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 Are token offerings a viable funding-raising mechanism?

 

 

Roaring into the spotlight in 2017, token offerings promised the fabled pot of gold at the end of the rainbow. Simply put, they offered a cheap alternative to traditional fundraising mechanisms - on the founder’s end, simpler, less time-consuming, significant publicity and on the (retail) investor’s end - a chance to play VC & invest in the next unicorn.

  

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The Backdrop:

 

 

The above data is sourced from InWara’s H1 2019 report on the blockchain landscape with data from the InWara Market Intelligence Platform.

Evidently, the number of token offerings in H1 2019 has crashed. In all, there were 1600+ offerings in H1 2018 compared to the rather paltry 583 in H1 2019. Clearly the popularity of the token model has plummeted in the year that has gone by. Much has plagued this fundraising tool - exit scams, unclear judicial frameworks, lawsuits, lack of investor interest given the lack of listing on exchanges. All of these just touch the tip of the iceberg, when looking at the problems ICOs faced.

 

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Okay, so does that mean token offerings are done?

Again, a quick look at the graph will tell you that ICOs which formed the major portion of token offerings in now on the decline, however, IEOs & STOs are on the up-tick. In H1 2018, ICOs formed over 95% of all token offerings, this has now fallen to under 70%. While the market as a whole has contracted, IEOs & STOs have carved out a niche for themselves and have eaten into the taken offering market share (to coin a new turn of phrase!)

 

What transpired with Funding?

 

The above data is sourced from InWara’s H1 2019 report on the blockchain landscape with data from the InWara Market Intelligence Platform.

Token raises have contracted unbelievably in H1 2019 vs H1 2018. With just $3 billion raised against the $15+ billion that was raised in H1 2018, everyone is taking a break from the token offering hype. ICOs have become passe. While they still contribute significantly to fundraising, they are no longer the dominant mode. Despite the lower numbers, IEOs & STOs contribute to over $ 2 billion of the funds raised in H1 2019.

 

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It’s now obvious and has been so for a significant period of time that an ICO no longer guarantees you funding. Nor does that matter an IEO or an STO. However, there’s enough proof from the InWara Crypto Research Report, that if done well, they both are still very lucrative fundraising tools.

Read the entire report here!

 
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