According to the market reports, 70% of crypto ICOs are presently running at a loss, which means that 7/10 cryptocurrency projects have lower valuations than the total funds raised at the initial offering.
A Lot Of Money Isn’t Proportional to Success
As indicated in a report by Diar, ICO projects have raised double the sum realised by offerings in the last year. Token developers have got a whopping $12 billion from the investors in 2018.
In spite of the investors braving 2018’s bearish market to finance token projects, these tokens don’t look to be doing so well. Market cap places many tokens at a loss at the point when tallied against the investments obtained amid the initial offerings of these projects.
70% of Crypto ICOs Running At A Loss
With the information gathered by TokenData, Diar reports that 402 tokens of the 562 with reliable fund-raising data are operating at a loss. These 402 projects raised over $8 billion aggregately, yet by and large presently have a market estimation of $2.2 billion. It implies a $6 billion loss against money invested.
Indeed, even with costly and far-reaching marketing tricks, a portion of these tokens have endured a shot. Argentine soccer star, Lionel Messi is a brand ambassador for Sirin Labs, but this hasn’t helped the organisation accomplish a significant market share. Sirin Lab that raised over $158 million when it held an ICO a year ago presently has a valuation of $17 million.
The Occurrence of Exit Scam in ICO
Dissimilar to their traditional counterpart, ICOs are generally unregulated, and pretty much anyone can issue an ICO. This has made it an advantageous chasing ground for scam entities, and because of the unknown and decentralised nature of the cryptocurrency ecosystem, it’s hard to trace these scams.
Diar’s report demonstrates that while there is an expansion in funds raised by ICOs between 2017 and 2018, ICO prevalence has endured a shot with the aggregate number of completed ventures striking an all year low in August. We can make an informed figure and say this is due in part to the expanded event of exit scams.