ICO market more than doubles in Q2 2018, yet more than half failed: report

Posted: 9 August 2018 4:00 pm
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The leading projects during the second quarter 2018 raised, on average, US$50 million within two months.

A new report has found that the global initial coin offering (ICO) marketplace has swelled to more than twice its size compared to last year. ICOs have already raised US$11.69 billion throughout the first half of 2018.

The report, published by independent ratings agency ICO Rating, revealed that US$8.35 billion was raised by 827 ICO projects during the second quarter of 2018, compared to just US$3.33 billion accumulated in Q1 2018.

Combined, these figures are reportedly ten times greater than the sum of ICO investments in the first half 2017. Excluding EOS, cumulative ICO funding for H1 2018 was 6.4 times larger than the amount raised in H1 last year.

However, over half (55%) of all ICOs in Q2 2018 failed to complete their crowdfunding. On average, ICO projects raised either $1-5 million (17%) or $10-25 million (12%). While there were twice the number of successful projects in May 2018 compared with January 2018, June 2018’s figures were far lower month-on-month.

The leading projects during the second quarter 2018 raised, on average, US$50 million within two months.

Quarter-on-quarter, there were significantly less (-24%) offerings for tokens with service characteristics. The proportion of projects offering security tokens also fell (-8%) during Q2 2018, while utility token-led projects increased by almost one third (32%) when compared to the number of similar projects in the first quarter 2018.

The report found that 15% of projects in Q2 2018 already had a functioning business, up 6% on Q1 2018. However, the absence of a working business had zero effect on ICOs’ fundraising efforts and success.

The majority (46%) of projects in Q2 2018 were launched in Europe, while North America raised most (65%) funds. Plus, there were more unregistered projects in Q2 2018 (39%) than there were in Q1 2018 (24%).

More than half (53%) of all DApp ICOs were unsuccessful in Q2 2018, failing to raise more than US$500,000. One fifth (21%) of projects that offered protocol solutions and nearly one third (32%) of custom blockchain campaigns were unsuccessful, according to the report. Additionally, there were an average 7,871 ICO financiers (including bounty and airdrop token holders) per coin offering in the second quarter of the year.

What are the odds of that ICO taking off? Considerably less than 50% it turns out. In fact, that project and your money will probably be gone in less than a year. In February, bitcoin.com analysed 902 token ICOs registered on TokenData in 2017, discovering that most projects were either dead and gone, or about to be.

ICOs are essential for the future, argued Binance CEO Zhao Zhangpeng in a lightly impassioned blog post in May. He might have a lot of reasons to feel strongly about the subject, with Binance getting its start on the back of an ICO (whose backers made a whopping return on investment), and also being dragged into a lawsuit by VC firm Sequoia Capital China after its talks with Binance fell through.

The Tezos Foundation recently filed a motion to dismiss a class action lawsuit that claims the company violated US securities laws. This week, a federal court judge denied the motion, meaning that the lawsuit will proceed.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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