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ICO/STO Analysis for October 2018

“Further down as we wait for market reversal and maturity”

January 2018 started the year off with so much exuberance and hope – both for ICOs and the cryptocurrency market as a whole. As we closed out the month of October, we saw another month of failed ICOs and a lack of investor interest.

A few projects took most of the pie in terms of money invested. The market even watched as security token offerings (STOs) failed, implying the market isn’t ready for such innovation.

October proved to be the worst month of the year for failed ICOs, seeing a staggering 81% failure rate. The top 10 projects also received 58% of all funds invested in what could be described as a “weeding out” process.

October was the second-worst month of the year for total funds raised, beating last-place finisher September by a mere 3%. 87% of ICOs were also launched on the Ethereum network, proving that platforms like NEO and Cardano have failed to dethrone Ethereum as the go-to solution for ICO launches.

Four STOs also finished in October, but they all failed. One of them, Neluns, turned out to be a total scam, which we review in detail later in this report. STOs hold potential for the future in their regulatory compliance. In theory, they can solve traditional issues in the financial world while also taking place in a regulated environment for clarity and safety. However, seeing only four STOs for October, with a 100% failure rate, proves the market isn’t ready for STOs quite yet.

Let’s take a closer look at October’s details.

We use the same methodology and success criteria for all our ICO reports.

Key Findings

  • The overall amount of funds raised was $298M, increasing by 3% from September.
  • The total amount of crypto raised was ETH 1.4M, an increase of 8%.
  • The total number of ICOs was 90, the same as in the previous month.
  • Only 19% of ICOs were successful.
  • The top 10 projects collected 58% of all funds.
  • 51% of ICOs did not report the amount of capital they raised.
  • 87% of ICOs were launched on Ethereum.
  • Finance is the leading category by number of projects.
  • There were only 4 STOs, all unsuccessful

Number of ICOs

90 ICOs/STOs were conducted this month, which is the same as last month. October is tied with September for the second-worst month regarding the number of ICOs/STOs.

This number would be more concerning if the market had already seen a reversal or if STOs had started to take over the market. But as it stands, this result is not surprising.

ICO success rate

81% of ICOs failed this month. This is just 1% higher than the failure rate of last month, making October the least successful month for ICOs this year.

22 ICOs were self-eliminated due to their absolutely unsuccessful performance. Their sites are not working, and their groups on social networks are either closed, abandoned, or no longer being updated. Such ICOs are not included in our report. Including such projects into the report would make the success rate even lower.

We are seeing a plateau regarding ICO failure rates. The past four months (July–October) were all within 2% of each other, staying largely the same. July, however, saw a 9% increase in ICO failure rates. Compared to January, we are seeing signs of a developing market that is no longer primarily hype based – at least for now.

Market size in USD

The total amount of funds raised this month was $298M, up 3% from last month. Successful ICOs collected about 70% of the total funds invested. $90M was raised by unsuccessful projects, according to our criteria, which is $23M more than in September.

We consider an ICO successful when the soft cap is reached and more than 50% of the hard cap is collected. See the full list of our criteria here.

The funds raised by successful projects dropped by $15M this month compared to last month.

The number of ICOs stayed the same, but the funds raised increased by 3%.

Market size in crypto

The total amount of funds raised in crypto was 1.4M Ether, an increase of about 8% compared to September.

The amount of ETH funds dropped consistently from May to July. August then saw a major spike in funds with 1.6M – the most raised this year via ETH. September subsequently saw a significant drop, and October rallied slightly after. October was the fourth-highest month in regard to the amount of ETH raised.

Top 10 ICOs

The total funds raised by the top 10 ICOs was $124M, 58% of the total market volume. This shows that the money is gravitating toward promising and successful projects.

The top 10 accounted for a major percentage of the total funds raised. This trend is expected to continue. Current ICOs are now targeting large/institutional investors, conducting funding rounds only open to certain participants. This shows a maturing of the marketing, mimicking what is seen in the IPO space.

Ingot Coin is a financial ecosystem created to link the crypto market to the traditional financial industry. It includes a wallet with a digital bank, brokerage, exchange, certifier, and ICO accelerator.

It’s important to note that just after the end of the ICO, a delay in the token listing was announced. The founders offered a buyback opportunity for investors who opposed the team’s decision to delay the token listing. On November 4th, after all claims had been filed, the total amount equaled $21,532,200, which is far below the initially approved soft cap and capital required to run the project. With the extension of the claim period, INGOT Group Team decided to buy back INGOT Coin as a whole.

Caspian is a full-stack crypto-asset management platform tying together the biggest crypto exchanges in a single interface. The platform also offers compliance, algorithms, portfolio management, risk management, and reporting. Caspian is building an ecosystem that enables sophisticated traders to operate more efficiently and improve their performance.

Loyakk is a tokenized data container for companies to share and track business data across the world. It develops enterprise-relationship solutions used by blue-chip customers such as SAP, Novartis, Abbott Labs, Infosys, and Mphasis.

Lambda is a blockchain-based storage solution providing unlimited scalability. It fulfills services such as multi-chain data co-storage and cross-chain data management.

BlockCloud is a blockchain-based service-centric network (SCN) stack. It combines the advantages of SCN and blockchain to empower the Internet of things (IoT). It proposes a new consensus mechanism and ledger structure to provide trust, security, and incentivization in a decentralized manner. In addition, it develops a service pricing and distribution mechanism that protects the profits of both service providers and users of the network fairly.

Funding amounts

Just like in September, only one project collected above $20M. The majority of successful ICOs raised funds under the $20M cap.

We saw 10 ICOs in the $10–20M range, with 2 of them failing. This differs from September, which saw 9 ICOs in the same range, with all 9 deemed successful.

Projects that raised $5–10M were a toss-up, with 5 successes and 4 failures.

Most ICOs raising between $1–5M were unsuccessful, and no successful ICOs collected under $1M.

There were very few successful low-capped ICOs. Only one successful project was capped under $5M.

Fulfillment of funding goals

Only 5 ICOs raised 90+% of their hard caps, accounting for $53M (50% less than September regarding both funds and quantity). The 55 ICOs (the same ones as in September) that raised under

ICO financial information

51% of ICOs did not provide financial information, an 8% increase from last month.

Most of such ICOs are probably dead or have little funding. However, we do not have fully comprehensive data. Some legitimate projects expecting significant funding do not provide investment information due to private investor contract limitations.

ICO duration

Many ICOs have rescheduled and re-evaluated their end dates and timelines due to the market conditions, which leads many ICOs to last longer than expected, failing to reach their soft cap goals.

The 6 successful long-lasting ICOs raised around $90M. This is down from 8 such ICOs last month, which raised $120M.

Only 16% of ICOs opened and closed within this month, and they collected only about $46M. This is 3% more than September in terms of the number of ICOs and about $14M more in funds collected.

Interesting ICO cases

W Green Pay

W Green Pay, the Korean ICO behind the W Foundation, might be a case that could break the whole ICO market analysis, if confirmed. However, there is no information publicly available – except for several representatives of W Green Pay who have declared in their Telegram channel that all 200M WGP tokens were sold at the ICO price of $2 each. This would mean the total funds raised are around $400M.

After the Copenhagen Accord in 2009, Korea is aiming to cut greenhouse gas emissions by 30% before 2020. The W Foundation was chosen by the government of Korea to lead this movement, being referred to as the HOOXI Campaign. With all this support behind W Green Pay, $400M no longer seems like a figure coming out of thin air.

However, we don’t see a reason for them to hide info about funds raised. Their unconfident communication within their Telegram channel is also cause for significant doubt. Although not included in this report, we cannot ignore the amount raised, which exceeds the ICO funding for the entire month by 150%, and will follow this case further. If the funding amount is confirmed, we will provide details in following reports.

However, it may be natural for Koreans to keep such information within the family, so to speak. The whole project, despite its fantastic idea of incentivizing the public to limit greenhouse gas emissions, looks more like a family holiday, with everyone dancing and singing about the brave new world they are going to build based on love and blockchain.

This attempt to protect the environment from pollution is admirable, except that it’s local. It’s based only on Korea’s Emissions Trading Scheme – the Korean market for carbon credits. HOOXI is an app that will track the greenhouse emissions data of each user, rewarding them with WPG tokens. The earned WPG can be spent at specific online shopping malls cooperating with the W Foundation.

This problem is highly relevant worldwide and should instead be considered globally, not restricted by local boundaries. Veridium is one of the most prominent blockchain solutions trying to solve this problem globally.

Scam projects revealed

Neluns

Neluns caught our attention primarily as a potential record holder for the amount of funds raised. We were surprised that a rather mediocre project with a hackneyed idea managed to collect such a sum. Of course, upon closer inspection, this ICO was nothing more than a scam. However, the level of preparation and the ongoing activity of the team, as well as the alleged preparation for its continuation (in the form of pump and dump), pushed us to analyze this scam project in more detail. The story of the full investigation we conducted deserves a separate article. Here we present just a few facts:

  1. Neluns claims to have released security tokens and that the SEC has been informed. However, we discovered that there is no mention of this project in the SEC registry or in the submitted applications.
  2. The project team has no history; all the members’ social networks were created just before the project started. Presumably, the people in the photos were simply hired for a single photo shoot in an office with the Neluns logo. There are no public speeches or videos available for any team member.
  3. The Manhattan Blockchain Fund is statedly one of the main investors. However, there is no such fund, and its website has the same IP address as Neluns’s site.
  4. None of the listed partners are aware they are Neluns’s partners. Neluns did not attend or show up to the events indicated on their website.

We can specify a dozen more inconsistencies in addition to these, but this is already enough to suspect Neluns of foul play.

What is Neluns, and what are their plans? In short, by investing about $20,000 in creating a fake entourage and rush, they could receive up to $200,000 in revenue from incompetent investors. At the moment, according to Etherscan, Neluns’s fake ICO received about 640 ETH ($135,000). The idea of such a scheme is not new, but the planned implementation is surprising. Even after the end of the ICO fundraising, the creators decided to continue and apparently will implement a pumping scheme for the existing pool of coins.

Neluns is a great example of a complex scam project. At the same time, it also shows the level of care in the analytical market, since most ICO reports do not bother to check such scams, calmly including them in the top lines of their ratings. In contrast, SCDE Ventures continues to publish only verified data for its subscribers. Only the most reliable and manually verified information is provided, so you can trust our ratings with a clear conscience.

Conclusions

October showed no major changes for the ICO/STO market. We are seeing a temporary bottom and plateau in comparison to 2018 as a whole. We saw a slight increase in funds raised compared to September, but also a slight increase in the number of failed ICOs, making October the least successful of the year in terms of the failure rate.

Ethereum continues to be a dominant force in terms of the go-to network solution for launching ICOs. Finance also dominates the sector for ICO solutions in terms of the number of ICOs, showing that ICOs aren’t branching out much into other sectors.

We also expect STOs to gain more prevalence, with more projects turning to STOs instead of ICOs. However, the four failures this month show that current STOs are still very early to the party.

Blockchain still poses significant potential to change contemporary sectors – this has not changed. It remains to be seen how quickly people will realize these opportunities and continue to incorporate blockchain into real-world solutions.