ICO rating sites! Let’s put them under scrutiny! Most precisely the potentially biased and untrustworthy ratings displayed there. I am encountering 3 major red flags that make me question how genuine they are.
But firstly, let’s briefly go over why we need ICO rating sites as a service. A year ago there were barely 10 ico projects a month and now we have over five hundred. We need a place where all of them are listed so we can weed out the exceptional ones from the myriad of bad ones. This is how ICO rating sites emerged and they were supposed to do exactly that. But are they really? Here is why I think this may not be the case.
1) ICO Teams incentivize reviewers with tokens in return of high ratings
As a bounty hunter and marketing practitioner, I am screening the bounty campaigns on a daily basis. The first red flag I found out is the disturbing practice ICO teams to incentivize reviewers on ICO rating sites to give positive scores for their project. And as we can see with Paypro, they did it in a blatantly obvious way. Publicly, in front of the whole bitcointalk community.
“Ratings must be high!”. This is what they say. Give us high ratings and we will give you tokens. Sound like a perfect deal. For both the ICO team and the reviewer. But that deal comes at the expense of the potential investors browsing for ICOs to invest in.
If you are new to ICO investing, not aware of these practices, you probably will visit ICOBench and sort out the ICOs by highest rating. And what you will receive as a result, is a biased picture of which ICOs are good and which are not. And from there on, nothing good can happen afterwards.
2) ICO teams incentivize ICO Rating sites with tokens in return of a listing
The second red flag are the content creation bounty campaigns, which mainly reward participants for writing articles for the ICO. The articles are scored based on the quality and the best receive the most stakes and tokens. Quite fair.
However, I noticed a lot of campaigns with a rule that listing on ICO rating sites earns automatically maximum number of stakes. And a lot of ICO listing and rating sites are taking advantage of the free tokens, so they list the ICOs that incentivize them no matter how good they are. This can be easily verified in the bounty spreadsheets, although I didn’t encounter any of the top 5 rating sites present in them. But there are plenty of the smaller ones.
3) ICO Rating Sites accept payments for the top spots
The third red flag is the paid promotion on these sites. I don’t talk about ads and banners, but the top spots reserved for ICOs that pay the price to be there. I believe this is absolutely unacceptable for a service which aims at providing ratings and opinions on ICOs. Every ICO willing to pay the price goes on top. But this is only half of the problem. How do you expect the ratings to be unbiased when the ICO team is paying for listing to the ICO rating site? A new investor may, and probably will, be easily misled. We can see this present in FoxICO, Coinschedule, IcoWatchList, IcoDrops and many more.
I want to be clear. I am not saying ICO rating sites are not useful. All I am saying is the ratings and reviews should be taken with a considerable doubt and we should not trust them blindly.
These sites are very useful, at least for me, because they collect the raw data from the multiple ICO sites and present it in a more convenient way. That’s what can be trusted – the raw data, the metrics, the dates, the prices.
There is definitely a lot of value in these sites, but the value is in the data aggregation and not in what they are mainly supposed to do. And this is evaluating ICOs.
The Philosophical Perspective
If we take a look from a philosophical perspective, the goal of the whole crypto industry is to create trustless environments and eliminate the need to trust third parties. By giving our trust to ICO reviewers, who we can’t know, whether are incentivized or not, we are not in line with the whole culture and spirit behind the crypto economy.
We are relying on other people to shape our opinions. Back in 2008, we relied on Moody’s, Fitch and Standard and Poor’s to evaluate mortgages. We all know what that lead to – a housing market crash and a global financial crisis. If we have learned our lesson 10 years later, we will know what to do now!
Deep in the foundations of the crypto-libertarian movement is laid that everyone should be responsible for his own decisions. And not relying on third parties with unknown motives. Of course, that’s in case we want to be in line with our generation and fully utilize the potential of the ecosystem we are so lucky to be in. And this boiled down to the case of ICO research, means we should collect the raw data, make our own opinions and act accordingly.
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