In the first part we gave analysis of ICO Market data, collected from 3300+ listed projects on ICObazaar. Now let’s take a look at the market trends of the ICO process itself.
New fundraising forms: STO, DAICO, IICO, CTM
More and more market players admit that the title “ICO” itself is compromised. While part of the projects leans toward STO, others prefer new forms of crypto crowd sales like DAICO, Interactive Coin Offering or Continuous Token Models.
Security Token Offering (STO) is held when token is backed by real assets or profits or company revenue. These tokens are protected from speculations and scammers, more like a traditional security, but in electronic form. Moreover, such a token meets all requirements of the U.S. Securities and Exchange Commission (SEC), which allows it to completely legally implement the token sale in the USA. The first security token platform Polymath data shows that STO will prevail on the market by 2020 and will be more than $10 trl.
(Source: Polymath, 2018)
DAICO is a hybrid solution of ICO and DAO, a model that allows the company to attract a solid investment, but at the same time provide investors with certain levers of management. It was Ethereum founder Vitalik Buterin who suggested this modification in order to improve ICO processing.
Interactive Coin Offerings is a protocol from creators Jason Teutsch and Vitalik Buterin that suggests a slightly different model of crowdsale that ensures certainty of valuation and participation at the same time. Dynamic mechanism then determines the desired number of purchases for each valuation, which leads to the final price that must satisfy both goals.
Continuous Token Models assumes that “instead of pre-selling tokens during a launch phase, the tokens are minted as needed through various means. The tokens are then dispensed for services rendered in the network”. Such continuous token models could enable small issuer specific bounty networks as well as an ongoing generation of non-fungible assets.
The idea is not enough, the product matters
In 2018 a steep roof-like idea does not automatically mean success anymore. “Game-changing” or “decentralising everything” is not the key. The product should meet industry demands, be scalable and integrative. The team must be strong and experienced, have notable advisors onboard and and a clear vision on funds spendings proved by a clear roadmap. Can I see the code on Github? No? Next!
Legal and Marketing
If in 2017 it was possible to start an ICO without hiring a lawyer, today more and more projects will undergo regulation and issue security-tokens, which involves the payment of dividends/profit share. This is a simple and understandable model, attractive for most investors, especially for traditional investment natives.
Due to the fact that 80% of the money now comes from large investors, it is not necessary to spend hundreds of thousands on your lending traffic, if you can more accurately work with large investors and funds. Moreover, the cost of buying traffic and publications grows even faster than the rate of some crypto-currencies.
The cost of conducting ICO, purchasing traffic and promotion on ICO trackers grows every month. Experts say that if in September 2017 it was possible to arrange an ICO for $60 thousand, in 2018 it costs at least $125 thousand. It becomes more difficult to attract investors, an increasingly important role is played by team personal participation in the promotion of the project and personal communication with major investors.
The current crowdsale model is still at the very beginning of its development and will face a large number of changes that will be bring more transparency, reliability and security, both to investors and projects themselves.
New forms of token offering are emerging, allowing projects to receive funds for the development of new ideas. Analysts compare today’s processes with the development of the Internet in 2000, the industry is starting to seek solutions to the real business tasks, more and more projects tend to register security tokens, as connecting your virtual token to real token is an additional confirmation of reliability for the user.
Even in a high-tech industry like the token market, no one has abolished natural selection – those who can build more proactive management and will be more effective in their work will survive. Given that at the moment more than half of the projects do not reach the set goal for fund-raising, it is obvious that there remains a huge field for improvements.