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IEO Due Diligence: 20 Things to Check Before Buying

IEO Due Diligence: 20 Things to Check Before Buying

Crypto Regulation & Policy Press Release Expert

Published 2026-05-13

Updated 2026-05-13

IEO Due Diligence: 20 Things to Check Before Buying

A systematic due diligence checklist applied consistently across every IEO eliminates the most common investment failures before they happen. The 20 checks below address team quality, technical validity, tokenomics soundness, legal compliance, and community authenticity — in priority order from highest-signal to supporting checks.

Team Checks (1-5)

All founders doxxed: Every named founder has verifiable LinkedIn with employment history predating the project by months
Team credentials match claims: An "AI blockchain" project has at least one team member with published ML research or AI engineering background
No prior fraud history: Search "[founder name] + scam/fraud/exit" — negative results are a basic requirement
Team size is project-appropriate: A 3-person team promising 12 major features in 6 months is implausible; verify team size vs. roadmap scope
Advisors are real: Named advisors have LinkedIn profiles that confirm the advisory relationship

Technical Checks (6-10)

Smart contract audited: Published audit from CertiK, Trail of Bits, Quantstamp, or equivalent — not "audit pending"
GitHub has real code: Repository with genuine commits, multiple contributors, not a 3-day-old repo with one commit
Working product exists: Testnet, demo, or beta — not just whitepaper claims
Whitepaper is original: Key technical sections aren't copied from existing projects (search distinctive phrases)
Technical claims are verifiable: At least 2-3 specific technical assertions you can independently check or ask the team to demonstrate

Tokenomics Checks (11-15)

Allocation table adds to 100%: All categories sum exactly — missing percentages hide undisclosed allocations
FDV is reasonable: IEO FDV doesn't exceed comparable working protocols at equivalent development stage
Team cliff ≥12 months: Shorter cliffs signal teams planning quick exits
TGE float ≥10%: Under 10% TGE float enables pump-and-dump with minimal buying
Token has genuine utility: The token is required for something within the protocol — not governance-only with no protocol interaction

Legal and Community Checks (16-20)

Exchange hosting the IEO is legitimate: Verified Tier 1-2 exchange — not a domain impersonating a real exchange
KYC/AML is in place: The IEO requires identity verification — anonymous participation is a red flag
Jurisdiction eligibility confirmed: You've read the eligibility section and confirmed your country is permitted
Community discusses product: Telegram/Discord has genuine product discussion — not 90% price speculation and "wen moon"
No paid-promotion dependency: The project has organic coverage and community not entirely dependent on paid influencer campaigns

For the detailed exchange vetting process that should precede this checklist, see our exchange vetting guide. For tokenomics red flags to expand on checks 11-15, see our IEO tokenomics red flags guide. For smart contract audit evaluation in check 6, see our smart contract audit guide.

Glossary

Doxxed: Team members whose real identities are publicly disclosed and verifiable through professional networks and prior employment history.
FDV (Fully Diluted Valuation): IEO token price × total supply — the theoretical market cap if all tokens were circulating simultaneously.
TGE Float: The percentage of total token supply that is immediately tradeable when the exchange spot market opens at TGE.

Disclaimer

Important: Even projects passing all 20 checks can fail. Due diligence reduces but cannot eliminate investment risk. This guide is educational only. CryptoPresaleNews.com is not a licensed financial advisor.

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Frequently Asked Questions

Have questions? We have answers!

What are the most important IEO due diligence checks?

Top 5 highest-signal checks: (1) all founders doxxed with verifiable employment predating the project, (2) smart contract audit published from recognised firm (not pending), (3) FDV reasonable vs. comparable protocols at equivalent stage, (4) team cliff ≥12 months (shorter = exit signal), (5) working product (testnet/demo) exists at IEO time. These five eliminate the most common IEO failure patterns before investment.

How long should IEO due diligence take?

Scale with position size: sub-$100: 30 minutes minimum (team check, audit status, FDV calculation). $100-$500: 2-4 hours (full checklist items 1-20). $500+: 4-8 hours plus independent research on technical claims. Never allocate more capital than you've invested proportional time researching — the 20-item checklist takes approximately 3-4 hours to complete properly.

What is the most commonly skipped due diligence check?

Check 12 (FDV comparison against comparable protocols) is most commonly skipped — investors focus on the token price without comparing FDV to working protocols at equivalent stages. A $0.001 token price feels cheap but if FDV is $2B for a pre-product project, it's dramatically overvalued vs. comparable protocols with working products and real revenue. Always calculate: IEO price × total supply = FDV, then compare against DeFiLlama-listed protocols in the same category.

How do I verify a founder's LinkedIn is authentic?

LinkedIn authenticity verification: (1) account creation date — profiles created within 2 months of project announcement are suspicious, (2) employment history — jobs at named companies should be verifiable via company LinkedIn pages, (3) connections count — real professionals have 100+ connections; new fake profiles have very few, (4) activity history — genuine profiles have engagement history, endorsements, and posts predating the project, (5) Google search — '[name] + [claimed employer]' should return confirmation of the employment relationship.

What does 'team cliff ≥12 months' mean?

Team cliff is the lock-up period before any team tokens unlock. A 12-month cliff means team members receive zero tokens for the first year post-TGE — they can only profit by selling after 12 months. Shorter cliffs (3-6 months) allow teams to sell significantly sooner, creating structural dump risk at the cliff end. The 12-month minimum reflects the industry standard that emerged post-2018 to align team incentives with long-term protocol success.

How do I check if a smart contract audit is legitimate?

Audit verification: (1) find the audit report link on the project's website or GitHub, (2) visit the auditor's official website directly (not via project link) and search for the audit in their portfolio/reports section, (3) CertiK, Trail of Bits, Quantstamp, Consensys Diligence all maintain public audit registries, (4) check audit date vs. current contract — audit from 2 years ago doesn't cover recent code changes, (5) read the findings section — a good audit acknowledges issues found and confirms resolution.

What is the TGE float test?

TGE float test: calculate what percentage of total token supply is available for trading at TGE. Under 10% = high risk (easy price manipulation, future dilution from unlocks). 10-20% = moderate (manageable). Over 20% = healthy initial float. Formula: TGE circulating supply ÷ total supply × 100. Sources: project whitepaper (tokenomics section) or Messari protocol page. Low float projects can spike dramatically at TGE then collapse as unlocks add supply.

How do I verify community authenticity?

Community authenticity checks: (1) join Telegram — read 50 messages: are they discussing product use cases or mainly 'when moon?' / 'wen listing?', (2) check Telegram member engagement rate: 100,000 members but only 20 messages per day indicates bot inflation, (3) Twitter — check follower growth chart (sudden spike = purchased followers), (4) Discord active user count vs. total members: under 5% active signals a ghost community, (5) Reddit — search the project name and check for organic community posts not from the official account.

What is the allocation table check?

The allocation table should list every token category (team, investors, ecosystem, public, liquidity) with exact percentages that total exactly 100%. Check: do all percentages sum to 100%? If not, where is the missing percentage? (Often: undisclosed advisor/private round allocations.) Does each category have a vesting schedule? Is there a 'treasury' or 'reserve' category with no governance control disclosed? Missing information in the allocation table is a material red flag, not a minor omission.

What is the 'no paid-promotion dependency' check?

Check 20 (organic coverage test): if you remove all paid influencer content, what organic coverage does the project have? Search the project name + 'review' excluding obvious paid promotions. Check CryptoTwitter for unpaid mentions from respected analysts. Look for coverage in technical blockchain media (The Block, Decrypt, Cointelegraph) from reporters, not sponsored content. A project with no organic coverage except paid promoters hasn't demonstrated genuine community interest independent of marketing spend.

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