Initial Coin Offering–Despite the sinking price of cryptocurrency across the market, initial coin offerings have managed to fair well in terms of growth through 2018. While the entire industry is embroiled in a bear cycle that has continued into the eighth month of the year, ICOs have doubled since 2017, while drastically increasing the amount of investment funds.
According to a report by ICORatings, a website that publishes independent research about upcoming and launched projects, the entire ICO market has doubled within the last year, with projects having already raised $11 billion throughout 2018. To put that figure in perspective, ICORatings reports that ICO investing through Q1 and Q2 in 2018 is ten times that over the same period last year, showing a substantial boom in investing in new coin projects. While the ICO market has drawn significant criticism over the last several months due to the propensity for scams, empty projects and unproductive profit seeking through cryptocurrency, the overall health of ICO investing appears to be thriving.
The report includes specific details about Q2 2018, stating that 827 new projects raised over $8 billion in funding, up from $3.3 billion in Q1. The 151 percent increase through the second quarter of the year is reflective to the interest generated by cryptocurrency, in particular the low barrier to entry for startups and developers that is afforded through the initial coin offering model. However EOS, currently the fifth largest cryptocurrency by market capitalization, made up the largest share of the ICO pie,
“Funds raised by EOS project account for most of this increase, they have collected $4,197,956,135 for a year-long ICO.”
ICORating also highlights Europe as the leader for all ICO projects, launching 46 percent of new developments this year, with North American investors contributing the most capital. In addition, the report mentions that Asia has seen an increase in investment capital flowing into ICOs, despite a decrease in the overall number of projects launched.
While the current atmosphere surrounding cryptocurrency and Bitcoin hinges upon the U.S. Securities and Exchange Commission’s ruling on the creation of a BTC ETF, ICOs have already started to incorporate larger amounts of institutional investors. The report shows that institutional capital in ICOs is on the rise, while retail investment continues to decline. ICORating finds this to be a favorable position for the growth of the ICO market and general well being of cryptocurrency, as greater institutional interest leads to higher standards in the development of the projects. In addition, the fundraising of ICOs will become more dependent upon “how well projects cooperate with investment funds,” thereby raising the standard across the industry.
Despite the positive news published by ICORating on the growth of the market, reports earlier in the year revealed the industry still has room to grow in terms of achieving higher quality. A study published by Statis Group found that 80 percent of ICOs in 2017 would fit into a category of “scam,” relaying the experience of investors who have found themselves duped by empty projects or teams that run off with investment funds. However, most have recognized that ICOs offer a high degree of innovation as a model for funding new projects and, despite the bad actors filling the space, are helping to grow the industry in terms of development.