Analysis recently released by ICOBench identifies a distinct slowing of both ICO launches and funding for ICOs in recent months. Initial Coin Offerings are sometimes called a “token sale” or “token launch”.
An ICO takes place when a company is creating a new product with an associated utility and wants to build an ecosystem of stakeholders upfront who will benefit from purchasing the product early. This token sale enables the company to further develop their product with an established user base, and the company can use some of the proceeds to build the product.
The information gathered by ICOBench shows a marked slowdown from June to July, where the funds raised dropped an eye-popping billion dollars. The current month looks even more dire, with only 30% of July’s anemic result being raised by ICO’s. August’s results so far are just 14% of those of June.
These results capture only the publicly known market: the so-called “private sale” phase of many ICOs, which is undertaken in private discussions and generally without advertising or press, is not included in this data. It paints a picture of a market in free-fall, with funding dropping to a level not seen in the past year.
But it doesn’t tell the whole story. Looking at earlier reporting from the same source, ICOBench’s weekly market review in May, shows that a significant slow down in funding in July and August of 2017 took place. While this drop was not as severe as the 2018 period, there is likely causality that investors simply don’t participate in funding during the summer vacation months.
This would make the ICO market rather like capital markets such as venture funding, initial public offerings, and a variety of debt financing mechanisms, each of which “take a vacation” for 4–8 weeks during the summer. But even the most positive spin doesn’t offset the raw facts: July and August were atrocious months for crowdfunding through ICO.
Will September signal a return to the growth of last year, or cement a downward shift in the market? We will know in 30 days.
About Dana Love: I am currently the cryptoeconomic advisor to two ICOs: eLocations and Intellos and president, CTO, and a founder of Radpay. First involved in blockchain work in 2011, I hold a PhD in economics (The University of Glasgow, highest honors), an MBA in marketing (Harvard Business School, Baker Scholar), and a BS in physics (University of Richmond, Phi Beta Kappa). Since I started coding as a youth in MORTRAN and ALGOL68G, I have co-founded five businesses with four successful exits, including Cisco Capital-backed Metacloud and Warburg Pincus-backed Radnet, and have led divisions of public companies including GTE (now Verizon), Prosodie Interactive (now CapGemini) and ADC. My research is in public policy, most recently the impact of blockchain and big data on emerging economies. Some of my past efforts include building the first cloud-based ERP system (in the mid 90s), development of the first carrier-grade VoIP and unified communications platforms in the world (at GTE, now Verizon), and early work in big data systems (as an Oracle partner.) My work in big data, machine learning, blockchain, and VoIP has been written about in Wired, Oracle’s Profit Magazine, the Financial Times, and Telephony Magazine.