ICO Funding Slows Down, New Forms of Funding Picking Up
In 2019, tokens sale volumes remain low, although a significant increase was seen in ICO sales this March.
At the end of March, ICO funding reached a temporary peak above $49 million. Token sale activity picked up this month, stemming a long slide that led to a February low in fundraising at around $22 million. The low results made analysts at the Wall Street Journal see the ICO sector as “essentially dead”, based on a mere $118 million raised in the first quarter of 2019.
At this point, the ICO market is still quite far from the peak times in 2018, where more than $7.8 billion were raised. In 2019, token offerings remain quite slim in absolute terms, with no large-scale projects raising hundreds of millions as easily as in 2017 and 2018. As the cryptocurrency market is at a crossroads, the higher ICO results in March are still insufficient to call it a recovery.
One of the positive developments for token sales is the drive of leading exchanges like Binance and Huobi to create token sale platforms, with specialized events. However, those token sales are quite limited compared to previous fundraising bonanzas, and the platforms are much more careful in selecting promising projects. Previous research has shown that as much as 81% of token sales in 2017 have ended up as failures or scams.
More recently, crypto critic Nouriel Roubini added to the ICO skepticism, by adding comments that token-based startups are inferior to traditional businesses.
However, some ICO tokens have managed to rise to the top, and leading projects have risen from the multitude of tokens issued in the past years. Projects like EOS and TRON were prominent in the ICO scene, and went on to command leading positions among digital assets, while delivering a decentralized product. Now, there is also a secondary wave of airdrops and token offerings based on those newly created networks.
Currently, hopes are pinned on security token offerings, as several platforms in the USA and Europe are ready to start secondary trading for security tokens. However, the offerings are still limited, and are reaching out to a new type of investors compared to ICOs, which were mostly seeking to appeal to cryptocurrency holders.