Sure, Crypto Prices Tanked But How Were ICO Token Projects Able To Survive This Bear Market?
How Was ICOs Able To Survive This Bear Market?
2018 has been a very hard year for virtual currencies and for the whole blockchain and cryptocurrency market. Indeed, most of the ICOs were not able to survive the bear market. Some of those that launched products to the space couldn’t sustain them over time while others couldn’t even launch a token.
The Block was able to talk with eight different Initial Coin Offerings that were able to survive the current bear market. These projects are based on Ethereum and although virtual currencies lost around 80% of their value or more, they are still operating. The ICOs that talked with The Block was Gnosis, SALT, Ziliqa, Blockstack, Civic, Polkadot, Aragon, and Komodo.
Initial Coin Offerings tend to raise funds in virtual currencies such as Ethereum (ETH) or Bitcoin (BTC), among others. But in a bear market like the one we experienced, these coins lost more than 80% of their value since December 2017 and January 2018. The Block explains that it is very important to understand what companies did as soon as they received the virtual currencies.
Civic, for example, decided to sell more than 90% of the funds received during the token sale. This allowed the project to have most of its funds in dollars, hedging against a volatile and bearish market. Nevertheless, an important number of ICOs that today are not operating anymore didn’t follow this logic and did not sell their coins or sold them when the market was already 50% down from the time they received the coins.
In a similar way as Civic, Muneeb Ali, the co-founder of Blockstack, said that they took the decision to hold 70% in fiat currencies. This is also something that SALT did as well. Although the company supports virtual currencies and are bullish for the long term, they decided to handle their funds using a conservative treasury strategy.
The CEO of Aragon, Luis Cuende, commented to The Block that they have applied a ‘prudent financial’ practice to sustain their development. However, he did not provide specific information about the number of virtual currencies sold.
There are several experts that believe that this bear market has helped clean the space from ‘weak hands’ or not professional companies. According to Civic’s CEO, Vinny Lingham, ‘the crap gets destroyed.’
Furthermore, during the year, companies had to be focused on developing blockchain solutions rather than paying attention just to virtual currency prices. With the hype level down, it is very positive for companies to focus on their projects, say Polkadot's developers.
The CEO of Zilliqa, Zinshu, commented about this:
“I believe it has provided a much-needed opportunity for organizations to focus on the infrastructure, the ecosystem, and the technical backbone of their project.”
Web3 Foundation explained to The Block that there is no better way to show resilience than to keep growing. Web3 Foundation is behind the team that manages the treasury development of Polkadot. Although the market has abruptly fallen this year, they were able to continue their operations and grow.
Although these projects are optimistic about the future of the space they are also cautious. Mr. Cuende said that they have now a runway of 10 years rather than 100. The SALT project is also realistic that price recovery is central to the long-term survival of this project. Komodo’s founder has also suggested that with a long bear market (more than one year) they might face ‘real issues’ and other problems.
The market will have to show that it is here to stay and recover part of the price that it lost during 2018. 2019 could be a good year and projects might start to grow once again.