Who invests in ICOs?

Interesting possibilities afforded by analyzing token sale data

A lot can be garnered from looking at historical and real-time data of token ecosystems. In this post, we dive into the historical data of 8 projects that conducted a public sale in 2017, followed by a broader look at token ownership today.

Data Issues

Well, just like most things in crypto, there is little transparency into what is actually going on, especially on the blockchain.

  • It’s hard to find the crowdsale wallet. Often, the current token wallet is different from the crowdsale wallet
  • The start and end dates of token sales is buried in the bowels of Telegram groups
  • Pre-sale data such as token supply and distribution is usually only mentioned in whitepapers and on other off-chain data sources
  • Max/Min contribution amounts and sale mechanics vary project to project

I could go on, but essentially, contextual data lives in disparate silos on the web and is not easily accessible. Projects use different addresses for the pre-sale and the public-sale, and there is no go-to source for this data. (Shoutout to the Messari team — Ryan Selkis and co — for doing a great job creating reporting standards for issuers).

ICO Participation

Let’s dive into the data. We looked at investor participation in 8 public sales¹ that took place between May and November of 2017. The analysis reflects contributions only into the crowd sale wallet during the time of the public ICO. Each sale comes with its own mechanics (see more @VitalikButerin post) that could be analyzed individually, but for this piece, we stick to broad observations.

~45,000 unique wallets participated in the 8 public sales. You’d think investors would use a different wallet per token sale, but no:

  • 4635 wallets participated in 2 sales
  • 761 in 3 sales
  • 89 in 4 sales
  • 19 wallets participated in 5 sales

Investor Behaviors

Why is this data interesting? In the traditional financial services industry, copying the pros is often a strategy employed by novice traders. Institutional investment managers, such as hedge funds, are required to file a Form 13-F that discloses holdings in certain securities. The 13-Fs can be a great source of information when looking for investment opportunities, but they are filed at the end of a quarter and thus the information is dated.

With real-time tracking of investments in ICO’s, we now have a way to learn about the behaviors/interests of entities (investors, exchanges, bots, etc.) on the blockchain, and develop profiles based on on-chain activity.

For example, entity 0xecA41…. is an ICO investor. She invests in governance and storage projects and her typical cheque size is 10 ETH. In her free time, she enjoys trading crypto-kitties with her friend 0xacR32……This information can be used by other ICO’s looking to air-drop tokens or by investors looking to copy the trades of the investor mentioned above. On-chain entity analysis is still in its infancy, but it’s an area ripe for exploration.

Token Centralization

Thesis-driven & long-term investors are investing partially on the promise of decentralization. But how decentralized are these projects? On closer look, not so decentralized after all. In the 8 public sales¹ we analyzed, 10% of the wallets contributed 70% of the ETH

If we fast-forward and look at current token holder distribution (May 2018) of 20 popular projects that conducted sales in 2017, we see that token ownership is even more centralized. For most projects,

10 wallets own >50% of the tokens

These large wallets often belong to token teams, exchanges, and pre-sale investors (often on vesting schedules). As an investor in one of these projects, it is paramount to track these large movers and shakers. Again, to draw parallels with the traditional financial services world, many institutional investors adjust their investing strategies when directors or large shareholders of a public company buy/sell shares. There are standards put in place by the SEC, FCA, and other regulatory organizations around these events. In the crypto world, no such standards exist. Investors have to deal with major price volatility when the token team makes a large transfer into an exchange to liquidate their position.

Further Exploration

Other interesting analysis from the real-time tracking of ICO investors and wallets could be:

  • Treasury Management — what post-ICO token teams do with their BTC/ETH ? Do they sell it right away or HODL? Transfer it to partner organizations? Start an asset manager?
  • On-Chain Governance — How do wallets that participate in a sale or hold significant tokens relate to each other? Did a whale syndicate participate in the ICO with multiple wallets and now owns >50% of tokens? What risks does token centralization have on future governance?

It’s still early days in the world of on-chain data. As the ecosystem evolves, many use cases and different types of analysis will become prominent, and we at TokenAnalyst hope to be at the forefront of this field.

¹ The 8 token sales evaluated were Aragon, Bancor, Civic, Gnosis, Golem, Decentraland, Request Network, and VeChain


TokenAnalyst parses and classifies every on-chain transaction (currently from the Ethereum blockchain) with the goal of deriving fundamental insights to understand crypto-assets.