Taking A "By The Numbers" Look At The Current ICO Market

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The ICO market is exploding in 2018, with new coins seemingly being launched every week. Linked to any and every industry you can think of – if there’s an idea you can be sure that there’s a token attached to it. Recently we published a guide that addressed what an investor should watch out for when diving into the ICO market, but that’s not the only information you should commit to memory. ICORating has become a go-to source for ICO market analysis, as its quarterly report is must-read material. Sparing you the task of going through page after page of data, we’ve taken a “by the numbers” look at what the latest ICORating report currently says about the state of the ICO market.

Different shapes and sizes

It shouldn’t surprise anyone to hear that the ICO market is currently flooded with choice. It also shouldn’t surprise anyone to hear that most of these coins are service tokens – 65.8% in fact. This is something of a cause for concern, as the definition for a service token has become loose at best. We’re seeing countless service tokens launch, with most not actually backed by a tangible product. The rest of the field is largely made up of security tokens and hybrid tokens, with just 3.8% being cryptocurrencies. From this, it’s pretty clear that the many coin creators seen the cryptocurrency market as a closed shop and are actively avoiding related projects.

Less money, more problems

No less than 412 token projects launched during Q1 2018, with there being a slight increase in the number launched during Q4 2017. The total figure raised by these projects reached a staggering $3,145,410,005. But, this figure is pretty deceiving, as most ICOs actually failed to generate more than $100,000 in funding, which shows that there is a lack of public interest in supposed lesser tokens. The largest chunk of the $3 billion figure is actually made up of a few select coins, with Telegram’s TON generating $1.7 billion on its own. There might be big money flowing through the ICO market, but fundraising goals have proved to be out of reach for most tokens.

Ongoing legal issues

Bitcoin, Ethereum, Ripple, and other leading cryptocurrencies have faced legal issues around the world, so ICOs certainly aren’t going to escape the firing line. More than 100 of the 412 token projects taking place during Q1 2018 had no legal entity, which has seen some huge legal issues unfold. Transparency is clearly an issue with many projects, to the point where the legality of various ICOs has been called into question. Blurring the public conception of ICOs, it’s clear that the market needs to self-regulate further to avoid additional legal complications.

Failing to find success

First, let’s understand what constitutes success in the eyes of ICORating. The company states that “a project is considered successful if a soft cap was reached or the project raised more than $0.5 million in case of the absence of a soft cap.” In the world of ICOs this isn’t actually a huge demand – or at least that’s what you would think. The number of ICOs deemed as successful has dropped by more than half in March when compared to February. It’s pretty alarming to see various projects struggle to gain traction, with the median hard cap falling from $22.5 million to $14 million. Success will always be subjective, but it’s clear that many ICOs are finding it tough to come by.

From all angles

Everyone watched in awe as Bitcoin skyrocketed in price during 2017. This frenzy opened the eyes of many to the cryptocurrency market and its potential, with many sectors now looking to get a slice of the crypto action. Breaking down where the bulk of new ICOs have come from, it’s the financial services sector that is clearly seeing the most value in token-based projects. Considering that the banking industry has been aggressively battling against the rise of cryptos, it’s somewhat hypocritical that so many are now exploring blockchain and ICO based projects. Other major industries linked to ICOs include gambling, gaming, and social media, which shows that “new media” has a keen interest in coin creation.

Momentum is a major issue

Information regarding the ICO market has been hard to come by in the past, largely as transparency has been a major issue. ICORating is going to great lengths to clear things up and make this data much more digestible. What we found from the report is that the ICO market has flagged slightly since the start of the year. It’s great to see plenty of ICOs bring new ideas to the table, but traction is a serious issue. Many ICOs are not getting enough funding, crumbling as a result. For every TON, there are countless ICOs that never get off the ground, which could be the start of a worrying trend.