Most ICOs fail in second quarter

August 08, 2018
Chris Wheal

A new report from ICORating claims that most initial coin offerings (ICOs) failed in the second quarter.

The ICO rating agency found that 55% of ICOs failed to complete their crowdfunding in the latest quarter versus 50% in the first quarter.

However, the amount raised through ICOs leapt to $8.3bn in the second quarter compared with $3.3bn in the prior quarter.

It means that while the market for ICOs appears to be booming, the overall quality of projects appears to be deteriorating.

EOS leads

At the same time, ICORating said much of the increase in the amount raised through ICOs was accounted for by the EOS project, suggesting the total raised by all ICOs could fall in the coming quarters.

While EOS had raised over $4bn in a year-long ICO, some 50% of all projects announced in the second quarter were unable to attract more than $100,000.

Meanwhile, only 7% of the ICOs unveiled in the quarter were able to list on exchanges.

EOS leads

EOS leads in ICO stakes

Returns sink

The deterioration in average quality of projects was also evidenced by the returns achieved by investors.

On average, digital coins lost over 55% post ICO in the second quarter, in sharp contrast to the average 49% positive return enjoyed by ICO investors in the first quarter of the year.

About 9% of projects that announced ICOs in the second quarter had already deleted their social network accounts and websites, according to ICORating.

Trends

Also among the key market trends observed by ICORating in the second quarter were:

  • A sharp increase in the share of institutional capital and a continued decline in the number of retail investors.
  • A significant rise in the impact that crypto exchanges have on the market.
  • A shift in the structure of most token sales, with more projects preferring to raise the majority of their ICO funding in private sales rather than public sales.

“We believe that the market should be more transparent and safe for every player and the first step to accomplish this is to create a higher standard of information disclosure for every pre-ICO and especially post-ICO project,” said Sasha Kamshilov, chief executive at ICORating.

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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