ICO Market Research of 2018
This article will be analyzing the ICO market research made by ICORATING for the third quarter of 2018.
According to the research, the total ICO funding fell by 78% from $8,359,976,282 in Q2 to $1,819,585,090 in Q3 of 2018. The funds raised in September 2018 fell by more than 78% compared to the month of May. Only 4% of all announced ICOs were listed on exchanges and MenaPay was among the listed ICOs. The success rate of these ICOs is also very dependent on which region they are operating in.
According to the results from the third quarter of 2018, the median return from tokens has decreased by 22%. The median return from tokens after three days of being listed is 3.35%. In addition, 79% of tokens were traded below the ICO price. Following the second quarter trends, the most popular industry with the largest number of projects were financial services.
Furthermore, about 87% of projects staged their ICOs with the intention of creating a Dapp on a third-party blockchain. 67% of all Dapps ICOs were not successful. It took 18 days on average from the completion of an ICO to the vesting of tokens for secondary trading. The average fundraising period was 41 days. 64% of all ICOs failed to complete their crowdfunding.
TOP 20 ICOs Funds/Duration
In quarter three of 2018; 49.05% of the tokens were service tokens, 25.3% were utility tokens, 12.47% were hybrid tokens, 6.54% were security tokens, 4.3% were cryptocurrencies, 1.55% were rewarded tokens and 0.52% were vote tokens. Compared to Q2, the number of projects with utility tokens decreased by 10.07%.
In quarter three of 2018, 76.15% of the projects who had an ICO were idea stage, 10.22% were MVP stage, 5.79% were beta stage, 4.77% were alpha stage, 1.7% were code stage and 1.37% were full-ready product stage. Compared with Q2, the idea stage increased by 18.72%. The number of projects with an already-operating business comprised 5% of all projects (−10% compared with Q2). The presence or absence of an operating business had no effect on fundraising success.
Furthermore, the median funding for projects at the idea stage was $0. Fully-ready product median was at $250K, code stage projects median was $300K, alpha stage median was $700K, MVP stage median was at $800K and a beta stage project had a $1,450,000 median of funding.
The number of successful/unsuccessful ICOs is given below according to their development stage from the report. A project is considered unsuccessful if the project raised less than $0.5 million. 72% of idea stage projects failed to raise more than half a million dollars.
Top 20 Industries by Median HardCap
The top 10 most popular industries are; financial services (following Q2 trend) with 50+ projects. There was also 50+ exchange and wallet projects. Trading, drugs & healthcare, blockchain infrastructure industries followed with around 30 projects each in decreasing order. Commerce & retail, banking & payments, investment, gambling & betting, mining, business services & consulting industries had around 20 projects, again in decreasing order.
The exchanges and wallets industry are consistently popular throughout the whole quarter. It is quite unusual to see projects from the drugs and healthcare industry on the list, as this industry has not previously been particularly popular.
The most popular industries in terms of total funds attracted in Q3 were infrastructure (following Q2 trend) and exchange & wallets; first collected slightly less than $125M. Financial services collected slightly more than $125M. Banking & payments came third in the total funds raised chart, raising close to $100M. Banking & payments raised $60M in July 218.
MenaPay was successful in raising around $6M and aiming to raise $25M. The company also includes financial services, payment and wallet business structure from the above mentioned top 20 industries by median market cap.
Number of Projects Distributed by Industry
Average Return for ICOs in 2018 by Sector
Geographical Distribution for Projects Based on the Country of Registration (ICO)
But when it comes to Geographical Distribution of Projects Based on Origin of the Project Team;
1. Russia; $182.9 M raised across 63 projects
2. UK; $157.6 M raised across 22 projects
3. USA; $155.5 M raised across 65 projects
4. China; $105.7 M raised across 30 projects
5. Spain; $91.2 M raised across 4 projects
6. Singapore; $78.3 M raised across 16 projects
7. South Korea; $68.1 M raised across 17 projects
8. India; $67.1 M raised across 18 projects
9. Australia; $51.2 M raised across 13 projects
10. Ukraine; $46.3 M raised across 11 projects
11. Kuwait; $41.3 M raised across 2 projects
12. Switzerland; $36.8 M raised across 9 projects
13. Italy; $34.6 M raised across 11 projects
14. Austria; $29.5 M raised across 2 projects
15. Vietnam; $27.6 M raised across 5 projects
16. Dominican Republic; $23.9 M raised across 1 project
17. Romania; $21.7 M raised across 4 projects
18. Canada; $20.7 M raised across 5 projects
19. Israel; $19.6 M raised across 6 projects
*‘Country of origin’ means a country in which more than 50% of team members were actually residing at the time of an ICO. If projects have an international team, they are not included. The country of origin is determined on the basis of open information about the team, including official project websites and team members’ social media.
The region that has the least projects is the MENA region and the growth in the MENA region is expected to accelerate to 3.2% in 2019 according to the World Bank report. MenaPay is the first mover in this region with their new payment system to make payments more secure and Islamic compliant. In addition, their Arabic application and support team will create ease of use to the locals.
· The leader in terms of fundraising was Europe ($663 M raised funds, 177 projects), with 48% of all funds raised. Projects from Asia showed a decrease in funds raised (–65%, $268 M raised funds) and a drop in the number of launched projects (–10%, 73 projects).
· Most projects in Q3 allocated less than 10% of all tokens to pre-sales.
· Projects in which less than 10% of tokens were allocated to private and pre-sale stages were unsuccessful in 67% of cases. Again, A project is considered successful if the project raised more than $0.5 million.
· At this stage of ecosystem development, Ethereum continues to monopolize the market due to (for example) easy listing on DEX (most tokens on which are also built on Ethereum or the 0x protocol). 3rd quarter projects used 83.75% Ethereum, 12.06% other, 1.68% Waves, 1.34% NEO, and 1.17% Stellar while creating their tokens.
· About 87% of projects staged their ICOs with the intention of creating a Dapp on a third-party blockchain. 8.96% were protocol improvement ICOs and 4.91% were custom blockchain ICOs.
· In order to make the top 10 by number of users per day, a marketplace or game should be used by at least 300 people. Additionally, 760 Dapps registered on the platform on 10.10.18 (77% of the total number) did not have even a single user per day. The highest number of users per day was in the High-Risk category (# 1–333ETH — 2171 users / 24h).
· 67% of all Dapps ICOs were not successful. Unsuccessful percentage for Protocol — 43%; custom blockchain — 51%.
· 82.17% of ICOs were closed source, 17.83% were open source. 67% of closed-source projects did not submit anything to the community other than ideas at the time of their ICOs.
· 69.42% of projects that either did not have a GitHub repository, or had a closed GitHub, were unsuccessful in terms of funds raised. 41.9% of projects with open-source code were unsuccessful.
· 71% companies staging an ICO have existed for less than a year. The average company age is 12 months.
· 79% of all projects staging ICOs had fewer than 5 developers on their team. Only 1% of projects had more than 10 developers on board.
VC FUNDING:
Venture capitals have a great impact upon the ICOs and today, most investors who wish to participate in VC investment do so through managed venture capital funds. In addition, the VC funding will help the ICO to promote the entrepreneurs, promote the product, encourage customers, bring out the latent talent, creates more employment opportunities, brings financial viability, helps technological growth and much more. MenaPay has two different venture capitals with equity and token investment opportunities.
· $957,910,860 have been collected by 78 blockchain projects via VC funding rounds. The average VC funding of projects with a disclosed amount of investment is 17.4 million.
· The rate of decline in fundraising for the quarter is similar for the VC and ICO methods.
· Distribution of VC-funded Blockchain projects with and without a Token is 54% non-tokenized, 46% is tokenized.
· 87% of VC-funded Blockchain projects did not hold an airdrop. Only 13% did.
Industries with the Highest Cumulative Sum of Raised Funds by VCs in Q3 2018
78% of VC- funded Blockchain projects were Dapps, 15% Blockchain, 7% Protocol. Projects with a ready beta version were the most successful in terms of median VC raised investments. Idea stage investments had a 0 median in VC round funding.
Geographical Distribution of Projects Based on Country of Registration (VC)
But when it comes to Geographical Distribution of Projects Based on Origin of the Project Team;
1. USA; $299.6 M raised across 16 projects
2. Multinational; $293.1 M raised across 6 projects
3. China; $141.1 M raised across 12 projects
4. Israel; $19 M raised across 2 projects
5. UK; $6.2 M raised across 3 projects
6. Australia; $2.9 M raised across 2 projects
7. Germany; $2 M raised across 1 project
8. Kenya; $0.8 M raised across 2 projects
9. Slovenia; $0.1 M raised across 1 project
10. Monaco, Russia, Argentina, Taiwan, South Africa has 1 project each with less than $0.1M funding.
It can be said that; even though the market has decreased according to the report, ICO firms such as MenaPay were able to grow without being affected. In other words, the structure and the dynamics of the initial coin offerings are extremely strong and by effectively using the concept of smart contracts, more tokens can be created as well as allocated to users. It is also vital to understand the commercial benefits the ICO members obtain from holding the tokens, apart from just the capital gains related to scarcity.
Moreover; as the fundamental goal of the Bitcoin/Altcoin cryptocurrencies is to perform as a substitute form of currency for payments, the real appeal for investors is the speculative cryptocurrency trading so the value of these crypto fluctuates drastically; driven by trading. On the other hand, the initial coin offerings (ICOs) issue tokens by using the blockchain technology and gives the investors an early investment chance to earn their tokens.
The success rate of these ICO is also very dependent on which region they are operating in. The research also outlines the success rate of 36% of ICO which were operating in the Asia region and MenaPay’s target being the MENA region has allowed the ICO to be the first mover in the less competitive market.
Last but not least, fundraising is the main issue for the ICO’s and in average, the ICO was able to raise around $25 Million where MenaPay was successful in receiving $6M of investment even before it’s launch.
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