Our Public Sale DYOR Checklist.
Education and serious attention to detail are key when navigating the wild crypto public sales market.
While one can not ever be 100% sure about their investments, keeping an eye out for the following details may help you to avoid investing in bad lemons. Especially as the space has been improving and there are now more expectations on projects to meet minimum security requirements and to work with reputable high-quality service providers.
✅ Properties of a potentially good ILO:
- The majority of team-owned tokens are vested on the chain.
- 60%+ of liquidity of the raised amount is locked for 3+ months.
- Contracts have been reviewed/audited and contain little to no findings.
- The team has been KYCed by a reputable provider (who actually funds professional investigations and has contact with law enforcement agencies for real fraud pursuit).
- The team is transparent and responsive to the community.
- The product/plan is well thought out and has a well-written whitepaper or technical documentation.
- Has a vesting schedule in a decentralized manner (not using a centralized safe or own contracts).
- Funds raised go right into a multi-sig.
- Ask yourself this question, why the @!#& does this project need a token? If you’re satisfied with the answer and it is logical, proceed with caution.
⛔ Properties of a bad ILO:
- The majority of the team tokens are unlocked (price impact may be drastic and this means that token developers can immediately sell them and instantly remove all liquidity — rug).
- No contract audit and/nor KYC.
- The max contribution is too high compared to the hard cap.
- A large disparity between soft caps and hard caps.
- Drastic token presale price discount over listing price (over 10%, which invites dumping upon listing).
- Contract audit (if present) has findings such as a mint function and the ability to blacklist addressees.
- Private sales of tokens that DO NOT add to the liquidity pool.
- Airdrops containing high amounts of tokens. (Where are these tokens going? Many brand new wallets?)
- The team is not transparent and/or aggressive when challenged.
- The project does not have a plan, logical purpose, or whitepaper (or has a badly written one).
- A private sale has no vesting schedule and if not, has a token advantage.
Down the rabbit hole:
- Is the vesting service compliant or compatible with the reflection tokens? All the vesting services that you see in the space mostly lock balances, however, if the contracts aren’t compatible, The reflection could become withdrawable.
- Is the project locking liquidity with a high-quality provider? If the locker code quality is not high, the lockers could have been exploited. If the project is locking liquidity with itself, the “lock” shall not be trusted.
Locked Liquidity Considerations:
➡️ Make sure that the percentage of liquidity raised and locked is 60–100.
- A 60% lock means 60% of the raised BNB/ETH goes into the liquidity pool to provide value for the token on the market. (While the other 40% of the raise is sent to the developer/owner address).
- UniCrypt restricts new ILOs to a 60% lock minimum.
➡️ Be careful with high amounts of team tokens unlocked.
- Team tokens are immediately available for the team to sell if they are not locked (either with our linear lock system or with our standard monthly lockers).
- Full faith in the project owner/developer should be given if high amounts of team tokens are available for sale upon launch.
➡️ Locked liquidity does not absolutely protect you from a rug.
- Mint functions can be present in the contract that the developer/owner can call on to create fresh tokens to ‘dump’ on the market.
- High amounts of unlocked team tokens can be sold on the market to drain the liquidity pool (rug).
- Blacklists and taxes can be implemented to keep you from selling (honeypot scenarios).
- Liquidity lockers lock LP tokens so those token developers can’t sell them and take the pool’s underlying liquidity assets.
*This goes without saying but please keep in mind that just because a project meets all of these criteria, doesn’t mean that it is an absolutely safe bet. Please proceed with caution and don’t invest more than you can afford to lose.
Join our community and feel free to ask our team any questions you may have about any project you are interested in!
Our team of experts will be happy to discuss and help. 💬 http://t.me/uncx_token
