Just 10 token sales account for 99% of ICO profits says Ernst & Young

A report on initial coin offerings (ICOs) from leading consultancy firm Ernst & Young (EY) found that the top 10 ICOs brought in 99% of the upside.

Tron, Binance and Tezos were the biggest winners among the top 10 gainers (see graphic below). 0X is also in the top 10 – see our report from yesterday – and it has just been listed on Coinbase. Populous, the UK-based invoice secondary market platform is up there too as is Singapore’s Qtum dapp platform with most of its nodes in China.

top 10 ICO returns

Top 10 gainers accounted for 99% of total ICO sector returns (source: EY)

In terms of funds raised, the successes include EOS and Telegram, which brought in $4.2 billion and $1.7 billion respectively.

The Petro is in third place  with a total of $736 million, less than the $5 billion claimed by the Venezuelan government but more than those who say it is nothing more than a scam.

Given this year’s monster bear market, some of the other findings are expected.

For example, 86% of the Class of 2017 projects (which the firm looked at in its first ICO report in December 2017) are trading below their offer price. That being the case, it is surprising that the ICO sector managed to pull in as much as $15 billion in the first half of 2018.

ICO

Top 10 ICOs raised 52% of funds (source: EY)

EY estimates that 30% of ICOs are wipeouts, where all value has been lost. If an investor had bought the Class of 2017 as a portfolio on 1 January this year they would have lost 66% of their money.

Few working products

Further, only 29% of the projects in the Class of 2017 have working products, which EY defines as being revenue-generating and an increase of only 13%. That suggest many projects are struggling to get even the first building blocks of their visions into place.

(Source: EY)

Detokenisation – a danger or a pragmatic response?

EY also found that 7 out of 25 projects it reviewed had gone down the detokenisation route by abandoning the use of their utility token or by overlaying it with fiat, making the token unnecessary. Some might see that as a welcome pragmatism by some project teams, by showing they are not ideologically wedded to “decentralisation”.

But others will see it as exposing the worthlessness of the sector or at best the difficulties of weaning businesses/customers off legacy systems

This report is likely to be music to the ears of the likes of Nouriel Roubini, for one, and other critics of crypto who see ICOs as a fraudsters playground. Roubini likened tokenisation to going back to thee stone age but perhaps even worse because at least the Flintstones had commodity money.

Detokenisation sees some ICOs introduce fiat payments, thereby devaluing the utility token (source:EY)

Where there were gains, they were concentrated in the blockchain infrastructure  sector. The report adds that none of the new platforms have come near to touching Ethereum which is still the “industry’s main platform”.

The report, which is entitled  EY study: Initial Coin Offerings (ICOs) The Class of 2017 – one year later, can be downloaded here

 

 

 

 

Be the first to comment on "Just 10 token sales account for 99% of ICO profits says Ernst & Young"

Leave a comment

Your email address will not be published.


*