Initial coin offerings are often considered to be the holy grail for blockchain projects. This business model allows anyone with an innovative idea to potentially raise millions of dollars. Unfortunately, the overall ICO statistics are anything but impressive in this industry right now.
The ICO Industry is Still Troubled
While most people will readily agree there are just too many ICOs to keep tabs on right now, it is evident there are plenty of other concerns as well. Not all of these companies will be successful in the long run, with a lot of them disappearing before the projects can even hit their stride. Recent statistics from Satis Group researchers show very few of these ICOs are legitimate in the long run.
To do their work, the group of researchers divided cryptocurrency ICOs into different categories. First of all, there are the scams, which often attempt to raise money without ever fulfilling their promise or showing any working code. These projects are a lot more numerous than one might think at this stage, which is quite worrisome. The number of failed companies is not small either, which only makes this industry even more troublesome to deal with.
As one would expect, there are also companies which successfully complete the funding and development process but do not get listed on any exchanges. These are not hard to come by, even though ERC20 tokens tend to make their way to platforms such as EtherDelta regardless of the success achieved by such projects these days. Despite all of this, it is still important to keep an eye on these projects as well, since they tend to cause a lot of friction for investors who are looking to recoup their initial contributions.
So far, the research shows that 81% of ICOs can be labeled scams right now. Additionally, 6% of these projects have failed, with an additional 5% considered dead in the water as of right now. Just 8% of all initial coin offerings make their way onto a reputable cryptocurrency exchange, which is next to nothing when looking at the bigger picture. That’s a very worrisome statistic, albeit one that is not easy to improve by any means.
Of the projects listed on exchanges, it seems the majority are running out of steam as of right now. This is especially true when looking at projects which raised between $50 and $100 million, as over 55% of them are struggling to deliver a working project or maintain a transparent roadmap. These concerns are nothing new in the world of ICOs, although it is evident things have been going from bad to worse in this regard as of late.
When looking at the projects which raise more money, it seems the higher-cap ICOs are far more successful compared to the rest. Although they may still run into trouble at a later stage, it seems any project with a market cap of over $1 billion is doing just fine right now. Getting to that level is very difficult, as it requires a working product and roadmap first and foremost. Given the growing number of ICOs failing to meet those standards, it is only normal that very few of these projects ever get to $1 billion.