Navigating the minefield of Token Offerings — Part 1

Token offerings have enabled companies to crowdfund their operations by issuing freshly minted tokens to users that are willing to trade them for profit or to get a cheap early access ticket to the upcoming services of the token issuer. This process despite its benefits, has also suffered from a series of incidents that have damaged the trust between the token issuers and the potential buyers.

According to a 2018 study from Satis Group, approximately a 81% of the Token Offerings had been identified as Scams. ~6% of them Failed, ~5% had Gone Dead and ~8% of them ended up being traded on a exchange. Adding up the numbers, in 92% of the cases the users lost their funds, since they didn’t manage to trade the tokens on a exchange or to get the token issuer’s service in a discount.

These events have led users to loot for the free tokens that they can get from the token offerings by completing tasks that help the ecosystem of the token issuer to grow. That way they reduce the risk of losing funds, while at the same time they secure a small amount of the issued tokens. This approach has had an impact on the funds that the token issuers have raised.

Funds raised in 2017 (by icodata.io)
Funds raised in 2018 by icodata.io
Funds raised in 2019 by icodata.io

This declining pattern is expected, and will continue until either the market finds a way to establish trust between the token issuers and the users, or until token offerings cease to exist.

Blocktopus has been aware of the high number of failed token offerings and we have been working on finding a way to protect our users from this scam minefield. The path that we decided to take is to partner with Cointelligence so we can get a private report of the token offerings that are applying to register on our platform.

A few words about Cointelligence:

Cointelligence conducts data research and analysis for the crypto economy. We create relevant tools for investors, namely an impartial and accurate ICO/STO listing and rating system, and our new crypto exchange rating system. While it is possible to find huge amounts of data widely available to the public, collecting everything and taking only what you need is not an easy task. Cointelligence was created to bridge this information gap in the crypto economy. It is a market maker, focused on bringing blockchain and cryptocurrencies to the masses through the use of fundamental economics, real-time market data, and great industry coverage.

This process will introduce a delay of up to a week in order for a token offering to be accepted by Blocktopus, but we consider this as a necessary measure in order to protect our users from risking their funds.

You can read the Part 2 here.