The cryptocurrency market is booming and the industry is, no doubt, attracting a lot of investors from all spheres of life. Keeping this in mind, the number of Initial Coin Offerings (ICOs) has skyrocketed over the last six months. Architect Partners conducted a thorough research, analyzing data collected from tokendata.io to come to stark conclusions regarding the ICO market.
There have been significant achievements in the ICO market as numerous ICOs that have raised millions of dollars worth of investments. More than 40 ICOs have been initiated since the beginning of June raising more than $1.6 billion. The median earning of each ICO was determined to be around $19 million.
According to the researchers, an ICO is considered a failure if they do not meet at least 75% of their hoped token distribution. In line with this definition, only one ICO failed to meet its target in June. However, as the market matured and more players offered their coins, the condition only got worse. From July 1st to September 25th, a 59% rate of failure was observed for all ICOs.
Understanding the market
The reason behind the majority of ICO failure can be accounted to the maturation of the market. People are treating ICOs like any other investment by basing their decision to invest or not on a critical evaluation of the ICO. An ICO being defined as a failure has no bearing on whether the ICO will lead to being a great project. ICOs are mostly governed by the choice of people and people can choose to follow a certain ICO for any number of reasons.
A two-tier market has quickly developed due to crowd behavior and as the regulatory environment around ICOs toughens up, quality is also becoming increasingly important factor in determining which ICO a person chooses to invest in. Some measures, which can be taken by ICOs to attract investors, include the following:
- Careful and complete preparation before initiating ICO
- Thorough project development
- Clear and well explained basis for a robust token economy
- Quality of the team involved for token distribution
It has been observed that companies are not completely prepared before initiating the ICOs, which leads to their higher chances of failure. As stated before, the ICO market will have to act mature just like other trading markets in order to attract investors or it risks loosing its spark.