According to a study conducted by ICO advisory company Satis Group , more than 80 percent of initial coin offerings (ICOs) in 2017 were scams. Report also says that in 2013, the market was comprised of 14 cryptoassets that were largely similar to Bitcoin. Now, there are more than 1,500 cryptoassets with over half being tokens created on top of other networks.
Following are the key points of the study:
- Although half of all cryptoassets are classified as tokens (built on other platform networks), nearly 90% of the value resides in coins.
- Further, the velocity of tokens is 4x that of coins.
- The median platform network trades at 4x the total value of the overlying tokens built on it.
- 12% ($5.4B) of the circulating supply of ETH is held by the top 115 ICO’s, and 3% ($1.3B) is held by the top 20.
- The current ETH balances of the top 10% of ICO’s is equivalent to 50% of the total funds raised to-date, while the top 2% holds 10%.
- Over 70% of ICO funding (by $ volume) to-date went to higher quality projects, although over 80% of projects (by # share) were identified as scams.
Report further revealed that total funding of tokens in 2017 was $11.9 billion out of which $1.3 billion of ICO funding went to scams. 1/10th of all ICO fundraising went to identified scams and the vast majority of the $1.2B was from just two projects, Pincoin ($660M), Arisebank ($600M).
The study surrounds the lifecycle of an ICO and has classified ICO’s into groups, with the following definitions:
- Identified Scam (pre-trading): The project that showed availability of ICO investment through a website or social media with contribution address did not have/had no intention of fulfilling project development duties with the funds, and/or was deemed by the community (message boards, website or other online information) to be a scam.
- Failed (pre-trading): The project was able to raise funds but did not finish the complete process and was closed, and/or refunded investors as a result of unavailability of funding.
- Gone Dead (pre-trading): The project was able to raise funds and finished the process but was not listed on exchanges for trading and has not contributed anything on Github.
It has also classified ICO’s into successful, promising and dwindling groups. On the basis of this classification, out of the total number of ICOs, it was found that almost 78% of ICO’s were Identified Scams, 4% Failed, 3% had Gone Dead, and 15% went on to trade on an exchange.
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