Majority of small-cap cryptocurrency tokens raised through initial coin offerings (ICOs) are at the moment of lesser value compared to the startups that released them raised via their crowdfunding sales, according to a recently published report.
The report which was made by cryptocurrency research firm Diar, the 562 ICO tokens ranked outside of the 100 largest cryptocurrency market caps have jointly lost $5 billion in nominal value against what these sales made for the funding teams, with about 70 percent of individual tokens going through losses.
Significantly, that great decline does not encompass the value of the tokens kept for the development team or in some way not made accessible via the ICO, which in some instances would make that post-ICO performance seem even more gloomy, based on the number of those reserved tokens that have been put into circulation.
Similarly as significant is that 324 tokens that jointly made $2.3 billion are yet to influence any one of the hundreds of cryptocurrency exchanges to list them on their platforms. Another 44 tokens that made a joint $1 billion have been listed on at least one exchange but have almost no trading volume, as well as on –Bankera- which made $150 million.
According to the report, the worst-performing ICO token is part of Sirin Labs (SRN), a startup launching a “blockchain phone” known as the “Finney.” SRN has declined by over $141 million, a drop of over 89 percent within nine months, after making $158 million via its ICO.
One of the reasons behind SRN’s poor performance may be as a result of unexpected rivalry in the blockchain phone market.
PumaPay is close behind Sirin Labs, which made $117 million but is presently worth $15 million. Envion and Paragon both made about $100 million and presently hold market caps of just $4 million and $3 million respectively.
Oddly, investors are not alarmed by the declining returns, even as the general consumer interest in cryptocurrency has got to a relative low-point. Assessments on ICO fundraising defer, yet CoinSchedule, which has recorded information from 789 token sales conducted this year, estimates that blockchain startups have jointly made over $20 billion this year.
Those figures could be substantial but they are an indication that even a bear market and increased laws can suppress interest in this emerging fundraising model. If CoinSchedule’s data is right, ICOs have risen over $1 billion in every month except August and July, a mark that token sales hit only twice in 2017 through a yearly total of $6.2 billion.
With this being stated, even though ICOS have jointly made a pleasing sum in 2018, individual projects that usually found it challenging to achieve their fundraising targets.