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 Why data transparency matters in the crypto space

 

ICO data

 

Initial Coin Offerings-ICOs were a rage among entrepreneurs and investors alike until 2017. This space was not as regulated as the traditional fundraisings like an IPO or Venture Capital. Investors were hooked by the astronomical returns on their crypto assets and entrepreneurs realized they could easily raise capital to propel whatever audacious idea they had in mind. It’s no surprise that coin offerings gained so much popularity in the short period since its inception.

 

Data transparency could revolutionize the crypto space

 

Despite the growing popularity of coin offerings and asset tokenization, a surprising number of companies fail to reveal some very crucial data. Ironically, industries off the Blockchain are looking for ways to increase data transparency, while the same cannot be said for the crypto marketspace.

 

Percentage of ICOs/STOs that revealed critical data

 

 

Source: InWara

 

As the crypto market space is populated with many bad actors, the sector gained notoriety, and so InWara believes the next progressive step is to bridge the gap between enterprises and investors by developing a spirit of trust and transparency. As a harbinger of this spirit InWara, an independent research-house, provides a factual grading to all concluded, upcoming and active ICO/STOs in the market space. This grading is meant to help users differentiate the bad actors in the market by their relatively low transparency grading and concurrently help build credibility to worthy enterprises. 

 

Data transparency grading is similar to the credit risk ratings provided by S&P & Moody’s except that, DTG will aim to bring more clarity to investors about their crypto assets.

 

Methodology of DTG

 

InWara aggregates the disorganized data published by startups, verifies it and then proceeds to bring structure into the clutter of information by categorizing it into four main categories.

 

  • Company Details: This section classifies elements like the address, holding company (if any), country of origin among several other simple but key elements.
  • Token Details: This section will include all elements of the token sale from Sale Dates to Funds raised among other key information.
  • On-Chain Data: This section will include the paper-trail of token sale, creation and post-sale distribution activities on the blockchain
  • Documentation: This section will aim to verify the information available, clear sources for all claims made by ICOs
  • Miscellaneous: This section will includes miscellaneous details related to the deployment of a clear bonus structure, Github activity of the company among others

For a more in-depth understanding of the methodology behind the grading, check out InWara’s article.

 

InWara’s Data Transparency Grading (DTG) country wise

 

Source: Inwara.com

 

In the US, the market leader in the crypto space in terms of number of ICOs, of the 738 ICOs that passed the minimum requirements to get graded. Only a measly 0.68% of companies have a fill rate of disclosed data above 85%, which translates to ‘AA’ grading and only 25% companies have a fill rate of disclosed data between 75–85%, which translates to ‘A’ grading. Interestingly the number of companies with ‘AA’ grading is approximately equal with the industry average of 0.72%. The sheer number of ICOs/STOs from the US may be an explanation for this, as the country dominates the crypto market on a global scale.

 

An overwhelming majority of ICOs/STOs, 74% to be precise, have a fill rate of disclosed data less than 75%, which translates to ‘B’ or ‘BA’ or ‘CA’ grading. The information not being disclosed to the public could include critical data such as fund allocation, funds raised, roadmap, the presence of a working prototype etc, which is why it is critical to conduct a data-driven analysis.

 

Data Transparency Grading (DTG) of the crypto market space

 

Source: Inwara.com

 

Across the crypto market space, it is observed that only 0.72% of ICOs/STOs were awarded an ‘AA’ grading, which translates to over 85% data being disclosed. 35% of companies were awarded ‘A’ grading and an overwhelming majority of 64% only have disclosed data less than 75%.

 

Benefits of Data transparency 

 

There is a lot to gain from complete data transparency in the Blockchain and crypto market space. Investors wouldn’t have to sift through volumes of data, that could a be a 100 page whitepaper or information available on social forums. Instead they could focus their time and energy on just the project, its deliverables and feasibility. Also a digital transparency grading could help create a conducive environment for investors to properly benchmark similar projects. The crypto market space has gained notoriety because of a few bad actors, this makes it difficult for legitimate projects to find funding. Here a digital transparency grading can help founders to build credibility in the community and help stand out among the multitude of startups looking to raise funds through an initial coin offering-ICO.

 

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