Dmitry Kornilov, Professor, doctor of economic Sciences, academician of RANS, senior analyst ICOBox
Michael reizin, co-founder of ICOBox
Dmitri Zaitsev, candidate of economic Sciences, head of international public relations and the Department of business analysts ICOBox
In some cases, the ICO project can be considered successful? To evaluate the possible use of different criteria:
- The amount of attracted funds at the stages of preliminary and basic;
- The existence of the project on the market after a year or more after the ICO;
- Listing on cryptomeria, the growth rate of the token, trading volumes and market capitalization;
- Fame and popularity in social networks and messengers, the number of search queries on the Internet, discussed in blogs, the increasing number of subscribers and the presence of major stakeholders;
- The possibility of using token project purpose (utility («useful») the tokens), lack of claims to the project by regulators, unique technical properties, etc.
All these criteria are important, but their significance varies depending on the stage of the project life cycle, a variant of which is shown in Fig. 1.
Definition of the main criteria for the success of the ICO is dependent on the life cycle of the project.
The ICO process can be considered as one of the first phases of the project, aimed at attracting funds for the implementation of ideas (innovation).
The criteria for assessing the value of the project at the first stage: DEA and ICO
The higher the value of the project, the greater the chances of success, therefore at the first stage is very important a detailed study of all aspects of the project.
The principle of error correction: the cost of correcting errors detected at the stage of project launch (engineering economic model of the token, writing the White paper (WhitePaper) and the source code) is ten times lower than the cost of fixing bugs identified during the testing phase of the token in the network, and hundreds of times lower than on changes in the phase of network operation (update, resistance to hacking attacks, the creation of network effects, compatibility, applications and network support).
Defects and errors in the operational phase, the network can do the project very expensive in relation to the risk of hacking the falling exchange rate, increasing cost of promotion and updating of the project, inability to zoom, etc. for Example, one of the most interesting projects of The DAO, who in 2016 has collected huge amounts of money (more than 12 million ETH, i.e., more than 6 billion U.S. dollars at the current exchange rate 1 ETH:$500), because of an error in the code has lost more than 60 million dollars due to a hacker attack «on contracts wallets» that occurred June 17, 2016. Project founder Stephane Twal called revealed the vulnerability of the «recursive call», which led the DAO to collapse.
The first stage is the most risky investments, since many projects are still at the idea stage, and about 50% of them either do not gain necessary for its implementation amount, or at all are Scam, con artists (Fig. 2, table 1). But at this stage it is possible to acquire tokens of projects in hundreds and thousands of times cheaper than at later stages of their development.
Based on site data tokendata.io icodrops.com, icodata.io coinschedule.com, cryptocompare.com, smithandcrown.com etc. in the figure, were analyzed over 1,700 ICO, the total amount of fees which was in the order of 19.78 billion U.S. dollars (Fig. 2, table 1).
Quality projects with a famous team, with experience in the industry, the ICO often early stage, collect a pre-planned amount (Hard Cap). These are the projects represent the lion’s share of all collected funds on ICO. Analyzed 1 723 ICO the principal amount of borrowed funds (92% of 19.78 billion U.S. dollars) accounted for only 380 (37+128+215=380) projects (tab. 2, Fig. 3). Thus, the degree of readiness for the ICO is a critical indicator for the project, especially given the fact that the token-holders become more discerning with the high number and diversity of the ICO, as well as a high percentage of fraudulent and failed projects (Scam&Failed).
In table. 2 it is demonstrated that for a group of projects with fees in excess of 50 million U.S. dollars, which consists of only 37 ICO, accounted for 53.2 per cent of all funds raised (10 520,3 million U.S. dollars), and the group with the amounts of fees from 25 to 50 million dollars, which includes 128 ICO, accounted for 21.8% of all attracted funds (4 304.3 million U.S. dollars). In the end, these two groups, including 165 ICO, accounted for 74.9 percent of all raised funds.
Thus, the famous Pareto principle – 20% of efforts give 80% of result, and the remaining 80% of the effort – only 20% of the results – in full you can apply to the ICO process. Determine 20% of the 1723 ICO is ICO 345. The ICO has 345 of 17.85 billion U.S. dollars or 90% of all the funds collected (Fig. 3,4).
For ICO analysed the Pareto principle is implemented as follows: 20% of the ICO account for 90% of all fees, and the remaining 80% of the ICO – the remaining 10% (Fig. 3, 4). Pareto chart (Fig. 5) more details reflects the degree of success of projects by groups of ICO.
In 2018-2020 will experience steady growth in the number of ICO, including the ICO is already well-established, well-known companies with a solid baggage of experience, ideas and great opportunities for «promotion» of the project. This trend stems from the fact that the ICO regulatory processes in many countries are becoming more clear and regulated, and ICO in contrast to the IPO allows us to attract large funds with minimal cost and risk. In this case market participants have more trust ICO-known companies and, consequently, the likelihood of them attracting hundreds of millions or even tens of billions of US dollars through ICO above (for example, ICO TON). In a number of countries will be implemented by the issue of coins provided by natural resources, and/or on the basis of state guarantees. Particularly relevant to this process would be for countries with relatively weak national currency, such as Venezuela.
Below in Fig. 6 presents the Top 20 ICO the size of the funds collected, which in total account for almost 10 billion U.S. dollars. Most of the projects belonging to the category of Infrastructure and Finance.
The criteria for assessing the value of the project in phase II: listing of project tokens on cryptomeria
In case of doubt, in the project raises the reasonable question whether it makes sense to invest in projects during the ICO or is it better to invest at a later stage, for example, at the stage of listing tokens of project cryptomeria.
When the ICO is completed, a known amount of the funds raised, the project was examined on multiple exchanges, its tokens are traded on them and, consequently, their liquidity is growing, risks are significantly reduced, but the reduced revenue potential. Usually within the first month after the appearance of the token on the stock exchange is very volatile. Depending on the economic model of the token and the popularity of the project the rate may fall as well as rise.
When the output tokens on the exchange, the lower their rate provoke speculators, the participants of bounty programs, as well as large holders of the tokens that went into the project at the stage of sales at a lower price and seek to capture part of the profits. At the same time, a successful ICO is attracting the attention of new players who can provide the growth rate of the token after the listing on cryptomeria. In most cases, the appearance of token projects for large and well-known exchanges has a positive effect on their course, liquidity and capitalization of the project, because increases potential demand.
Consider the aggregated indicators of the effectiveness of past ICO taking into account the categories of projects for 2017
For the comparative analysis of the effectiveness of the ICO category were selected projects of 2017, i.e. projects that continued to work for at least three months after completion of the ICO, as well as projects for which information is available about the value of their tokens on cryptomeria.
Given the charges at the biggest and most popular ICO, details of which are treatable, we can conclude that at least 500 held in 2017 ICO accounted for more than 6.8 billion USD. With the bulk of fees applies to the second half of the year. Particularly large fees was in November (about 1.1 billion U.S. dollars) and December 2017 (more than 1.6 billion U.S. dollars).
The results of the analysis 513 ICO 2017 30 categories are represented in table. 3. In accordance with the Pareto principle on these very popular projects account for more than 90% of all premiums in 2017. The selection of categories ICO was made on the basis of site data coinschedule.com however, not all projects fall neatly into are 30 categories could be assigned to others and/or related categories. The table’s applied conditional formatting, the highest values are highlighted in green, lowest in red.
Most of the successful projects are classified as Infrastructure (Infrastructure) (79 ICO), Trade and investment (Trading & Investing) (72 ICO), Finance (Finance) (68 ICO) and charges (Payments) (37 ICO). The highest amount of funds raised in the projects of the same categories: Infrastructure (Infrastructure) – 2 of 179.5 million U.S. dollars, Trade and investment (Trading & Investing) – 977,2 million U.S. dollars, Finance (Finance) – 835,9 million U.S. dollars and Payments (Payments) – 624,4 million dollars.
The highest average size of funds on the one ICO (Avg Collected) was observed in the categories of data Storage (Data Storage) (59.8 million US dollars) and Infrastructure (Infrastructure) (27.6 million USD).
In table. 4 shows the characteristic parameters calculated in table. 3,5.
To determine the average efficiency of projects by category ICO (see table. 5) indicators are calculated according to the formula:
Average [(token reward – 1)/ month]*100% and Average [(token/BTC reward -1) / month]*100%
These indicators characterize the efficiency of investments for the month in percentage.
In table. Figure 5 the Average token reward (ATR) (column 3) is highest in the categories of data Analysis (data Analytics) and Trade and investment (Trading & Investing). This means that on average every dollar invested in tokens of projects in these categories in 2017 at the stage of ICO, with their subsequent sale on the crypto currency exchange for US dollars 01.04.2018 get $23.3 and $22,6 respectively. And one of the most successful ICO in terms of Token reward were the projects Spectrecoin and Bitquence (Ethos) (see table. 5).
In table. 5 in column 7 presents the indicator, the similar index of the Average token reward (ATR), which characterizes the average efficiency of investment in the tokens for the month and is calculated according to the formula:
Average [(token reward – 1)/ month]*100%
If the value of the Average [(token reward – 1)/ month] >0 then attachments effective.
Month – number of months since the ICO.
Average token performance (ATP) or Average token reward (ATR) – (see table. 4).
The greatest value of the metric Average [(token reward – 1)/month] observed in the categories of data Analysis (data Analytics), Trade and investment (Trading & Investing) and the Identification and reputation (Identity & Reputation). This means that on average every dollar invested in tokens of projects in 2017 in these categories at the stage of ICO, with their subsequent sale on the crypto currency exchange for US dollars 01.04.2018 was completely paid off and brought additional 305%, 116% and 109% per month, respectively. And one of the most successful ICO in terms of[(token reward – 1)/month] steel Spectrecoin (3 174% per month), Bitquence (Ethos) (1 263% per month) and Neblio (579% per month).
Also note that the effectiveness of purchase token in 2017 in separate categories (Commodities, Transport, Legal, Mining, Machine Learning & AI) 01.04.2018 year was negative (see table. 5). However, this does not mean that projects of these categories to invest should not be. This is likely related to a small number of analyzed projects in these categories (see table. 3). Also note that all of the projects were influenced by the negative trend of the stock market in the first quarter of 2018, which certainly affected the course of their tokens.
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