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ICO Analysis for September 2018

As the downtrend for cryptocurrency markets continued throughout the month of September, it was interesting to see how Initial Coin Offerings (ICOs) were affected. Last month was labeled in our August report as the Plateau of Maturity. September was a continuation of downward interest from investors. Although it was not this year’s “bottom of the barrel” in terms of the number of ICOs conducted.

September proved to be the worst overall month this year in terms of funds raised via Initial Coin Offerings (ICOs), showing the least amount of investor interest this year. This month saw the worst success rate for ICOs this year – a success rate of only 20%. We also only saw $290 million raised from ICOs – 42% less than the next lowest month of $503 million raised.

However, there were more ICOs conducted in September than in August – 23% more to be exact. These ICOs are trying to get every last drop of interest possible, as the market matures and transforms.

The cryptocurrency space is maturing as a whole, while currently experiencing growing pains of regulation and investor skepticism. Security Token Offerings (STOs) and their pursuit for regulatory compliance are going in the direction funding is headed. Blockchain as a whole holds significant opportunity for the market, provided the right solutions and framework are applied.  

Take a look at specifics on how September specifically stacks up in terms of the numbers.

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

Key Findings

  • The overall amount of funds raised was $290M, dropping 42% from August.
  • The total amount of crypto raised was ETH 1.3M, a decrease of 19% from August.
  • The total number of ICOs was 90, 23% more than in the previous month.
  • Only 20% of ICOs were successful.
  • The top 10 projects collected 62% of all funds.
  • 43% of ICOs did not report the amount of capital raised.
  • 90% of ICOs launched on Ethereum.
  • Finance is the leading category by number of projects.

Number of ICOs

25% more ICOs in September

This report covers 90 ICOs completed in September 2018 (pre-ICOs not included).

The number of ICOs stopped falling and even showed small growth.

ICO success rate

Almost 80% of ICOs Failed

September was the least successful month in the entire ICO market history. Projects are unable to meet their goals, trying to squeeze the last drop of life out of the changing market. ICOs are merging into other forms of investment, like private sales, security token offerings (STOs), and others. We will elaborate on this in one of our separate reports this month.

Market size in USD

The total amount of funds raised was $290M

The total amount of funds raised this month was fell by 42%, hitting new lows.

The 25% increase in the number of ICOs did not result in more funds raised

An increased number of ICOs does not always result in a greater amount of funds. This month we see this exact situation: more shallow ICOs closing their sales.

Funds raised by successful ICOs

Successful ICOs collected 77% of the total funds

As for market imbalance, successful ICOs, which account for only 20% of all ICOs, collected $223M of the total funds this month.

Unsuccessful ICOs raised $67M, which is a 50% drop from last month, taking into account the overall market drop. Some projects can continue their development even with low funding, but it’s still a bad sign for the overall infrastructure.

Market size in crypto

The amount of funds raised in crypto decreased by 19%

Even with a pretty stable ETH price this month, the total amount of funds raised in crypto dropped by 19%. However, this seems relatively stable compared to the overall drop of 42% in funds raised in USD.

Top 10 ICOs

Total funds raised by the top 10 ICOs was $181M

The leader of September’s top 10 is Genexi, a biotech accelerator that operates as a platform and a foundation focusing on hi-tech bio&med research and drug development. The project collected $37M.

62% of the total funds raised by top 10 ICOs

The top 10 accounted for a huge portion of the total funds raised. This trend is only going to continue, as the market is currently driven by huge private rounds with preliminary funding agreements.

Funding amounts

Only one project collected above $20M

The majority of successful ICOs raised funds under the $20M cap. There were no successful ICOs that collected under $1M.

There were no successful low-capped ICOs

This month, only 15% of all ICOs were hard-capped at under $10M, with only 15% of them successful. Just 3 ICOs hard-capped under $1M, and all of them were unsuccessful. However, we still foresee a low-capped ICO trend.

Funding goals fulfillment

Only 10 ICOs raised 90+% of their hard caps, accounting for $108M. The 56 ICOs that raised under 10% of their hard cap collected almost $14M altogether.

ICO financial information

43% ICOs have not provided financial information

Still almost half of all ICOs hide or do not disclose financial information.

Most of such ICOs are almost certainly dead or very poorly funded, but there are a few credible projects with expected high contributions that do not disclose their funding information, as they are limited by contracts with private investors.

ICO duration

ICO quantity by duration

The constant ICO rescheduling of the previous month has resulted in a large quantity of long-lasting ICOs that are unable to cover even their soft caps. The majority of ICOs concluded this month having lasted for more than 60 days, most closing with a failure.

Funds raised by ICO duration

However, looking at the same projects in terms of the amounts raised per period, we believe that the long-lasting ICOs could still be quite successful. Of them, 8 successfully raised around $120M.

Only 13% of ICOs opened and closed within this month, and they collected only about $32M.

Suspicious ICO cases

Alchemy (AFI)

The Alchemy project, a blockchain-based P2P lending service, reported collecting $46.62M. It was supposed to be the leader of the September ranking, but not everything turned out so smoothly.

Initially, it was announced that 50M AFI tokens would be available for sale at the ICO, which was 40% of the total supply of 125M. The project planned to raise $60M by selling the 50M AFI.

The following token prices were announced:

With the maximum token price, 0.000952 ETH, multiplied by 50M available tokens, the maximum amount of possible funds raised (technical hardcap) could be 47600 ETH.

The average rate of ETH in September was $210, which, multiplied by 47600ETH, equals $9.996M.

Alchemy offers an ETH ratio equal to $500. Even so, $500 multiplied by 47600ETH equals $23.8M.

With the stated emission of tokens, the technical hardcap is about $10M. How the project planned to collect $60M is not clear. Even more surprising is how the project managed to collect more than $46M during the ICO, without even having the necessary emission of its own tokens.

The Analytical Department of SCDE has contacted Alchemy project over Telegram to clarify this situation. Nobody answered our questions: In fact, the questions were deleted, and our account was blocked. Unfortunately, such incidents are becoming more common. Projects report completely arbitrary amounts raised at the ICO, without even trying to justify the feasibility of the numbers.

Then, the main ICO trackers do not carry out the necessary project analysis and include the numbers provided in the reports, which are then copied by others and taken at face value.

Meanwhile, 22-year-old Alchemy  CEO Justin Jung has already managed to boast on his LinkedIn page that he led the ICO, which raised $46.62M.

Multiple collaborations with other ICOs of similar projects suggest such a popular phenomenon: ICO token-swapping. ICOs overstate the funds raised with the help of the mutual exchange of tokens, thereby misleading investors.

Given the strange reaction of the project representatives to our questions, as well as the apparent inconsistencies in the tokenomics, we classify the Alchemy project as suspicious.

All this forces us to call into question the Alchemy ICO and to exclude it from our rating.

NEO Exchange (NEX)

The ICO of the NEO Exchange project, a decentralized exchange based on the NEO blockchain, has become another controversial crowdfunding story.

Some analytical agencies have indicated that more than $21M was raised. A detailed analysis has revealed that the figures were provided by one such agency and then replicated by others. There is no official information from the project itself about this.

We cannot rely on unverified data provided by a third party. There is no doubt about the seriousness of this project, but the unavailability of official financial statements and the lack of confirmation of at least some figures by the project representatives force us to exclude this project from our rating.

Tutellus (TUT)

The tokensale of Tuttelus stretched for more than 9 months, starting at the end of 2017 and ending on September 30, 2018. Even though ICO trackers are full of data about over $22M being raised, there is no official information confirming this. Moreover, the official representatives of the company, while they did answer a direct question about the amount of funds raised, referred to the impossibility of disclosing such information. Therefore, this project is also excluded from the rating due to the absence of confirmed data.

Conclusions

The ICO market in its current form has declined very heavily. This month shows the smallest amount of funds raised, not to mention the poor ICO performance. The absolute majority of tokens traded much below the ICO price right after the listing.

The trend of ICOs with ERC-20 tokens thrown into the market in an attempt to collect free crypto has subsided long ago. Conducting ICOs is no longer the approach for prominent blockchain projects. Some fishy ICOs are still trying to raise money with several graphs from open studies wrapped up into a pitch deck and a white paper. However, their attempts are few and mostly unsuccessful.

The current market infrastructure forces projects to find other ways to raise crypto funds. ICOs are morphing into such forms as STOs (security token offerings), DAICOs, and private ICO rounds (basically a new type of VC investments), among other forms.

The market potential of blockchain technology is now more obvious than ever. It is only a question of time when the industry will come up with new solutions capable of integrating into the traditional market.