ICOs Raised 95% Less in January 2019 Than in Their Best Month, Data Shows

Omar Faridi
  • ICOs are not receiving as much capital as they did during the crypto bull market of 2017.
  • However, ICOs are still performing better than what they did January 2017.

Investments in initial coin offerings (ICOs) have dropped by nearly 95% according to data from cryptocurrency analytics firm Coinschedule.

In March 2018, ICOs raised over $5.8 billion, however Coinschedule reported the popular fundraising method attracted only $291 million in total investments during January 2019. Although ICOs have not generated as much capital as they did when blockchain project valuations were a lot higher, Coinschedule pointed out that ICOs still raised over 70% more funds last month than they did in January 2017.

When compared to the time period during which cryptoasset prices hit record-level highs in late 2017 and early 2018, the ICO market has slowed down considerably. Coinschedule’s data shows there were less than 50 ICOs launched in the first week of January 2019. Moreover, the ICO ecosystem received only $6 million in total investments from 424 different public token sales tracked by Coinschedule. Significantly, this is the smallest amount raised by ICOs since 2017.

$1.4 Billion Raised From ICOs In Q4 2018

As CryptoGlobe reported last week, ICOs netted 25% less in funding during Q4 2018 when compared to Q3 of the same year. This, according to data from ICOBench which also revealed in the same crypto market report that there were 594 ICOs completed in Q4 2018. During the previous quarter, 554 ICOs were successfully conducted (as they managed to reach their fundraising target).

Data from ICOBench revealed that $1.4 billion was raised by ICOs in Q4 2018, while Q3 of last year saw public token sales generate $1.8 billion - according to ICOBench.

As covered, a study conducted by Satis Group found that more than 80% of ICOs launched in 2017 were scams. However, the fraudulent token sales only managed to attract 11% of total investments made in ICO projects (during 2017). According to Satis Group’s report (published in July 2018), approximately 70% of the funds raised by ICOs went towards helping legitimate crypto and blockchain-related projects.

Security Token Offerings (STOs) Provide Regulated Investment Options

In December 2018, Jerry Ji Guo, a Chinese-American who previously worked a journalist for the New York Times, was charged for his alleged involvement in a $3.5 million ICO-related scam. Guo is now facing up to 20 years in prison as he was found guilty of orchestrating fraudulent schemes in which he stole large amounts of cryptocurrency from blockchain startups that had employed him as a consultant.

Due to the large number of scams orchestrated under the guise of ICOs and the lack of proper regulations for the crowdfunding method, many companies have introduced security token offerings (STOs). These are regulated token offerings that allow investors to acquire cryptoassets which are tied, or backed by, real-world assets such as stocks, debts, commodities, and real estate.

Blockstream CSO Samson Mow's Firm to Launch Security Token for New Sci-Fi Game

Samson Mow, the CEO of Pixelmatic, a Shanghai-based video game development firm, and the Chief Strategy Officer (CSO) of Blockstream, a leading blockchain and cryptoasset company, is planning to launch a security token on the Bitcoin (BTC) blockchain through a sidechain, called the Liquid network.

According to CoinDesk, Pixelmatic will be issuing security tokens for its upcoming science fiction game, called Infinite Fleet. The central theme of Infinite Fleet will involve a humans versus aliens space fighting game.

Samson Mow: ICO Projects Never Intended to Launch Working Products

As mentioned in the sci-fi game’s Twitter profile, its players will be “taking command of a fleet and joining the epic war for humanity’s survival.”

Notably, Mow has criticized the approach taken by many blockchain projects which raised a large amount of funds by launching initial coin offerings (ICOs) that used Ethereum’s ERC-20 tokens. Commenting on the controversial fundraising method, Mow remarked:

My main criticism is there’s no substance. The leaders of many ICOs have no intention of actually creating something.

Dual-Token Model for Fulfilling Multiple Purposes

The former Chief Operating Officer (COO) at BTCC, a Chinese bitcoin exchange that closed down in September 2018, explained: 

That’s why we’re doing a security token, not a token with no obligation.

He added that Infinite Fleet’s cryptocurrency project will be based on a “dual-token model” which will issue two tokens in order to fulfill two different purposes (or use cases). Instead of selling unregistered financial products, Mow’s firm will reportedly be issuing tokenized securities which will adhere to regulations that are similar to those which apply to traditional (financial) securities.

The Blockstream CSO confirmed that Infinite Fleet’s security token sale will be conducted privately. According to Pixelmatic’s management, the game's developers are planning to raise $16 million by the end of this year. They also believe that crypto exchanges will increasingly be listing and enabling the trading of compliant security tokens towards the end of 2019.

Pixelmatic’s team will be issuing a utility token, called INF, which will reportedly be distributed randomly to Infinite Fleet’s players. Users will receive INF tokens based on their “proof-of-participation.” In other words, users will be rewarded based on how much time they spend playing the game and whether they take part in “major” in-game events.

Liquid Network Is “Well-Suited” for Financial Transactions

Explaining why his firm will be launching the new token on the Liquid sidechain network, Mow said:

I do believe in the technology.

He added that it’s “well-suited” for financial transactions because it does not overload the main blockchain with smart contracts.

Mow also mentioned that the Liquid network allows for a greater level of privacy than what’s currently available on the Bitcoin blockchain. This, as Liquid uses “confidential assets” which is an experimental privacy feature that hides the type of assets associated with crypto transactions.