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The Reality Quadrant in ICO Projects and Token Sales (Part II)
ICO projects rarely evolve in a straight line while going from launch to market. As I made the case in Part I of this 2-part series, The Darkness Side and Long Honeymoons of Token Sales; shortly after a token sales launch, most of them quick enter a Darkness stage.
Along the journey to the market rollout reality, there is an interim step,- a Transitional period where early signs of market acceptance and usage begin to appear, but clarity on the product-to-market fit or plain availability hasn’t necessarily taken hold yet.
The reality is … few ICOs are in the market reality stage.
At the Token Summit last month in New York (videos are now posted here), I introduced for the first time my Tokens Launch-to-Reality Quadricle (SM), a take on Gartner’s Magic Quadrant depiction of players positions within a given segment.
In light of the current volatility in cryptocurrency prices and perceived hype in some ICO valuations, how do you know where each project is, really?
Below is the latest version of my Quadricle, placing some ICOs where I feel they belong, based on what I know, market analysis, and sometimes direct talks with these companies.
The other reality is that many of them are in the darkness stages now, even if they have high valuations.
Here are the characteristics and guideposts I used, in order to slot these token-based companies. At least one or several of these conditions typically exist for each stage.
Darkness
- No demonstrable product yet
- White paper may still be in revision modes
- Team just came out of a heavily promoted token sale with little attention on the product itself
- No indication of users, customers, networks usage
- Lots of social and blogging about what will be done, as the main activity
- Some Github activity
- Active Slack channels
- Protocol or app are not deployed yet
- More partners than users/developers
Transition
- A working demo (not smoke and mirrors or simulations)
- Credible signs of imminent market launch
- Credible signs and data about a beta product that might be working well on a testnet
- Early beta/test users, customers, developers
- External signs of support as evidenced by usage
- Has announced when the live date will be, and working towards it
- Increased & regular Github activity
- Testimonials from early users
Reality
Note: The bar is very high to get placed in the Reality Quadricle.
- Visible, credible and tangible signs of: an ecosystem, users, customers, traction, engagement, signups, daily/monthly active users, developers adoption, ancillary services, transaction volumes, and any other real metric that the project has publicly shared, or as evidenced by market entry.
- Value to the market is in production stage
- Signs of real growth
Typical Paths to Get There
There are 3 different ways to arrive at the Reality Quadricle.
Path A: Launch-Transition-Reality
This is the most desirable path. Projects can skip the darkness period if they launch their tokens when the product is almost ready, as they enables them to focus almost entirely on the transitional elements in a credible way.
Path B: Launch-Darkness-Transition-Reality
This path is also acceptable, as long as the darkness period doesn’t last more than 6-9 months. If the project isn’t able to show credible signs of transition past 6 months, typically it is not a good sign of things to come, due to loss of momentum, but there are exceptions.
Path C: Launch-Darkness-Darkness
Some projects will remain in the darkness period for a long time, while they attempt to get out of it. Given that some of these projects have raised a lot of money, and have benefited by the rising tides in higher valuations, they could theoretically stay in the darkness for a long time, and continue giving fake or vanity signals about their activities. The longer a company stays in the darkness period, the harder it becomes to get out of it (based on anecdotal evidence).
End Notes and Disclaimer
Being in the reality quadricle does not represent an endorsement from my side. It just says that we have more data now to judge.
I have not evaluated all of the tokens listed on CoinMarketCap or CryptoCompare, but chose a representative sample that I was familiar with. I will be updating this quadricle on a regular basis. The permanent location for this Quadricle model will be on this Slideshare location.
If some ICO projects feel they were not placed in the right quadricle, please email me evidence and data to back-up the desired change request. I’m sure I’ll get a lot of emails from ICOs I have placed in the darkness segment, but I’m keeping an open mind for changes. (my email is wmougayar@gmail.com)
At the time of writing, I was a holder of ETH, BTC, ETC, BAT, SJCX, STEEM, SIA, ICN.
Where would you place Tezos in your quadrant, and would you offer your thoughts on it?
So I would like to know why you put IOTA in the darkness circle? You must be totally clueless about what we do!
Either darkness or transition. I need to get an update from them.
I will need to get an update from them before deciding.
thanks… I’d be interested in your opinion since they are having a “fundraiser” on July 1st… https://tezos.com/?utm_source=Tezos&utm_campaign=9b76d4f4ed-EMAIL_CAMPAIGN_2017_05_16&utm_medium=email&utm_term=0_d8f4b4112e-9b76d4f4ed-116326521
Some arguments for IOTA not being “in the darkness”:
Signs of real growth – Real Confirmed transactions per second with no fee growth (182 per second was the last public test announced on 4/29 – increased by over 60% in 2 week span)
Flash network in mid stage development
#17 in daily trade volume
Light wallet created
I don’t believe the white paper is still in “revision mode”
Market launch happened
There was not really recently a token sale that happened in 2015 – it just started publicly trading on exchanges (which I would argue would move it past the dark since the slack channels are transitioning to reddit, etc.)
Doesn’t have more partners than users/developers
There is indications of users/consumers using the tangle to perform transactions via light wallet transferring money to bitfinex to trade
I would argue they do have a working demo of the tangle and some parts of the roadmap that are complete (while there are issues that is normal)
I’d argue increased github activity
Who are their users?
Could be transition.
Thanks for this data.
Does an alpha on a public test net count as having no demonstrable product?
Thanks! Do investors who are using the tangle to perform transactions like sending iota back and forth to each other using the light wallet and to exchanges count as users? If not then I’m not 100% on who their users what be
Alpha can not be public, it is a lab version. Betas are public.
right. but some token-based companies are showing alphas and calling them betas.
right. trading the tokens on the exchanges is not a product or protocol usage.
Cosmos is definitely in “Transition”. The underlying consensus algorithm (Tendermint) is nearing production ready status and is in use by companies and projects all over the world, including Hyperledger – it’s literally state-of-the-art. We are also quite active on our cryptocurrency application framework that will be the foundation for the Cosmos application – it’s called basecoin (https://github.com/tendermint/basecoin). It already includes capability for interblockchain communication. The token is not trading yet because the network is not live yet. 🙂
Sounds very quaint.
Precisely.
I like this article and think you are right about the different phases (Although I may have differing opinions on who is in darkness and who is in reality and transition) however the overall idea of this is true. Most coins are just junk that most likely will never take off.
Did you get an update from Tezos? What is your opinion on Tezos today, please? Their project looks excellent, founders look smart and honest. With such huge money raised they are able to deploy tezos network-protocol in very good shape technically. They are confident the applications will come to tezos. They have funds now to build ecosystem…
“They are confident the applications will come to tezos.”
– that would be the proof, but it won’t be easy, nor a given.
https://m.facebook.com/story.php?story_fbid=10156281307175039&id=576005038