Nearly half of this year’s crypto-related endeavors began their ICOs with nothing more than a white paper and an idea.
It’s no secret that a lot ICOs start without an MVP in place, or that many have simply tapped the services of a developer to generate the smart contract for their token. Recruiting developers and writing code costs resources after all, and money’s is difficult to come into me without an ICO, hence the eagerness to crowdfund first and code later. New research by ICORating indicates the prevalence of this trend among cryptocurrency projects. Their market research report disclosed that 46% of the ICOs that launched in Q1 of 2018 did so with no development whatsoever.
A mere 26% had an MVP in place, and 15.5% had an alpha release all set at the time of their ICO. It’s become a common habit for projects, especially those working on blockchain infrastructure, to kick off with just a roadmap and whitepaper as an ERC20 token before starting a token swap once their mainnet is established several months after the fact. The trouble for investors, trying to evaluate these projects, is that they must trust the claims of throughput and other performance-based metrics, since there is no way of ever confirming them.
ICORating’s Q1 data also displayed that the median return on tokens has dipped by more than 10% compared to Q4 of 2017, and now sits at 49%. Additionally, only 21% of this year’s tokens have been listed on exchanges, compared to 33% for the previous period. Perhaps the most compelling statistic that shows the difficulty investors have had in returning a profit is the fact that 83% of tokens listed in Q1 traded well below their ICO price.
A final figure of interest from ICORating involves crypto funds. These have proliferated over the past 18 months, with a string of major investors from the worlds of VC and traditional finance penetrating the space. These funds tend to get into the market with much fanfare, but have a tendency to leave with a whimper. ICORating notes that only 119 of the 219 crypto funds it assessed are actively operating, and nine funds shut down in the first quarter of this year including Crowd Crypto Fund and Alpha Protocol.
“We expect that more funds may be closed in the future, due either to inefficiency or legal problems with regulators.” Nevertheless, with the remaining funds overseeing almost $28 billion in assets, crypto funds are big business.
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