts published on Twitter, Facebook, LinkedIn, Reddit, and news websites across the web. This is something that is difficult to score numerically, as each product is different than others and uses different channels. As such, we made this criterion qualitative and rated from low to high.
6. Social engagementThis criterion concerns the volume and flux of the response from the crypto community to the project and to its publicity. We rate this criterion by calculating the sum of the followers, comments, likes, and subscribers the project’s official page has on Twitter, Facebook, LinkedIn, Reddit, and digital newspapers. We keep the numbers for rating this criterion hidden from the public in order to prevent “like buying” and “follower buying” as methods of increasing the Cointelligence Social Engagement Score. A project needs to maintain their level of engagement across the different social media platforms in order to achieve a high score in this field. Being popular on only one of the social media platforms is insufficient. This criterion appears on the ICO and STO profiles under the title “Community”. This is something that is difficult to score numerically, as each product is different and uses different channels. As such, we made this criterion qualitative and rated from low to high.
7. Legal entity and company registrationEvery ICO/STO should have a company behind it. The first step in examining this criterion is determining whether the company name and company registration number are available and visible. Ideally these should be present on the website, the whitepaper, or both. For ICOs, the company should ideally be registered in a jurisdiction with regulatory guidelines in place for ICOs. Malta, Gibraltar, and Switzerland are the three countries with the most favorable regulations and guidelines for ICOs. Registering your company in a country with unfavorable regulation is obviously a poor move, but a company registered in a jurisdiction without any regulations in place is putting their future at risk. Should the country enact unfavorable guidelines down the road, the ICO could fail. STOs on the other hand are subject to the securities regulations of the country where they are registered. That does not guarantee that they are actually adhering to these regulations, as we have already encountered several examples of STOs violating SEC regulations, for example. Malta, Gibraltar, and Switzerland can also be seen as beneficial countries to launch an STO, as they are actively interested in cryptocurrency projects and thus open to actually talking and helping projects. Other countries seem to have no interest in making this effort, so far, leading to the rise of private companies dedicated to helping projects launch their STO. We cross-check this information against the public databases of company registrations provided by each country. Although this criterion is not given a space on our rating metric bar, it is taken into consideration when reviewing projects to determine their ICO rating or STO rating. Any project which did not have a legitimate legal entity behind it would be considered suspect.
How do we determine our risk score?The Cointelligence risk score is not an indicator for the project’s quality, but rather it is an indicator of the probability that the project will or will not be realized. The risk score is calculated as an aggregate score of several sub-criteria. Dividing the total score by the following sub-criteria allows the origin of the risk to be better understood. The final risk score includes an aggregate score comprised of each of the sub-criteria and is presented on a scale of ‘low risk’ to ‘high risk’. Our sub-criteria include: 1. Team-originated risk:
- Not presenting a team or presenting a fully anonymous team
- Presenting a team with little or no social media presence, or seemingly fake social media presence (fake profiles photos, amount of connections, profile creation date, and more).
- Lacking important team members or divisions, such as a development team or professional experts
- Having an inexperienced team with little or no past experience
- Having team members that were involved in past scams.
- The technology on which the vision is based does not yet exist or is very advanced.
- The project is open source, but doesn’t have a GitHub repository, has a lacking GitHub repository, or a badly maintained repository.
- Being a clone/fork of another altcoin or token without a noteworthy difference.
- Aiming for a relatively small market
- Number of competitors, level of maturity, and existing market share.
- Aiming for a market that is well-known for scams or that is notorious for other crimes.
- Vision/Market fit.
- Disproportional token distribution that does not correlate with the projects goals (for example, having a large portion of the tokens or funds raised going to the team/advisors).
- Having a very large difference between the soft cap and hard cap.
- Existence of a valid lockup plan for team (at least three years) and investors.