The Strategist

ICO market stops growing and focuses on problem solving

05/07/2018 - 12:46

The volume of investments in ICOs in the first quarter of 2018 exceeded the same indicator of the fourth quarter of 2017, but showed an insignificant increase of only 5%. Investors put money in usual for them projects, such as blockchain infrastructure, financial services, games industry and virtual reality. At the same time, according to experts, this year's trends will solve problems related to legal purity of transactions and transparency of the crypto market participants, as well will eliminate inefficient crypto-currency funds.

Various projects around the world attracted more than $ 3.33 billion through the ICO mechanism in the first quarter of 2018, the ICORating agency calculated. This is 5% more compared to the fourth quarter of 2017 (more than $ 3.14 billion), which provided more than half of the funds raised at ICOs for the whole last year ($ 6.18 billion). The statistics included data on completed initial placements of 412 token projects.

According to the research, only less than half of the ICOs managed to raise more than $ 500,000. The average volume of one placement was only $ 8 million, while it was twice as high in the last year ($ 15.7 million). At the same time, average duration of the fund raising campaign doubled. If in 2017 the average term of ICO was 30 days, and two months - in the last quarter. However, a number of large projects (Zeepin, Neuromation, Arcblock) collected the necessary amount of funding on the first day of the ICO.

The largest ICOs in the period in the question were Bankera (a new crypto currency bank), Envion (mobile decentralized infrastructure for mining) and Zeepin (a platform that provides copyright protection and funding for creative industry participants). The largest number of ICOs was carried out by companies engaged in blockchain infrastructures, financial services, games industry and virtual reality.

ICORating says that one of the hot topics of 2018 are problems with the rule of law. Thus, a quarter of the projects (109 out of 412) did not have a legal entity at the time of the ICO. A significant part of the projects are not paying proper attention to KYC and AML (the policy of "know your customer" and anti-money laundering measures), which affects activity of large investors (crypto-currency funds) trying to avoid serious risks.

At that, crypto-currency funds themselves, which are managing $ 27.8 billion in total, have a low degree of transparency. 40% of them do not publicly disclose information about the asset management strategy and their CEO's names. Closure of such funds is yet another trend: in the first quarter of 2018, nine of them ceased to exist (for example, Crowd Crypto Fund and Alpha Protocol). "The current correction of the market will significantly affect profitability of the crypto-currency funds, which was huge in 2017. Many funds may be closed due to inefficiency or legal problems with regulators," the study says.