Checking ICOs, Again

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It has already been three months since I last checked the ICO scene. At the time, I suggested ICOs were probably slowing down. New data seems to confirm this but all points to other trends not detected before. Figure 1 presents the latest data

ending on 31 May. 159 ICOs were successfully completed between March and May raising over 4 billion dollars. The data includes the Telegram wh.ich collected over 1.7 billion dollars in spite of not holding a public ICO phase. Telegram can indeed be seen as a statistical “outlier” making last April the most successful month ever. Note that the number of successful ICOs did not increase overall. March matched February with 57 ICO but was much more skinny regarding resources. April and May are fatter but do not exceed the number of ICOs of the previous months. So the slowdown seems to be converging to a stable number of ICOs per month

In the last three months, median ICO investment drop but then managed to recover in May as shown in Figure 2.

It now stands at 14.2 million, still lower than the maximum reached in January this year. Note the somewhat negligible impact of the Telegram ICO on median investment in the sector. In spite of the massive infusion of capital, the median value only increased marginally in April. Since Telegram is an outlier, using the average instead will be misleading as most ICOs in that month were relatively small in size. The April average is over 40 million, an amount only two ICOs other than Telegram were able to attract.  In fact, 61 percent of all April ICOs did not surpass the 10 million dollar mark.  Beware that June ICO data will report the recently finalized EOS ICO which mustered over 4 billion dollars. So we see the emergence of unicorn ICOs while, on the other hand, most others cannot even raise 10 million.

Figure 3 shows that the ICO success rate increased in May after 25 percent decline in the previous two months. In fact,

May’s success rate is the highest since October last year.  However, the total number of May ICOs is almost 50% less than the one for October. Remember that the data includes ICOs that officially failed, the ones that reported no investment and a small group that had nearly zero income.  In sum, we have a lower number of ICOs with a higher probability of success, almost 50 percent. Much better than playing poker or blackjack.

The rise of Unicorn ICOs demonstrates that the Blockchain Economy has the same traits as the broader Internet sector where power-law distributions are a common occurrence.  Figure 4 depicts the distribution of ICO investments.

Telegram has had an enormous impact on the overall investment distribution as it represents close to 14 percent of the total. In fact, 1 percent of firms, the seven highlighted in the chart, has received 22.4 percent of all funds. Similarly, 10 percent attracted 52 percent of all funding.

All in all, we can highlight the following trends:

  • A smaller number of ICOs per month accompanied by a higher rate of success
  • A slight increase in the median ICO investment to just over 14 million dollars
  • The emergence of unicorn ICOs attracting massive amounts of capital
  • Confirmation of the power-law distribution nature of the blockchain economy
  • As a result, a few ICOs draw most of the capital invested whereas a significant number have to fight for the remnants

Cheers, Raúl