The ICO & STO market 2018 in numbers – Initial Coin Offering Report

The ICO & STO market 2018 in numbers – Initial Coin Offering Report

More than 5 billion USD have been raised in June, the end of EOS marked a new ICO record with 4.2 billion USD and 81% of ICOs were classified as spam. This report conveys the current market of Initial Coin Offerings and Security Token Offerings in the second half of 2018.

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2017 vs. 2018

In 2018 (till now), already more ICOs have been scheduled than in the entire year of 2017. Same counts for the capital that investors put into the market.

Comparing the average size of a project, it highly increased from 12.8 million USD back in 2017 to the amount of 25.5 million USD in 2018. And that is of course a consequence of EOS closing its billion dollar ICO this year and driving the increase of the average funding.

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The USA: regulation coming into place?

Although many projects step away from every square based in the USA, the United States remain being the region with most ICOs ever executed. Since the SEC is following very strict rules and many people are scared of the classification as an investment vehicle, many projects exclude US investors. Nevertheless, many ICOs in the past still make them to the country with most of the ICOs.

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To see all graphs, statistics and numbers, have a look at the publicly available PDF that you can download in one click.

Comparing Crowdfunding and ICO fees & commissions

Comparing Crowdfunding and ICO fees & commissions

There is a common misconception about Initial Coin Offerings regarding the costs of launching and executing a successful tokensale. However, Crowdfunding platform are consuming a mention-worth portion of contributions. Here, we want to compare both ways.

Crowdfunding

While Crowdfunding was born back in 1997, ICOs are considerably new with their first occurrence in 2013 by the launch of Mastercoin. However, Crowdfundings and Tokensales seem to emerge as competitors.

Popular Crowdfunding Platforms and their fees

Kickstarter (total raised: 3bn$)

Kickstarter is probably the most known crowdfunding platform: its stated mission is to „help bring creative projects to life“, so that many people decide to raise funds to write a book, record an album or make a film (but not only!).

  • Kickstarter’s fee3: 5% of total funds raised
  • Credit card processing fee: 3% + $0.20 per pledge
  • Pledges under $10 have a discounted micro-pledge fee of 5% + $0.05 per pledge

GoFundMe (total raised: 5bn$)

GoFundMe is a platform used mainly for short-term personal needs of money: not only projects, but also medical emergencies or unexpected bills to pay.

  • GoFundMe’s fee: free (it accepts donors’ tips to cover expenses)
  • Credit card processing fee: 2.9% + $0.30 per pledge

Indiegogo (total raised: 1bn$)

Indiegogo is another popular platform which, unlike Kickstarter, allows to raise funds for non-profit as well. Indiegogo also offers flexible funding which allows you to keep the funds raised even if they did not reach the initial targeted amount.

Fixed Crowdfunding

  • Indiegogo’s fee: 4% of total funds raised
  • Credit card processing fee: 3% – 5%

Flexible Crowdfunding

  • Indiegogo’s fee:
    • If the funding goal is reached: 4% of total funds raised
    • If the funding goal is NOT reached: 9% and you keep what you earned
  • Credit card processing fee: 3% – 5%

Crowdrise

Crowdrise is a slightly different platform which is more addressed to real-life issues and disaster reliefs.

  • Crowdrise’s fee: 3-6% of total funds raised
  • Credit card processing fee: 2.9% + $0.30 per pledge

 

Costs for an Initial Coin Offering

In this article, we focus on the platform and issuance costs – not the Consulting fees, later management fees and exchange listing costs.

Since there are no world-wide established platforms for ICOs yet where commissions can be extracted from, the following estimations can be used for a comparison to Crowdfunding:

Payment processing fee

While in Crowdfunding credit cards are used most of the time, ICOs usually only accept cryptocurrencies and specifically ETH. In this case, an average ETH transaction costs less than 0.20 USD, independent of the amount of money sent. Let’s say that the minimum contribution is 10USD, therefore the commission would be 2%. However, it will already reach 0,2% if 100USD are contributed.

Funding fee

What you pay here is related to a platform (Tokensale software) as well as for the finder’s fee you are paying to people who acquired investors. While the platform cannot really be estimated in the sense of costs and is often self-developed, the finder’s fee ranges from 3-5%. However, the platform costs can be counted as the Pre-Raising activities that are not considered here.

Crowdfunding or ICO?

It is important to mention that this article only delivers a quantitative comparison for the limited view on the Crowdfunding/ICO execution. However, looking at the numbers, ICOs with their fees between 3-5% can compete with Crowdfundings, having a fee that often ranges from 7-9% of the contributions. Furthermore, the Crowdfunding does not include a commission for people bringing in investors. Counting that in, a much larger amount of money can be raised within an ICO by including institutional investors, family offices, HNWIs or VCs.

 

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Sources:

  • https://www.crowdfunding.com/selection/ 5 https://www.charitynavigator.org/index.cfm?bay=content.view&cpid=2014
  • www.forbes.com – “Trends Show Crowdfunding To Surpass VC In 2016”
  • https://www.crowdfunding.com/
  • www.thebalancesmb.com – “The Entrepreneur’s Guide to the Fees on Crowdfunding Platforms”

The ICO matrix to differentiate successful and failing ICOs and Blockchain projects

I am convinced that 90% of the ICOs will fail in the long-term – although most of them could be detected as failures or scams within 5 minutes with this matrix.

Having looked at hundreds of Tokensales, I noticed four main different types of projects for decentralized platforms or ICOs. Therefore, I classified the projects into them by developing a two-dimensioned approach. Weiterlesen