I've noticed many ICOs have to spend a lot of money on promotions and advertising.
For example, let's say an ICO raises 10 million dollars but has to spend 9 million on promotion.
Therefore, they only really raised 1 million for the project.
Isn't this unethical?
If you're starting a company and looking for investors the traditional way via stock equity, you would never spend 9 million or even 5 million or even 2 million in order to raise 10 million from investors.
This begs the question, what ratio of promotion cost versus funds raised for ICOs is ethical?
And how do we know if an ICO is using an ethical ratio?
Not necessarily. The ICO phase is the crowdfunding phase - it's where you draw the crowd in.
So it's mostly a marketing phase where you don't have a product yet to show.
The guys behind the ICO are mostly marketers, community managers and designers who build the prototypes and do the crowd communication.
So no, actually advertising is not unethical, it's THE main purpose of an ICO.
Obviously the ICO must have a product/service offering, otherwise it's a scam. It can't just be marketing, but marketing is a big part of it.