Topic: 📕📙📗Guidebook for ICO organizers and ICO investors📗📙📕 - page 4. (Read 10656 times)

Although the general trend towards an increase of the success along with the growth of the average number of backlinks to ICO website is visible, the graph looks less clear than in case with referring domains. What is the reason? There are several reasons why ICO success dependency on the number of backlinks differs from success dependency on referring domains:

     •   Linking trash on the issue-related website. Posting on the relevant websites inappropriate, from SEO point of view, articles with several links to the ICO. Technically, the number of links to the ICO grows. But the increase of the target traffic of ICO website is not proportional to the number of backlinks;
     •   Linking trash on the non-relevant websites. Posting on the irrelevant websites inappropriate, from SEO point of view, articles that are not related to the ICO theme but still contain a couple of links to the project. Technically, the number of backlinks to the ICO grows. But there is no increase in target traffic;
     •   Linking trash in profiles, social media, etc. Backlinks from mostly irrelevant resources, purchased just to increase their number. Technically, the number of backlinks grows. However, there is almost no increase in target traffic. There is a chance of search results pessimization from Google ‘s part.
Surely, not all ICO projects are known to abuse worthless backlinks. But projects taking advantage of purchasing poor-quality backlinks are the reason why diagrams on pic.1 and pic.2 are not totally identical.

The analysis of pic. 2 shows that despite all the «noise» in the data, there is a dependency manifested in the growth of ICO success along with the increase of the number of backlinks. In the range of the ICOs group with websites having 500-600 backlinks, there is a jump of the success level. It should be noted that ICOs from groups with websites having 500-1000 backlinks are marked by greater total amounts of collected funds.

A short intermediate conclusion for ICO organizers based on the analysis of the diagram at pic.2:

     •   Increase the amount of backlinks from issue-related websites for your ICO project;
     •   The optimal amount is 600-900 backlinks;
     •   Do not purchase “trash” backlinks –positive result shall be really low. There is a risk of pessimization of your project in search results.

A short intermediate conclusion for ICO investors based on the analysis of the diagram at pic.2– pay attention to the number of backlinks for ICO project before investing. There is a correlation between the level of ICO success and the number of backlinks to its website. When the number of backlinks exceeds 500-600, the potential success of the project additionally increases by 10%.


c. Traffic

It is expected that the higher the traffic of ICO website, the more successful ICO should be. The diagram in pic. 3 clearly confirms this.


Pic. 3. Dependence of the amount of funds raised during ICO (as percentage of the declared ICO Hard Cap) on the daily traffic of the ICO website.

The diagram above demonstrates dependence between declared Hard Cap percentage of funds raised during ICO and estimated daily traffic on the ICO website. On the horizontal axis the data is divided according to groups of ICOs:

     •   ICO sites with daily traffic rated from 51 to 100 visitors;
     •   ICO sites with daily traffic rated from 51 to 100 visitors;
     •   And so on to the ICOs group with daily traffic rated from 1001 to 1050 visitors.

The vertical axis shows the average declared Hard Cap percentage of funds collected by each group of ICOs. The size of the yellow circles shows the average amount of money in millions of USD raised by ICOs from each group.  The trend line is drawn in blue.

It should be noted that the diagram in picture 3 presents estimates of the traffic that came on the ICO sites from the Google search results. The vast majority of ICO projects hide their access counters, but it is still possible to get estimate values of the daily traffic coming on those counters.

It is well-known that the higher the website traffic is the more tokens are sold during the ICO. But in our opinion this fact is still worth mentioning.


d. Declared Cap

The relation between the ICO success and the level of “greed” of its organizers is also rather interesting. We are talking about the dependence of ICO money rising success on the size of its declared Hard Cap.


Pic 4. Dependence of the amount of funds raised during ICO (as percentage of the declared ICO Hard Cap) from the amount of Hard Cap.

The diagram above demonstrates dependence between declared Hard Cap percentage of funds raised during ICO and the amount of Hard Cap. On the horizontal axis the data is divided according to groups of ICOs:

     •   ICOs with declared Hard Cap from 1 to 8 million USD;
     •   ICOs with declared Hard Cap from 8 to 16 million USD;
     •   ICOs with declared Hard Cap from 16 to 24 million USD;
     •   And so on to the ICOs group with declared Hard Cap from 160 to 168 million USD.

The vertical axis shows the average declared Hard Cap percentage of funds collected by each group of ICOs. The size of the yellow circles shows the average amount of money in millions of USD raised by ICOs from each group. The trend line is drawn in blue.

The tendency to reduction of the ICO success along with an increase of the declared Hard Cap amount is clearly visible. Starting with Hard Cap level of 72-80 million USD, ICO organizers should consider themselves lucky if they manage to raise at least 15% from declared target amount. Of course, there were and there are exceptional cases of successful ICOs with large Hard Cap. However, such exceptions only prove the rule. The data, presented in pic. 4 represent that quite well.

A short intermediate conclusion for ICO organizers based on the analysis of the diagram at pic.4– do not practice upon unreasoned overvaluation of Hard Cap amount. Declare the amount you really need for your project. The smaller the amount of the Hard Cap announced, the more likely it is that your project will actually collect it. The chances for successful ICO dwindle with the increase of Hard Cap. Exceeding the size of the Hard Cap value of 72 million USD almost certainly means failure for most ICOs. Try keeping your Hard Cap between 2-40 million USD.

A short intermediate conclusion for ICO investors based on the analysis of the diagram at pic.4– take a look at the Hard Cap amount of the project before making investment decisions. Try investing in ICOs with Hard Cap amount not exceeding 50 million USD.


e. Messages on Bitcointalk

The user activity on content-based websites, caused by certain ICO, is also a significant parameter in ICO estimation. In this research were used statistics of messages posted by users in official topics of analyzed ICOs on Bitcointalk.org website. Surely, it would be nice to engage statistics from other resources (Telegram, etc.), allowing users to comment on specific ICOs. But it went beyond the scope of this study. Perhaps, data analysis from other channels will become the topic of new research on technical analysis of ICOs.


Pic. 5. The dependence of the amount of funds raised during ICO (as percentage of the declared ICO Hard Cap) on the number of messages in the official ICO topic on Bitcointalk.


Diagram in pic. 5 illustrates dependence of declared Hard Cap percentage of funds raised during ICO on the number of messages in the official ICO topic on Bitcointalk. On the horizontal axis the data is divided according to groups of ICOs:

     •   1-200 messages in the ICO topic;
     •   201-400 messages in the ICO topic;
     •   401- 600 messages in the ICO topic;
     •   And so on to the group of ICOs, with 3201-3400 messages in their topics.

The vertical axis shows the average percentage of collected funds for each group of ICOs from the number of messages. The size of yellow circles on the diagram illustrates average amount of funds in millions of USD raised by ICOs from certain group. The trend line is marked in blue.

There are three zones in the diagram. In zone from 201 to 1000 messages, there is a tendency for decrease of ICO success level along with the growth of the number of messages. In zone from 1001 to 2200 messages, there is a tendency for the increase of ICO success level. In zone of more than 2200 messages along with decrease of ICO success level, there is also a decrease in the average amount of the money collected during the ICO. Of course, everyone understands that the number of messages in the official ICO topic does not always correctly characterize the real activity of users. Often there are a lot of custom-made comments in the topics, which are ordered and paid by the organizers of the ICO. This blurs the analyzed data. However, it is still possible to make some basic conclusions relying on this data.

A short intermediate conclusion for ICO organizers based on the analysis of the diagram at pic.5 – certainly, it is necessary to imitate some user activity in the official topic of a new ICO. Ordering paid comments within reasonable limits of 50-100, in the first days of ICO is rather insightful. But to go to extremes and order comments in the hundreds and thousands is a bad idea. When the number of comments exceeds 2400-2600 users get carried away from the subject and ICO success level goes down. The number of messages in the official ICO topic is a secondary parameter of the project success evaluation but it definitely has a certain impact.

A short intermediate conclusion for ICO investors based on the analysis of the diagram at pic.5– it makes sense to avoid ICOs with more than 2400-2600 messages in their official topic. If such ICOs seem an attractive investment for some reason, one should study them more careful than the rest of the projects.

Contents:

1.   Introduction
2.   Parameters characterizing ICO
     a.   Referring Domains
     b.   Backlinks
     c.   Traffic
     d.   Declared Cap
     e.   Messages on Bitcointalk
3.   A few words about semantic differentials and connotative meanings of texts
     a.   Potency Parameter
     b.   Activity Parameter
     c.   Evaluation Parameter
4.   Additional information for investor
5.   «Icing on the cake»
6.   Conclusion


1. Introduction

As on the end of 2018, an average of 200-250 new ICOs (Initial Coin Offering) start every month in the world. The data from ICO Catalog shows that 222 new ICO projects started in August 2018, in September – 263 projects, in October –190 new ICOs. Every day investors review a list of around 400 active ICOs where they can invest their funds. Surely, comparing to stock market with thousands of shares appearing each day, ICO market is rather small. However, evaluating even 400 ICO projects basing just on White Paper, personal experience and ambiguous “ratings” is pretty challenging. Strictly speaking, still-developing ICO market currently does not have a tool, which could allow analyzing large amount of data and making right investment decisions basing on such analysis.

The success analysis of already ended ICOs considering their characterizing parameters is also important for organizers on new ICOs. It allows determining the values of range of target parameters for the upcoming ICO. Complying with such parameters within certain limits increases the chances of final success for ICO project. It is understood that the idea of a new project, correct White Paper and the project team are important too. Nevertheless, the appropriate management of additional ICO parameters also increases the success level of the project. Needless to say, that not taking into account parameters most likely to be considered by potential investors during the project implementation is at least unwise.  

The ICO market is at the beginning of the journey, which the stock market once passed. The evolution of stock market brought us to the tools provided by technical analysis, which allows automatically analyze large amounts of initial information, select the most interesting objects for investment and, if necessary, examine them in more detail in manual mode. It is safe to say that the ICO market eventually will come to exactly the same technical analysis as the stock market. Only the source data used for the analysis will differ.

Yet there are certain issues with the initial data for ICO market analysis.  Overwhelming majority of existing ICO ratings (ICObench, ICO Rating, ICO Alert etc.) provide a standard set of information for new ICOs: ICO start and end dates, White Paper, team, declared hard cap and in some cases, personal evaluation/rating of ICOs. It is rather problematic to make a decent investment decision relying only on such data. ROI data and the amount of funds raised during ICO, which is information on success/failure of ICO, is published on some resources (ICO Drops, ICO Data) only after the ICO has ended and it is too late to invest. So, is it impossible to evaluate the ongoing ICO or to set certain target parameters for your own upcoming ICO?
No, there is a way.


2. Parameters characterizing ICO

Ask yourself, what ICO characterizing parameters is it possible to acquire while the project still goes on? It turns out that quite a number. For each ICO we can acquire:

     •   The number of backlinks leading to the project;
     •   The number of referring domains;
     •   The number of referring IPs;
     •   Evaluation of search traffic.

Using SEO-services like SemRush and Ahrefs we can get a span of additional parameters for any ICO site, including the sources of the search traffic by countries, the amount of paid advertisements, the search results position of the ICO site and many more. Thus, we can get the values of a sufficiently large number of parameters for any ICO site that, potentially, can affect the success / failure of the ongoing ICO. Moreover, for most of these parameters, it is possible to obtain the dynamics of their changes over time.

As the great Leonardo da Vinci wrote, «No human investigation can be called real science if it cannot be demonstrated mathematically». Let us apply this reasoning in practice and try to assess the influence of parameters, which we can obtain, on the success level of ICO. It sounds a bit difficult, but in fact, we will calculate the correlation coefficient between each of our parameters and the ICO success criteria. As ICO success criteria, we choose:

     •   Percentage of announced Hard Cap, raised during ICO;
     •   The total amount of funds in USD, raised during ICO;
     •   Income (ROI), which investors gained form the ICO.

Surely, instead of separate criteria characterizing the success of ICO, we could use single criterial function. However, creating such function is beyond the scope of the study. The objective of our research is identification of possible existing correlations between data available for ICO analysis and final indicators of its success.


a. Referring Domains

To be honest, at the beginning of the analysis of the available data on more than 1000 completed ICO projects, we were quite ready for the result to be a set of randomly scattered points on the graphs. A sort of «white noise». We would consider ourselves lucky if we noticed separate clusters in this white noise, indicating the presence of at least weak dependencies between the parameters characterizing ICO and its financial results. Reality exceeded all expectations.


Pic. 1. Dependence of the amount of funds raised during ICO (as percentage of the declared ICO Hard Cap) on the number of domains referring to the ICO website.

The diagram at pic. 1 demonstrates the dependence between declared Hard Cap percentage of funds raised during ICO and the amount of domains referring to the ICO website. On the horizontal axis the data is divided according to groups of ICOs:

     •   ICOs with websites having 1-50 referring domains;
     •   ICOs with websites having 51-100 referring domains;
     •   And so on to the ICOs group with websites having 451-500 referring domains.

The vertical axis shows the average declared Hard Cap percentage of funds collected by each group of ICOs. The size of the yellow circles shows the average amount of money in millions of USD raised by ICOs from each group.  The trend line is drawn in blue.

The announced Hard Cap percentage of the collected funds shall be considered as a main parameter characterizing success of ICO.  The total amount of funds collected during ICO shall be considered as an additional success parameter.

Picture 1 clearly demonstrates almost linear dependency between the success of ICO and the number of domains referring to ICO. There is a sharp spike in success level in the range of the ICOs group with websites having 300-350 referring domains. For ICOs with websites having more than 300-350 referring domains there is about 25% jump of the success level. Also, it is easy to see that ICOs from groups with 300-400 referring domains are marked by greater total amounts of funds collected.

A short intermediate conclusion for ICO organizers based on the analysis of the diagram at pic.1 – increase the number of issue-related domains referring to your ICO project website. The optimal amount is 300-400 referring domains. These are not just empty theoretical investigations of marketing managers without proper math education, but bare results of analysis of a large amount of statistical data from the wide range of successful, not that successful and failed ICOs. Perhaps later the state of things will change. However, as on the end of 2018 the situation is as you see it in pic. 1.

A short intermediate conclusion for ICO investors based on the analysis of the diagram at pic.1 – before putting money in ICO, pay attention to the number of domains referring to the project website. There is a straight linear dependency between the success of ICO and the number of domains referring to that ICO. When the number of domains referring to the ICO website exceeds the number of 300-350, the potential success of the project additionally increases by 25%.


b. Backlinks

The results of previous research made us hope that dependence of the ICO success on the total number of backlinks to the ICO website will have similar look.


Pic. 2. Dependence of the amount of funds raised during ICO (as percentage of the declared ICO Hard Cap) form the number of backlinks to ICO website.

However the graph at pic. 2 looks more «blurred». On horizontal axis on pic. 2 the data is divided according to groups of ICOs just like on pic. 1:
     •   ICOs with websites having 1-100 backlinks;
     •   ICOs with websites having 101-200 backlinks;
     •   And so on to the ICOs group with websites having 901-1000 backlinks.

The vertical axis shows the average declared Hard Cap percentage of funds collected by each group of ICOs. The size of the yellow circles shows the average amount of money in millions of USD raised by ICOs from each group.  The trend line is drawn in blue.