In the latest issue of their weekly newsletter, Diar.co has revealed some stark information on ICOs. It was reported that most ICOs are now worth less than when the coins or tokens were released.
In fact, 70% of ICOs have lost value from their fundraising days. 2017 saw an explosion of tokens and coins coming on to the market via ICOs and crowdsale style fundraising. More than 8 billion dollars was raised by these hundreds projects and startups, but over the past months their value has been hemorrhaging.
“Diar number crunching shows that 70% of tokens are now valued at less than what was raised during their ICO. And with tokens having no equity representation, markets have shrugged off cash-on-hand as part of an enterprise valuation.”
According to TokenData, the momentum that was building in ICO funding has died down severely. The number of ICOs that have successfully completing a round of funding in August was only 17 and Ricky Tan, the founder of TokenData told Diar that he doesn’t expect the ICO field to pick up speed anytime soon.
“While Initial Coin Offerings (ICOs) have to date raised double in 2018 what they did last year, the controversial fund-raising vehicle is seeing its popularity diminish to select projects.”
Another quirk shown in the newsletter are the numerous coins and tokens that had successful sales but can’t be found anywhere now for purchase or trade.
Diar reports that “324 tokens, over a third of tokens that completed an ICO and that raised over $2.3Bn in 2017-18 have yet to have their token listed on any exchanges. Half of these projects have completed their funding rounds in 2017. And 44 tokens that have raised $1Bn sit on the bottom of the table due to practically zero liquidity, and no information about distribution of token supply.”
The newsletter also showed that there are still winners among these ICOs, and that not all projects have dropped through the floor. According to Diar, “foundation token holdings” have proven to be the most valuable.
Cardano, NEO, TRON, IOTA, Tezos, are projects that have grown and separated themselves from the rest of the market, garnering more confidence than the typical ICO.
Perhaps as the space matures ICO madness will die down, and it won’t be so easy for startups to raise crazy amounts of money without more viable plans and infrastructure ready to go. The fact that ICOs are slowing down could prove to be a good thing for cryptocurrency and remove the negative connotations surrounding crypto startup fundraising.