ICO test, how to evaluate an ICO

Freely inspired by the Spolsky test but applied to the ICO this test is based on some material I came across in the internet and from various authors. Among the others Giacomo Zucco, Ferdinando Ametrano, David Siegel and few more.

Disclaimer: This test does not guarantee any result, an ICO that brilliantly passes this test does not imply a good investment and vice versa. So do not rely solely on this test to make your investment. This test is just a way to highlight some of the features of an ICO. Do your research.


Please note that the sum of passed checks is not a quality indicator, the whole test just shows in a single page facts about an ICO. It is more aimed at the ICO proponent rather than investors. The former can self-test and get some useful insights and decide whether or not to adjust some elements of the ICO and related project.


Reality check: Does the project address a real problem?

Technology check: If the problem is real, is it solvable in a practical way?

Market check: Even if the solution is practical is there a market to sustain it?

Legal check: Even if economically viable, is the solution legit?



First, let’s figure out whether it promises dividends and profits and looks like a bond or share. In this case, it is likely a security and would not pass the Howey test.

Regulatory check: If it’s “like” a security, has the team applied for the needed authorization?

Utility check: if it is not a security, does the token unlock some right to use or access a product or service sometime soon?

Ponzi check: If no product / service is planned, can we make sure that it is not a pyramid scheme where those who enter first just make profits at the expense of those entering later?

Role check: Does the token have something special in transaction dynamics and scarcity and cannot be just replaced by the native currency (eth or btc)?



Anonymous check: Does the team shows the identities of its members?

Skill check: Does the team have the skills to solve the problem?

Organization check: Does the team have the organizational skills to use the resources efficiently?

Liquidity check: Does the team have the reputation and the network to list the token on the main exchanges?

Get money and run” check: can the territorial jurisdiction in which the team works enforce the rights of token buyers?



Closed source check: are the token sale smart contracts open sourced?

Vulnerability check: Did one or more independent experts perform any security audint on the source code of tokensale smart contracts?

FOMO check: Fear of missing out, does the token sale take any countermeasure to prevent that in case of transactions hanging, long queues and timeouts my funds won’t be lost?

Failure check: Does the token sale have a well known minimum funding target and guarantee money back in case of non-achievement?

Overfunding check: Does the token sale have a well known max funding cap?

Legal terms check: is there a document that explains the legal terms of the token sale?

Automation check: is the restitution and other terms of the ICO encoded in the smart contracts, or through escrow or other automation?

Consistency check: does the legal terms correspond to what is claimed and promised in the white paper?

Work in progress check: is there a smart contract or equivalent automation to release funds on defined milestones?


Pump & dump check: Does the team guarantee that they will not retain a substantial percentage of tokens?

Manipulation check: Does the team guarantee that they cannot burn or create new tokens at will?

Hidden speculation check: Is the system planned to burn tokens to increase their price?