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ICO Analysis for July 2018: “We Keep Falling Down”

We open the second half of 2018 with the following report from Suicide Ventures. Please have a look at our previous reports with a new design on our blog.

We continue to use the same success criteria as before. We have just moved them to separate article.

The key findings for this month are presented below.

The Number of ICOs is Falling Fairly Linearly

This report covers 106 ICOs completed in July 2018 (pre-ICOs are not included). However, we analyzed the ICOs based on different phases. The results are calculated separately for each phase.

The number of ICOs has continued to fall since December 2017.

Number of ICOs per month.
Diagram 1. Number of ICOs per month.

Only 21% of All ICOs Were Completed Successfully This Month

Distribution of projects by status.
Diagram 2. Distribution of projects by status.

This indicator is another new low for this year. The chart below shows the dynamics of ICO success for this year. The decline in successful ICOs correlates heavily with falling BTC prices.

Dynamics of ICO success in raising funds.
Diagram 3. Dynamics of ICO success in raising funds.

The ICO success rate, according to our criteria, correlates closely with the overall market decline. As long as BTC prices fall or stay flat with minor fluctuations, ICOs will not be considered a safe investment.

Market Volume Strongly Subsided

Raised by Total Funds Median Funds
All projects $504M $3.8M
Successful projects $333M $9.5M
Unsuccessful projects $171M $2.3M
Raised in crypto (ETH) ETH 1.1M ETH 0.008 M

Table 1. Funds raised (if stated)

The amount of funds collected keeps decreasing. This month ICOs collected $504M, which is 19% less than last month. This is also a lower result relative to the past year; the previous July saw $575M collected.

If all ICOs had reached their goals the market would have grown by $6,009,716,618.90, or just over 6 billion dollars. Taking into account the current state, only 8.4% of global crypto demand was satisfied this month.

Dynamics of the funds raised.
Diagram 4. Dynamics of the funds raised.

The total funds raised closely correlates with the number of ICOs, with both parameters dropping throughout this year.

Dynamics of the total funds raised compared with the number of ICOs.
Diagram 5. Dynamics of the total funds raised compared with the number of ICOs.

Successful ICOs collected 66% of the total funds this month. Below you can see how many funds could be wasted by unsuccessful ICOs: this month it’s about $171M, only a small fraction of which was refunded. However, some of them will continue development without proper funding, and maybe even deliver someday.

Total funds raised by successful and unsuccessful ICOs, in millions of USD.
Diagram 6. Total funds raised by successful and unsuccessful ICOs, in millions of USD.

It is still very dangerous to start an ICO in this market environment, so there are even fewer “newcomers”: only 11% of ICOs opened and closed within this month.

Most ICOs performed below 1x, so it is currently much easier to grab a good token on exchange at its lows, without freezing your crypto in an ICO for months. 

The Amount of Funds Raised in Crypto Was Also Creeping Down

This month continues the downward trend with a 10% drop in the amount of ETH raised.

Total amount of crypto raised, in millions of ETH.
Diagram 7. Total amount of crypto raised, in millions of ETH.

If we convert these funds to the current price of ETH ($411 as of July 5), we see that storing money in crypto is no longer a good option for ICOs. Even within a month the market could lose more than $50M.

Total funds raised in fiat and crypto.
Diagram 8. Total funds raised in fiat and crypto.

Total Token Supply is Massive. All ICOs this month collected 84,700,321,851, or nearly 85 billion tokens. That is about 13 tokens for every human being currently alive on Earth.

In terms of timing, ICOs have two attractor points: the middle and the end of the month. A lot of ICOs concluded at market lows, losing potential value.

Number of ICOs ended compared to ETH price.
Diagram 9. Number of ICOs ended compared to ETH price.

For some time the amount of crypto raised was rather stable, but as we see a 10% drop this month, we cannot say it’s still all about the USD-to-crypto pair. A general distrust is apparent in crypto fundraisers.

The Median Amount of Funds Raised Decreased by 49%

What a terrible drop. It looks like we climbed a little in June, only to fall flat on our faces this month…

Median funds raised compared with total funds, in millions of USD.
Diagram 10. Median funds raised compared with total funds, in millions of USD.

All medians regarding ICO success are dropping as well.

Median funds raised, in millions of USD.
Diagram 11. Median funds raised, in millions of USD.

Trying to be optimistic, we could say that the median for successful ICOs has moved further away from the other two medians, just like we saw at the end of bullish 2017.

The Top 10 ICOs Accounted for 57% of the Total Funds Raised

This has never happened before, with several big ICOs taking the majority of funds. We are getting closer to a Pareto distribution, which we elaborated on in our Q2 ICO report.

Top 10 ICOs compared to the rest.
Diagram 12. Top 10 ICOs compared to the rest.

We should mention Atlantis Blue Digital, which raised $66M for securing the semi-precious gemstone known as Larimar. Moreover the ICO was launched on Stellar Network, which is still quite rare. This proves that amid the global decline there is still room for successful ICOs, even in such a niche market.

Total funds raised by top 10 ICOs, in millions of USD.
Diagram 13. Total funds raised by top 10 ICOs, in millions of USD.

In the graph below the biggest category is “above $50M,” which is somewhat misleading. There are only two projects in that largest category, so we suggest comparing both graphs to understand the distribution.

Distribution of successful and unsuccessful projects by funds raised, in millions of USD.
Diagram 14. Distribution of successful and unsuccessful projects by funds raised, in millions of USD.
Distribution of ICOs by funds raised (from the 65 that stated their results).
Diagram 15. Distribution of ICOs by funds raised (from the 65 that stated their results).

This month, only 22 ICOs hard-capped under $10M, raising around $56M altogether. 45% of them were successful, which is quite high compared to the general success rate of 21%.

Recall that success is not when you raised more than others, but when you raised as much as you planned. In this regard, only 13 ICOs raised 100% of their hard caps, collecting $115M altogether.

Distribution of projects by funds raised, as a percentage of the target or hard cap.
Diagram 16. Distribution of projects by funds raised, as a percentage of the target or hard cap.

Each month fewer and fewer ICOs covered more than 90% of their caps. This month most of them were low-capped ICOs.

To paraphrase Seneca, one of the greatest stoics, the less you want the more you have. In other words, be realistic in your caps to get proper funding.

39% of ICOs Did Not Provide Results Following the Sale

Although this is a little bit better than 47% last month, it’s still disappointing.

Dynamics of ICOs with no financial information.
Diagram 17. Dynamics of ICOs with no financial information.

This suggests that such ICOs are almost certainly dead or funded very poorly. Most of such ICOs will join the list of cryptocurrencies forgotten by the world.

Very Few “Ninjas” Attacking the ICO Market this Month

However, it’s still quite clear that the success rate is dropping as time passes. It’s happening mainly because of private investments and preliminary arrangements. Due to the emerging uncertainty about regulations, the ICO market looks more like traditional investments. Many ICOs are trying to limit the number of participants, which seems to be contrary to the decentralized spirit of crypto.

Distribution of ICO quantity by duration.
Diagram 18. Distribution of ICO quantity by duration.

It’s interesting to notice that the 5 fastest ICOs concluded within 5 days after the start, were capped under $5M, and were 100% funded.

Distribution of funds raised by ICO duration, in millions of USD.
Diagram 19. Distribution of funds raised by ICO duration, in millions of USD.

The longest ICO ending this month was Nimbus Token, which lasted 194 days and raised $11.6M.

Successful ICOs started and concluded within July raised only $16M. The two biggest ICOs this month, accounting for 27% of the total funds raised, started in April and early May.

Key Findings

  • The overall amount of funds raised was $504M, decreased by 19%.
  • The total amount of crypto raised was ETH 1.1M, decreased by 10%.
  • The total number of ICOs was 106, one fewer than the previous month.
  • This month, there were only 10 pre-ICOs, which raised around $91M. The biggest pre-ICO is Online, which collected $50M, once again trying to reinvent the internet.
  • 21% of ICOs were successful, compared to 30% last month.
  • The median funds collected by all projects comprised $3.8M, decreased by 49%.
  • The top 10 projects collected 57% of all funds.
  • 39% of ICOs did not report the amount of capital raised.
  • 90% of ICOs launched on Ethereum.
  • The finance sector is still the most popular sector among blockchain projects. 13 ICOs were completed this month, collecting 12% of the overall funds. However, funds are spreading among other categories. Two months ago, financial ICOs accounted for 37% of the market.
  • The security wave is starting. This month, 3 ICOs officially declared the issuance of a security token.

Conclusions

Is crypto falling apart?

Both total funds and the number of ICOs are decreasing each month. However, the general idea of decentralized solutions is still alive. Every crypto enthusiast knows how bad crypto feels in a bear market. However, it’s still not the “death of the ICO,” but rather a long-lasting market purification.

There are many good projects developing high-profile solutions for a decentralized world, where the main work is done outside multi-million dollars fundraisers. The less money you have, the more incentives you have to work harder. Let’s remember the case of Ethereum, which raised around $18M at first, cashed out a huge portion of this at a low rate, and still manages to deliver a great product.

We are seeing future ICOs whose main goal is not to raise funds for business development but to distribute assets among communities.

Suicide.Ventures will continue to provide ICO analyses on a monthly basis.