ICO death spiral fears may be overdone finds latest research

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The ICO death spiral may not be all it is spun up to be. The sneaking suspicion, as reported here and elsewhere, that projects that undertook initial coin offerings are selling reserves as ETH falls in value, may be wide of the mark if analysis from Diar Newsletter is right.

1/ There is a big misconception that ICO companies have liquidated most of their ETH holdings. In today’s issue of Diar, we looked at all the publicly available ICO treasuries and analyzed the numbers. https://t.co/EryLsW9Ouj pic.twitter.com/j2DYajcwzQ

— Larry Cermak (@lawmaster) September 10, 2018

Diar’s findings show that many popular tokens have healthy ETH balances.

Note: Smartphone users rotate device to landscape to view full table

Table 1: Popular Tokens Sitting on upward of $½ Billion (source: Diar)

Name	ETH Raised	ETH	USD
DigixDAO	466,648	395,433	75,808,415
Golem	820,000	369,023	70,745,428
Polkadot*	485,331	306,276	58,716,224
Status	299,898	246,419	47,241,053
Aragon	274,990	237,466	45,524,526
Filecoin	566,715	216,906	41,583,115
Tezos	361,122	203,468	39,006,848
Gnosis	250,000	190,367	36,495,316
Iconomi*	114,939	114,939	22,034,956
Kyber	200,000	81,999	15,720,048
Request	100,000	80,000	15,336,800
Airswap	119,511	38,908	7,458,999
district0x	43,000	37,990	7,283,092
TenX	245,832	37,835	7,253,353
Bloom	54,000	33,185	6,361,973
Bancor	396,720	30,698	5,885,125
0x	80,000	30,050	5,760,831
Santiment	45,000	30,006	5,752,401
Basic Att’n Tokn	156,250	26,344	5,050,408
Raiden Network	109,532	24,957	4,784,432
Sirin Labs	205,000	4,290	822,354

The figures show that many top-tier projects that held their token sales before the price run-up took off at the end of last year have deep reserves of funds. That should guarantee funding of development roadmaps.

Market capitalisations less than Treasury

Token	ETH Treasury	USD	Market Cap
Aragon	237,466	45,524,526	21,548,571
SingularDTV	201,131	38,558,754	10,734,428
Gnosis	190,367	36,495,316	32,538,049
FirstBlood	76,921	14,746,463	5,370,291
Monetha	57,190	10,963,813	3,682,337
HEROcoin	39,116	7,498,962	1,101,650
Bloom	33,185	6,361,973	3,962,182
Mysterium	27,522	5,276,271	2,361,780
Atonomi	26,922	5,161,222	3,640,872
Indorse	16,559	3,174,552	1,531,934

In the foreword to the report the authors explain:

“Companies that did an ICO before the price boom of 4Q17 are sitting on massive reserves that could potentially fuel development teams for years to come. Last week TenX, a basic wallet that promises a Visa debit card, voluntary disclosed their financial positions revealing that the company is sitting on over $100Mn. Not only is that more than the company originally raised, but it’s more than their whole network is currently valued on secondary markets. And they’re not the only ones.”

ETH is down 3% today at $192 as it continues to shed value. Bitcoin has stabilised at $6,300 for now and overall market cap of crypto has slumped to $193 billion. The overwhelming majority of ICO tokens are ERC-20 compliant or some other variant, meaning they run on the rails provided by Ethereum.

There are plenty of other issues weighing on the ETH price other than projects selling out. The delay to Casper upgrade looms large and the ongoing problem of Gas prices, forcing sales of ETH to pay for the transaction costs of running dapps.

The ICO death spiral may not be across the board but as the second chart shows.

But there is still selling pressure being brought to bear by market conditions, which leaves open the question of how a continuing bear market might yet push many projects into selling substantial amounts of their ETH stash.

Jennifer Collins

Jennifer has been writing about crypto since 2016 when she first got interested as a student at Queen Mary University in London. You can email me here: jennifercollins@coinintelnews.com