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Burning Billions: Tokens Cents on the Dollar Against Raised Capital
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While Initial Coin Offerings (ICOs) have to date raised double in 2018 what they did last year, the controversial fund-raising vehicle is seeing its popularity diminish to select projects. Diar number crunching shows that 70% of tokens are now valued at less than what was raised during their ICO. And with tokens having no equity representation, markets have shrugged off cash-on-hand as part of an enterprise valuation.

Public ICO statistics collected by TokenData suggest that August 2018 saw the number of projects successfully completing a fund-raising round hitting a one year low, standing at just 17 tokens (see chart). Ricky Tan, Founder of TokenData tells Diar that’s it’s unlikely that public ICOs and pre-sales will pick-up any speed for the remainder of 2018.

Still, despite the never-ending bear market of 2018, investors have dropped a hefty $12Bn into ICOs (see chart). And returns outside of projects with Ogilvy marketing know-how have, unsurprisingly, not been stellar by any means.

|| UNDER THE FOLD, UNDER WATER

Outside the Top 100 cryptocurrencies being traded, there is a $5 Billion shortfall against the total amount raised during an ICO for the 562 tokens with reliable information about their fund-raising. 7 out of 10 tokens that are sitting below the screen fold have valuations that are now under their initial raise.

The story is quite telling when accounting only for the tokens that are below the funding teams received. 402 out of 562 projects that raised over $8.2Bn are now worth $2.2Bn – an eye watering $6Bn loss in market capitalization value against actual cash paid out to development teams.

Depending on when the funds were raised, teams might be sitting on even larger crypto coffers (Diar, 10 September). Of course, bad treasury management and holding onto crypto for speculative purposes could also have backfired in 2018.

Even if one is to assume zero capital raised for all the tokens currently listed outside the Top 100 with no ICO information, markets have spoken and tallied a $1.3Bn loss against the funding raised. In fact, outside the Top 20 cryptocurrencies, market capitalization stands below ICO fund-raising totals to the drum of over $700Mn.

|| WHO DECIDES WHAT’S ABSURD?...

While the market cap board shows crypto to be valued at over $200Bn, Diar estimates outside the top 5 cryptocurrencies, exchange tokens and Stablecoins, that cryptocurrencies have, supposedly, a value just over $35Bn. Yet no project has taken off and sustained any sort of audience (Diar, 20 August).

|| MR AMBASSADOR, DID YOU GET THAT PAID IN BITCOIN?

Sirin Labs, the third largest ICO which raised $158Mn, had deep enough pockets to persuade football/soccer superstar Lionel Messi, arguably one of the most popular athletes in Europe to be their brand ambassador. It hasn’t helped keep up the company’s token price.

In fact, the project’s token, aimed at funding a “blockchain phone” is literally the worst performing token in total dollar value with their market cap losing $141Mn (see table). The phone is slated to launch at the end of November.

|| UNLISTED, UNACCOUNTED – UNREAL?

324 tokens, over a third of tokens that completed an ICO and that raised over $2.3Bn in 2017-18 have yet to have their token listed on any exchanges. Half of these projects have completed their funding rounds in 2017.

And 44 tokens that have raised $1Bn sit on the bottom of the table due to practically zero liquidity, and no information about distribution of token supply. Bankera, which raised $150Mn in February is one of them - the fifth largest ICO outside of private sales.

|| MORE THAN MEETS THE EYE

With the mega raises that the ICO market has witnessed over the past 12 months, the funds raised by some of the top cryptocurrencies, at first glance, almost look humble. Outside of EOS, the top projects raised $380Mn – their market capitalization stands at $6.7Bn.

However, the success of the tokens prices has done well for the foundations and development teams. The projects teams are sitting on over $2.6Bn from their own token holdings as financing for future development (see table).

Link to post: https://diar.co/volume-2-issue-38/
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