Smiling Members Boost ICO Funding by up to 95%, Study Finds

A finance professor from the Hanken School of Economics in Finland has released a preprint study that suggests initial coin offerings (ICOs) have a higher chance of success if the individuals promoting them have “trustworthy” faces. Professor Sinh Thoi Mai, the author of the study called “The Value of a Smile,” discovered that ICOs with images of team members ranked high on a trustworthiness scale received up to 95% more investments compared to those with lower rankings. The study analyzed 5,826 ICOs and found that the average capital raised by ICOs varied significantly depending on the perceived trustworthiness of the team members’ faces. Importantly, this perceived trustworthiness did not correlate with post-ICO performance.

To conduct the study, Professor Mai manually collected a sample of ICOs from different sources, amounting to around $24 billion in total funds raised. The facial photos in each ICO’s investor packets were then evaluated for trustworthiness using indicators from previous research. ICOs with team members who appeared more trustworthy on the scale raised more money, but this initial investor interest did not translate into long-term success. In fact, the study found a negative association between trustworthiness and post-ICO performance, indicating that investors attracted by trustworthy faces might overestimate the value of the ICO, leading them to sell off their tokens quickly in order to recoup potential losses or unrealized gains.

The research also revealed that facial trustworthiness played a more significant role in attracting investors to ICOs when there was limited information available, such as less coding information on GitHub or more complex white papers. This suggests that investors with less technical knowledge tend to rely on perceived meaningful indicators, such as a trustworthy facial expression captured in an image, in their decision-making process. It is worth noting that the study stressed there is no scientific evidence to support the notion that people who smile are more trustworthy, although there is a common belief in society that they are.

The study conducted by Professor Sinh Thoi Mai highlights the potential influence of perceived trustworthiness in the success of ICOs. ICOs featuring team members with trustworthy facial expressions tend to attract more initial investments, but this trustworthiness does not necessarily translate into long-term gains. Investors who are drawn to trustworthy faces might overestimate the value of the ICO, leading to a possible tendency to sell off tokens rapidly. The significance of trustworthiness in ICO attractiveness is more pronounced when there is limited information available. This suggests that investors with less technical knowledge often rely on other indicators, such as facial expressions, to make investment decisions. It is essential to note that while people tend to believe that smiling individuals are trustworthy, there is no scientific evidence to support this notion.