Coinschedule Trust Score: Self-regulating the ICO industry
I founded Coinschedule in 2016 when there was barely any action around ICOs. Having seen some early notorious ICOs including Mastercoin and NXT, I knew the potential for this innovation was huge and I was a big fan of a model that seemed to democratise fund raising and early stage investment.
Back then, to the best of my knowledge, there was no other ‘ICO listing site’ (as we are called today). It was an edge being the first and only in the industry. There was no framework or examples to refer to and we had no idea how fast this industry would grow. In the early days, we used to receive one ICO submission per week (in a good week). Everything was done manually as there was no point in automating a process that took me a couple of hours per week.
Today, the numbers are enormous. We receive more than 20 submissions every single day. At some point in 2017 with only 2 people in the team (me included), we realised we had to automate the submission system otherwise we would go insane. We also had to start hiring people. Oh, and I had to leave my day job so I could dedicate myself entirely to Coinschedule and my co-founder Maj had to relocate to be close to our office.
All of that took some time to happen due to various hurdles, but since early in 2018, Coinschedule has an office in the UK and a team of more than 15 people (and growing).
Having a bigger team allowed us to finally release several features that had been planned long ago. In particular, I am happy to announce today a feature that we originally sketched in 2016 and developed throughout 2017: The Coinschedule Trust Score. Let me explain what this is.
We hate scammers
At Coinschedule, we absolutely hate scams. It didn’t take long for us to feel ICO scams are launching themselves as a big threat — that could potentially ruffle this nascent industry.
In late 2016, we were getting hammered by ICO spam and scams. People would post the same project over and over with different names and it was around that time that we started to see scam attempts, projects that had anonymous teams, a website that looked like it was put together in a couple of hours and claims of impossible returns.
We knew from the beginning that we needed to do whatever it takes to protect both our business and the industry we operate in.
Initially, we tried to filter them out by collecting a minimal fee from listers. That trick worked. We were able to toss out all spammers and most scammers while making some money that covered hosting and other expenses. Eventually, scammers became more sophisticated. Once ICOs really took off around April 2017, and projects started to raise millions of dollars with ease, scammers realised they could simply bite the bullet, pay the fee to get listed in Coinschedule and hopefully still be high in profit. It was clear that we needed a new strategy.
So again, we contemplated and here is what we came up with.
Coinschedule AI-Powered ICOrank™
Early in 2017, we started working on an algorithm that aimed to lock user-safety. Our team and a few scientists from Oxford were on the task to create it. We called it ICOrank, the algorithm behind our Trust Score.
ICOrank is basically an algorithm that scores ICOs based on how much background information we have about the project and the team. It uses AI techniques to determine the weights and cut off points for the score, and takes several data points in order to assign numeric values to ICOs. The values are then used to make a score, that we call the Coinschedule Trust Score.
The score values start from “A” and go up to “E”. A score of “A” is the highest score, which means that the project has amongst other measures, volunteered to us all requested information, has passed our KYC (Know Your Customer) assessment and has attracted positive attention by independent third parties regarding its trustworthiness, therefore, the objective likelihood of the project being a scam is reasonably the lowest. In the same vein, a project with an E score is relatively untrustworthy based either on information that is publicly available about the project or on the fact that the issuing team failed to volunteer any information that would allow any objective third-party investor to objectively assess the project’s trustworthiness.
However, it is important to note here that there is no absolute result. Trust Score is neither a credit rating nor a certificate of a project’s trustworthiness. It is just an indication of a project’s likelihood of trustworthiness based on certain real-time and objective factors. So, although we do our best to provide you with unbiased information about the projects listed on our website, you should always perform your own research and due diligence prior to investing in an ICO.
Why not just use reviews?
When someone posts a review about a restaurant or a product they bought, they are providing their opinion based on an item they have already consumed (or bought). They have all the information they need to do so since they have already used it.
However, with ICOs the story is different. People would only really be able to provide a decent review once the ICO is finished and product or service promised by the company behind the ICO has already been launched, and this could be years after the ICO itself.
In most cases, people providing reviews are doing it blindly based on ‘gut feelings’ and ‘past experience’. But how much past experience can people have, when the entire industry is just 2 years old and most projects didn’t even yet have enough time to launch their products?
Moreover, as anyone that has owned a restaurant or hotel will be able to attest, reviews can be corrupted. Competitors can post bogus reviews to try and damage the reputation of other companies, users can do it in order to reduce the average price of the ICO tokens, and ICOs can try and recruit reviewers to get good reviews.
Surely crowd intelligence is an important aspect to consider, and we do use it in our Trust Score. Project upvotes count towards a higher Coinschedule Trust Score because that is a signal from the crowd that the project is not a scam, but this has a limited impact in the overall score as it may not provide for an objective result.
The Coinschedule Approach: A Trust Score
The most important thing that an ICO Listing site can do, is the legwork to find out more trusted information about the project and the people behind it. So, this is basically what the Trust Score is all about. As part of launching the Coinschedule Trust Score, we provide free KYC (Know Your Customer) services for every ICO. Every ICO can log in to their Coinschedule dashboard and simply click “Verify this person’s ID” next to the team member that they want to get verified. That person will receive an email from our fraud detection partner with instructions to upload documents, pictures and additional information to get themselves verified.
The Coinschedule Trust Score is basically the measure of the trustworthiness of an ICO operating within Coinschedule’s ecosystem.
One important aspect of our Trust Score is that it doesn’t try and predict the likelihood of success of the ICO’s idea, nor does it touch compliance matters surrounding the ICO issue. Such a thing would fall completely outside Coinschedule’s business scope.
With our Trust Score we focus on the likelihood of the project being ‘trustworthy’ in terms of it being ‘legitimate’. Scammers claiming to have fake team members and advisors would not be able to verify their ID. The scammers themselves would think twice before verifying their ID if they are planning to defraud investors. Crucially though, the ID is not the only factor taken into account by our algorithm.
The ICOrank™ algorithm uses dozens of data points when trying to determine an ICO’s trust score. It took us several months and considerable investment to perfect the algorithm, and this work will continue.
The more data we accumulate, the better we become at assigning trust scores to projects listed in Coinschedule.
Apart from getting all team members IDs verified, here are some of the things that can influence a project’s trust score:
- Having a complete profile including as many team members as possible, all relevant links, clearly written and presented project description, white paper and website, etc.
- Sending incorporation and governing documents of the company behind the ICO (not the marketing company promoting the ICO, but the company issuing the ICO, that will control the funds once the ICO is over);
- Votings (thumbs up/down) in the project’s page in Coinschedule
- ICO CEO Interview with our media partner;
There are dozens of other variables, we are not going to list all of them because we don’t want to make the work of scammers easier (or of our competitors). We are, however, ready to adapt and improve the system as needed.
More to be done
We think we can do even better! We will continue to improve the algorithm and add more data sources, refine the cut off points and keep monitoring the community feedback.
If you have any questions please check our FAQs: https://helpme.coinschedule.com and feel free to reach out to us using the chat icon at the bottom right of the help pages.
We hope that the Coinschedule Trust Score becomes a helpful resource that brings some much-needed safety and transparency to ICO industry.