The auditing firm Ernst & Young has released an Update to its ICO-analysis from 2017. In this year’s Report analyzed the progress and yield of 372 ICOs. The conclusion is modest.
The most positive development shows the ICO-investment volume. This is already in the first half of the year, higher than the total volume in 2017. In contrast, the rate of return, however, is significantly negative. The majority of the analyzed ICOs (about 94 percent, or 132 ICOs) is in the red. About a third of them (approx. 43 ICOs), has fallen by more than 90 percent.
A possible reason for this poor Performance is the lack of market maturity. Although approximately ten percent more ICOs have this year a working product (or a prototype) than 2017, but 70 percent are still in the idea stage.
The Trend towards Delisting and a few winners
are not even ICOs with functioning products necessarily positive for investors. After all, many projects increasingly rely on Fiat currencies as a payment alternative. This allows you to validate your token. So accept seven out of the 25 market ICOs tires in addition to own Utility-tokens and US dollars. The most extreme step Digipulse. In August, the company announced its Delisting; 15. December will be the DGPT tokens tradable. The rate has leveled off since the announcement at Zero.
another Extreme, one also sees in the Win. The Top 10 ICOs generate 99 percent of all net income. Not surprisingly, the sectors distribution is: The slight majority of the highest-yield ICOs are Blockchain platforms.
summary and Outlook
As is the case with young technologies, the usual, fail many experiments. And ICOs are no exception. It is of concern in these, but the lack of market maturity; especially as you have collected a lot of capital. It seems to the auditors that ICO-Investments are even more risky than traditional venture capital. One of the reasons for this are the lack of product development. Based on this, the analysts expect that private investors from ICO-Investments and qualified investors (e.g. funds) to replace this.
Although the report does not indicate the fact, the reasons for the lack of product development, be helpful for a more precise assessment of the income. The true causes are likely to remain unclear. Probably a combination of fraud and incorrect assessments by the company. Many ICOs have for example. the complexity and the demand is overestimated. And possibly also the Time-to-Market Blockchain-companies just longer than a year. One indication of this is the (relatively) good return of Blockchain platforms. Since many applications depend on scalable block chains, they are waiting to be forced to not be able to bring their products to market.
In the course of this year, Ernst & Young intends to publish a further follow-up Report. Maybe scaling up solutions such as Liquid initial successes and give Blockchain applications, thus the required basis to bring their products to market.
Link to the Report: Slideshare