ICObazaar Rating System
Overview of Methodology
The goal of the ICObazaar rating system is to be able to provide a rigorous, in-depth, and independent grade for any given project running an ICO in order to help potential investors make more informed decisions.
The rating system consists of a weight adjusted formula with six factors, each of which evaluates some separate aspect of the project/ICO — the weight of each factor was determined by ICObazaar’s experienced blockchain and finance professionals and reflects the perceived relative importance of each one. The sixth factor consists of the rating score (on a scale of 0–5) made by an industry expert advisor/investor separate from the ICObazaar team. Each of the six factors that ICObazaar evaluates is described in detail below in our methodology.
Please note, though the ratings provided are based on real, in-depth analysis, they are not intended to be forecasts or predictions. The main goal for establishing this evaluation system is to provide investors with reliable, systematic, independent assessments of each potential investment to help them better understand the risks and potential profits involved and make more informed investment decisions.
Our rating system is subject change. Any changes or updates to the methodology will be published accordingly.
The ICObazaar rating system is intended to evaluate the overall quality and viability of the product, team, and technical implementation behind any given ICO. In order to formulate a grade for any project running and ICO, we evaluate each by examining the following five factors:
- Project Idea + Whitepaper
- Media + Community
- Technical Implementation
- Expert Rating
Each of these six factors are rated on a 0–5 scale and a specified weight is given to each of them (see formula below). As stated above, the sixth factor is the rating score(s) (also on a 0–5 scale) provided by one or more industry experts according to their individual criteria, independent from ICObazaar’s criteria and methodology. The expert factor also has a specific weight and limit, described below.
ICObazaar uses a weight adjusted formula to rate ICOs. Each of the above six factors has its own specific weight (in decimal form), the sum of which is 1. The formula summarizes each of these six factors to produce a single grade for each project running an ICO.
The formula is as follows:
Where w= weight and r= rating
Below are the descriptions of what we consider in the evaluation of each factor:
(R1) Project Idea + Whitepaper
- Financial plan
- Technical explanation
- Use of token
- Product Relevancy
- Product (is there an MVP)
- Quality of product/idea presentation (marketing)
- Level of experience
- Publicity/transparency of team members
- Offline presence
- Quality of advisors/partners
(R3) Media + Community
- Media presence
- Size of online community
- Quality Web/Social presence
(R4) Technical Implementation
- Market dynamics
- Accessibility of Smart Contract
- Type of blockchain
- Number of localizations (market reach)
- Presence of legal terms and policies
- Overall quality
(R6) Expert rating
This rating is created by individual experts in blockchain and finance whose evaluation criteria and methodology is their own and operates independently from ICObazaar.
The expanded formula is as follows:
Grade = ICObazaar rating∗W1+Expert rating∗W2
W1= weight of ICObazaar rating
W2=weight of Expert rating
w= weight of each factor, as determined by the ICObazaar team
If there is no expert rating included in a given evaluation, then W2=0 and W1=1
The more experts that rate a given ICO, the more weight (R6) will have in the formula. However, it is crucial that the weight of ICObazaar’s total rating cannot be less than 0.6, meaning that the maximum weight for all expert ratings of a given project must be 0.4. This will guarantee that the expert rating will not have majority impact on the ICO’s overall grade, meaning that the overall grade cannot be too significantly influenced by the ICO’s individual relationship or agreement with any individual expert, financial or otherwise.
Following mathematical rules, all Grades will be rounded to the nearest 0.5 decimal point (e.g. 3.25 will round to 3.5).
Grades and Rating Descriptions
Description of Major Rating Categories:
Investment grade — Projects within this category have extremely strong potential for short and long term growth. Investments in these projects have a reasonable potential to return profit.
Speculative — The development and positive growth of projects within this category is uncertain. Investment in these projects is considered risky, however there is a chance that said investments will give return.
High Risk — Projects in this category should be considered very risky investments. Some element of the project, team and/or ICO implementation is severely lacking in quality. The chances of projects in this category developing positively in the short or long term are very low.
Default — Projects in this category are major investment red flags. They have critical problems with their business model and/or technical abilities. There is a minimal chance that projects in this category will develop profitably.
Every project listed on ICObazaar receives the above described evaluation. In addition to this systematic evaluation, projects can also chose to receive a full review. A full review consists of an extremely thorough overview and audit of the project, ICO, and Smart Contract(s), the result of which is a 15–20 page report. The review is performed and written up by an industry expert and verified by ICObazaar.