The ICO Market Has No Clear Trend – From $2.9 Billion Dollars to Hundreds of Projects Dead
We have been hearing how the Initial Coin Offering (ICO) market has been behaving during the last years. Indeed, there were hundreds of ICOs trying to gather funds and invest in their projects, but there is also a negative side, over hundred of projects have already disappeared.
It is important to mention that around 1,000 different cryptocurrencies have been considered deceased, something that was related to the drop suffered by the markets since the beginning of this year.
But let’s see which are the latest statistics related to ICOs.
Where are ICOs Located and Which Are the Top Sectors?
Initial Coin Offerings are not a regional phenomenon, but instead, the issue is global. The three countries with the biggest percentage of ICO projects are the United States, the United Kingdom and Russia with 16.05%, 10.7% and 7.69% respectively. The US raised $811.2 million dollars, the United Kingdom $131 million dollars and Russia $980 million dollars.
The list is followed by Switzerland, Singapore, Estonia, Australia, Hong Kong, Gibraltar, Lithuania, France, Germany, Canada, Israel, Spain, Ukraine, China, Poland, Slovenia and Argentina.
Another key point is that most of the projects fall in the ‘Finance’ category, which accounts for 13.1% of all the projects in the system. This is followed by wallets / payments (6.6%), and Asset Management (6.3%). Other categories are Betting and Gambling, Gaming, Blockchain Platforms, Data Computing, and more.
The ‘Blockchain Platform’ category was the one that received the most funds during the ICO campaign. It is followed by the Network / Communications category with 16.6% and Payments / Wallets with 5.3%.
The end of the last year was specifically good for ICOs. Bitcoin and most of the virtual currencies expanded everywhere around the world and where able to reach new individuals and investors.
In 2018, the things seemed to keep growing even further. March say $2.94 billion dollars raised, more than combining the next two best months January and February 2018. And this was related to the Telegram ICO and the Venezuelan Petro.
But it seems that the money that ICOs are gathering is not enough for projects to be successful. Indeed, there are some projects like the Tezos one that suffered different problems and were not able to be launched to the market.
Additionally, in 2017, over 913 projects with tokensales, of which 48% have been a success being able to raise $5.6 billion dollars. 131 (14%) were not able to survive that stage, and 347 (38%) did not have reports.
In 2018, as regulations increase everywhere around the world, ICOs will have to work even harder to be compliant with the legal frameworks spreading in different countries. This means that teams behind ICOs will have to be more prepared, protect investors and give all the necessary information to regulators.
On ICObazaar there were 195 ongoing ICOs in May. They were ready to close sales. Only 91 public sales were closed and raised $2.57 billion dollars.
That means that 46.7% of the tokensales published their results, and 53.3% did not close the token sale or did not want to publish the results. Which means that ICOs are not delivering the promised timelines. In fact, in 2018, companies are taking more time across the board to complete ICOs, something that shows that they are not in a rush.
In 2018, ICOs last longer time than ICOs launched in 2017. Almost 40% of the Initial Coin Offerings last more than 50 days. 23.2% takes between 30-50 days, and 38,4% does it in less than 30 days.
This is related with new ICOs that decided to run their fundraising campaign in different stages, something that is becoming more popular. And indeed, there are some case studies like EOS that show that longer ICOs can be more successful for different reasons.
Another important thing that ICOs are doing is launching private token sales with discounts for the tokens they sell, and later opening a public token sale. In this way, companies are able to fund pre-ICO campaigns, marketing and other expenditures.
Just to mention an important case, Telegram Open Network (TON) suspended the public ICO because it was so successful in its private stage that it did not need the public sale to keep its project. Something similar happened to Kodak Coin and the platform that this company is going to build.
But there are some differentiation taking place in the market. For example, Vitalik Buterin has been working in a token sales known as DAICO. Other companies like Overstock, have been working in Security Token Offerings (STO). Other possible token models are Interactive Coin Offerings, or Continuous Token Models.
STOs are tokens backed by real assets, something that includes the controversial oiled-backed Petro coin launched by the Venezuelan government at the beginning of the year. These STO tokens can be the next compliant way to issue tokens on the market because they will be compliant with the securities laws around the world.
The DAICO solution is a hybrid token offering that combines solutions from ICOs and DAO (decentralized autonomous organizations). It is a form of management model that is based on blockchain technology.
How to Avoid Scams?
At the moment there are some problems with the ICO market. For example, there are so many projects that have scammed people, and others that have completely failed.
ICObazaar explained that their system shows that there are only 7% of projects rated above 4.5 out of 5. Additionally, up to 58% of the projects scores less than 4 out of 5, showing the lack of information that ICOs provide to the buyers, including information on the team, he company and the project they want to build.
ICObazaar says on that issue:
“This usually happens when the team hurries to get listed on ICO trackers but doesn’t pay enough attention to their documentation, social media, or the size and quality of community supporting the project.”
But compared to 2017 ICOs have been able to rank better than in 2017. Indeed, 65% of the projects scored between 3,5 and 4,4 points out of five.
Cryptocurrencies, ICOs and blockchain technology are still in its early days. There are so many things that will have to improve in the future if the ecosystem wants to keep growing in the future. With more regulations and more competition in the market, better projects and products will see the market, making the space a much more mature one.
ICOs have been helping several companies and enterprises to launch their tokens and raise funds for the projects they have in mind.