What to Look for in an ICO White Paper

There are almost no universal truths when it comes to token issuance and Initial Coin Offering (ICO) events but here’s one: every one has a white paper.

The trouble is there is no standard, universal structure, or best practice when it comes to these documents.

After launching benjaCoin, I was struck by the range of questions and comments we received. We heard that we were too technical and not technical enough. We were asked about how we’re getting Nike into cryptotokens, and whether we think the movie The Fan should be rebooted. Questions and comments all over the map.

Based on that experience and my involvement in subsequent projects, here’s a list of questions that should be answered and things that should be standard in any white paper you’re considering:

There are a few sections every white paper must have:

• Problem
• Solution & Product
• Token Implementation (how the token works with the product, economics and technical)
• Team
• Token Deployment & Plan

“What would you say ya do here?”

The team section is the most important section of any white paper. Period.

Every angel investor has a story about investing in a brilliant team with a horrible idea, knowing that they would find pay-dirt after they pivoted out of the original idea. Android was an operating system for cameras before their pivot, Nokia was a wood pulp mill, and Pinterest was a shopping app before it was a social network before it started turning back into a shopping app again.

It’s tough to say what makes for a good team, but watch for dead weight. Ask the question from Office Space, “What would you say ya do here?”

While we’re on the subject:

Do these people know what they’re talking about?

The majority of these projects are raising funds without a blockchain engineer on board, thinking that they’ll raise enough money to find one when they need to. Engineers with experience in this area are harder to find than you might think and with the kind of money that organizations with freshly-minted ICOs can afford to pay, they’re about to become the most expensive hires (if they aren’t already).

And if there isn’t significant blockchain experience in the team section, one clear signal that the team is at least beginning to learn is a technical section that goes overboard. I always like to see that.

What do you have so far?

The staggering part of token issuances is there are companies raising millions of dollars on the strength of a white paper, some mockups, and… that’s it.

No product, no users, no traction.

Hot take: I believe that groups with an existing product should get a closer look than those without. If there’s an existing ecosystem and users, that gives the token a better chance at reaching its deployment as a utility.

What’s the plan?

I hate to be the skeptic or cynic, but…

What’s the use of funds? One of the great schemes going in ICO-land are organizations that pledge large portions of their raise to creating an industry consortium, a non-profit arm, or an event series to benefit the industry. This may be a cynical view, but there’s a good chance this is just a way for the team to spend(/waste) the raised funds (and likely for the benefit of someone specific.)

What’s the development roadmap? I generally like to see a detailed plan for the next 12–18 months (that includes a beta launch at minimum). Bonus points if this team has executed a roadmap together before.

How will the organization interact with the token once it hits the market? Are they holding on to token supply beyond the pre-sale? What are the events that trigger selling those tokens on the market (and does that represent trouble for the economics of your token)?

This is just a start. What are some things that you look for? Leave suggestions in the comments or tweet them to me at @andrewjchapin.

My name is Andrew J. Chapin — I’m a co-founder of Benja, the merchandise ad network, which recently announced the benjaCoin.