I am convinced that 90% of the ICOs will fail in the long-term – although most of them could be detected as failures or scams within 5 minutes with this matrix.
Having looked at hundreds of Tokensales, I noticed four main different types of projects for decentralized platforms or ICOs. Therefore, I classified the projects into them by developing a two-dimensioned approach.
What are we looking for in a project?
Not every idea, project and startup has to be completely unique and different from existing solutions on the market. There are a lot of markets that are separated e.g. regionally and therefore allow a co-existence of competitors.
However, many ICOs claim to develop new, unique products and compare themselves to existing, Non-Blockchain products. And not all of the projects seem to have a real unique selling proposition (USP) against their competitors.
How to differentiate really innovative projects from copy cats?
The projects we want to differentiate are the ones developed seriously with a value proposition and the solving of a problem from the ones that simply use the current market traction to buzzword their Fundraising.
The ICO matrix
Therefore, I developed an ICO matrix that can classify projects in two dimensions:
- Does the Blockchain add value?
The question here is whether the Blockchain provides a real value to the platform that solely occurs due to the utilization of a Blockchain.
- Is the use-case great without a Blockchain?
The question here is whether the idea behind the project is valuable without a Blockchain, referring to new solutions and the comparison to existing ones.
How to read the matrix
For example, launching a new currency provides a very small advantage compared to existing fiat currencies. Therefore, the use-case is not great without a Blockchain. If you ask for the value adding of the Blockchain, this is truly the case – only a distributed ledger makes the concept new and innovate with an extra value.
Interpreting the matrix elements for decisions about ICOs
Blockchain and Idea Symbiose
This is the optimal combination of both dimensions: The project has an idea that is – independent from the technological layer – valuable. However, the Blockchain layer provides an additional value.
If one aspect is lost (change of the underlying technology) or the Business Model has to be adjusted, it is supposed to stay valuable.
- Have a look at both dimensions and critically analyze how relevant the Blockchain is and which interdependencies occur
The startup has a great business idea and wants to leverage the Blockchain technology for it. It does not provide any real value, so in this case you should critically focus on the general business model, since the Blockchain is simply used as a hyped technology and a Buzzword. Although, the business idea might be interesting.
- Critically have a look at the business idea
The idea is made valuable only with the help of a Blockchain. The idea provides a value which can only be leveraged if a Blockchain is used. It depends both on the idea and the distributed ledger technology
- Critically have a look at the Blockchain related USPs and centralized competitors
Non-Valuable projects and Scams
Although this category seems to be a case without psoitive expectations, we see many projects coming from that angle that simply try to collect money through ICOs and take advantage of the Investors goodwill and (often too) high expectations of Blockchain technologies.
- Stay away
This is not an investment advice and should not be used for any investment decisions.