Over half of all initial coin offering (ICO) projects failed to complete their crowdfunding in the second quarter of 2018, revealed cryptocurrency data firm ICORating in its latest report.
The independent ICO analysis portal found that 55% of the ICOs failed in Q2 2018. That is 5% more than the number of failed ICO projects recorded in Q1 2018. Nevertheless, money continued to flow in the ICO projects as a whole, raising from $3.3 billion in the first quarter of 2018 to $8.3 billion in the second — amounting to a 60% surge in investments.
[Editor’s note: The EOS crowdsale technically raised $4 billion over the course of a calendar year, but startups are often said to have “raised” the funds during the month or quarter in which their ICOs concluded.]
The ICOs that offered service and utility tokens were at the forefront of failure. ICORating said that “emission conditions, token type, and metrics had [an] indirect effect on fundraising success,” indicating that not all the unsuccessful ICOs could have been of poor quality.
The vast discrepancy led ICORating to conclude that “the overall quality of projects has significantly worsened.” A small number of projects have reportedly raised an average of $50 million per project, while the failed ones couldn’t even cross above $100,000 worth of investment. PumaPay, a reasonably-simple cryptocurrency payment and billing solution, single-handedly raised $117 million in May 2018.
The ICORating report also highlighted the bearish angle of the second quarter, revealing that the median return for the token in Q2 was a 55% loss. It is poor in contrast to the first quarter’s impressive return of 49.3%. However, the decline can be blamed the cryptocurrency market’s dismissive performance in Q2. Bitcoin, the topmost digital currency, has already declined over 50% in 2018.
The study also found that 57% of the total ICOs aimed to raise funds at the idea stage. But these projects raised the lowest amount of funding on average. The report said:
“The highest percentage of unsuccessful ICOs in terms of product readiness arose from projects at the idea stage. 58% of such projects failed to raise more than half a million dollars.”
Instead, a majority of investors were interested in participating in projects that had an MVP ready. These ICOs raised as much as $34.5 million on average in crowdfunding.
The most popular industries according to the amount invested in Q2 was finance and blockchain. EOS, a blockchain software architecture, had raised $4 billion over the past year, while PumPay, a finance sector project, as mentioned above, was one of the most successful ICOs in Q2.
Meanwhile, concerning popularity, financial, gaming & VR, investment, blockchain and social media industry witnessed a more substantial number of ICO projects. The number of gaming projects doubled compared with Q1.
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Last modified: May 20, 2020 6:08 PM UTC