\n| 2017<\/td>\n | Bancor<\/td>\n | $153 million<\/td>\n | Prediction Markets<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n Examples of ICOs that earned investors a high return on investment (ROI) include:<\/strong><\/p>\n\n- Nxt ICO was launched in 2013 at $0.0000168 and hit $1.94 in 2017 for an ROI of 11,547,519%.<\/li>\n
- IOTA investors had a 522,900% ROI.<\/li>\n
- Neo investors had an ROI of 378,453% in 2018.<\/li>\n
- Investors who bought Ethereum at its starting price of $0.31 and sold their tokens at its peak of $4,362 made an ROI of over 1,400,000%.<\/li>\n
- After its $5.5 million ICO, DigixDAO’s starting price was $3.20. It reached a peak of $510 in 2021, giving investors an ROI of over 12,000%.<\/li>\n
- Investors who bought Stratis at $0.007 saw a 300,000% ROI in 2018.<\/li>\n
- Cardano saw its token rise from $0.0024 to a high of $2.46 in May 2021, delivering gains of over 1020x or 54,000%.<\/li>\n<\/ul>\n
ICO Success Rates<\/span><\/h2>\nA comprehensive study of 3,392 completed ICOs between January 2016 and December 2018 found that the success rate for ICOs was nearly 90% in the first half of 2017.<\/strong><\/p>\nHowever, this dropped sharply to just under 50% in the second half of the year. By Q4, 2018, the success rate was around 30%. The authors note plummeting digital currency prices and the threat of regulation as major contributors to the falling success rates.<\/p>\n Out of over 4,000 planned and executed ICOs in 2018, the survival rate of startups 3 months after an ICO was only around 44.2%.<\/strong><\/p>\nAdditionally:<\/p>\n \n- 56% of crypto startups that raised money through ICOs failed within four months.<\/li>\n
- 83% of ICOs that didn\u2019t report capital and didn\u2019t list on an exchange were inactive after 120 days. For those that raised capital, this dropped to 52%.<\/li>\n
- For ICOs that were listed on an exchange, only 16% were inactive by the fifth month.<\/li>\n<\/ul>\n
Insights by Enterprise Risk Mag revealed that a whopping 90% of ICOs failed in 2019. <\/strong>This implies that ICOs had a success rate of around 10%, a significant drop from 2017 and 2018 levels.<\/p>\nSuccessful ICO Examples<\/span><\/h3>\nIn 2018, EOS generated $4.2 billion worth of investment through its ICO, making it one of the most successful ICOs.<\/strong><\/p>\nEOS was worth $14.64 when it launched and at its peak, traded for $22.89. As of August 23, 2023, EOS is worth $0.59. With a market cap of $649 million, it is ranked 58th in the world.<\/p>\n ![\"eos](\"https:\/\/icobench.com\/wp-content\/uploads\/2023\/08\/EOS-Price-Chart.png\") <\/p>\n
In July 2014, Ethereum’s ICO was successful and raised $18.4 million.<\/strong><\/p>\nEthereum is the world’s second-largest cryptocurrency with a market cap of over $200 billion in August 2023. From an all-time high of $4,891 in November 2021, Ethereum is now trading at around $1,678.<\/p>\n Improving on certain aspects of Ethereum, Cardano had a successful ICO and raised $62.2 million in January 2017.<\/strong><\/p>\nWith a market cap of over $9 billion, Cardano is the eighth-largest cryptocurrency in the world. At its all-time high, Cardano traded at $3.09. As of August 23, 2023, Cardano is worth $0.27.<\/p>\n ICO Failures<\/span><\/h3>\nAccording to data by Visual Capitalist, there were 2,383 defunct cryptocurrency coins between 2013 and 2022.<\/strong><\/p>\n10% failed to launch after an ICO. Abandoned coins with no trading volume accounted for 1,584 or 66.5% of crypto failures while 22% were scam coins. Additionally, of the coins launched in 2017, more than 50% were defunct by the end of 2022.<\/p>\n The highest number of ICO failures occurred between 2017 and 2019. After 2019, coin failures fell below 5%.<\/strong><\/p>\n\n- There were 46 failures in 2017.<\/li>\n
- There were 112 failures in 2018.<\/li>\n
- There were 51 failures in 2019.<\/li>\n<\/ul>\n
![\"Details](\"https:\/\/icobench.com\/wp-content\/uploads\/2023\/08\/ICO-Failures.png\") <\/p>\n
Failed ICO Examples<\/span><\/h3>\nAlthough Tezos raised $232 million through its ICO in July 2017, it wasn’t a complete success.<\/strong><\/p>\nAfter the ICO, there were several delays in distributing the tokens sold. This led to a class action lawsuit. Consequently, Tezos reached a $25 million settlement with all parties in 2020.<\/p>\n In 2018 Telegram raised $1.7 billion through 2 ICOs for its Telegram Open Network (TON) March 2018.<\/strong><\/p>\nUnfortunately, the SEC stopped the distribution of Telegram’s tokens and prohibited its launch in the US. Telegram was also ordered to pay $1.2 billion in refunds to investors.<\/p>\n In March 2018, Dragon Coins raised $320 million. A series of controversies resulted in the token\u2019s price plummeting shortly after being made available for public trading.<\/strong><\/p>\nDragon Coin reached an all-time high of $2.40 on March 21, 2018. By 2021, its market capitalization had fallen below $1 million. Its lowest price was recorded on Aug 5, 2022, when it traded at $\u202f0.00004. As of 23 August 2023, its market cap stands at only $27,684.<\/p>\n What Makes a Successful ICO?<\/span><\/h2>\nBy industry convention, an ICO is considered a success if it raises more than the soft cap or minimum goal amount. If an ICO doesn’t reach its soft cap, funds are usually returned to investors. In rare cases, a team may decide to forge ahead.<\/p>\n According to PwC, what makes a successful ICO includes:<\/strong><\/p>\n\n- A capable team: Successful ICOs are led by qualified, capable, and well-rounded teams.<\/li>\n
- A viable use case: Use cases solve problems and have real applications.<\/li>\n
- Business model: Successful ICOs have sustainable and scalable business models.<\/li>\n
- Institutional mindset: This refers to a strong motivation to build a long-term institutional-grade business.<\/li>\n<\/ul>\n
When comparing the differences between failed and successful ICOs:<\/strong><\/p>\n\n- Successful ICOs receive more positive ratings from online experts.<\/li>\n
- The average minimum funding goal or soft cap for successful ICOs is $5 million while the average hard cap or maximum funding goal for a successful ICO is $57 million.<\/li>\n
- 59% of successful ICOs include a presale before the main token sale.<\/li>\n
- Bonuses of 20% or more are more prevalent in failed ICOs.<\/li>\n
- 40% of successful token sales ask for customer identification.<\/li>\n<\/ul>\n
![\"what](\"https:\/\/icobench.com\/wp-content\/uploads\/2023\/08\/ICO-Success-Factors.png\") <\/p>\n
Cryptocurrency Prices<\/span><\/h3>\nA 2022 study analyzed 428 ICO projects to determine ICO success factors and found that the prices of cryptocurrencies, namely, Bitcoin and Ethereum, were inversely related to project success.<\/p>\n A lower Bitcoin price is related to more successful projects while Ethereum has more successful projects when its price is higher. Another study found that ICOs that accept multiple digital currencies are also more likely to succeed.<\/p>\n Funds Raised<\/span><\/h3>\nSuccessful ICOs achieve 55.4% of their maximum funding goal or hard cap and have around 2,480 supporters. on average. They also raise an average of $14.7 million over an average of 54 days compared to 68 days for failed ICOs.<\/p>\n Social Media Presence<\/span><\/h3>\nA strong social network presence influences project success.<\/p>\n \n- Having an active Twitter account during the ICO campaign is associated with successful projects (32%), in contrast to not having an active Twitter campaign (15%).<\/li>\n
- Having more followers was linked to successful projects (32%), in contrast to having smaller networks (16%).<\/li>\n
- Having an active GitHub account was linked to greater success (28%) than not having one (19%).<\/li>\n
- More projects were considered successful when they had an active website (30%) than when they didn\u2019t (17%).<\/li>\n<\/ul>\n
Whitepaper Characteristics<\/span><\/h3>\nWhitepaper availability and length positively influence ICO success (29%). Projects that disclose more information are more likely to succeed.<\/p>\n Additionally, token sales featuring multi-language websites or whitepapers tend to be more successful. Overall, ICOs missing whitepapers have significantly lower fundraising success rates, raise less funds, and are less likely to be listed.<\/p>\n Team Variables<\/span><\/h3>\nThe team variables necessary for a project\u2019s success are the number of team members and LinkedIn networks. Larger teams have more successful projects (29%) compared to 18% for smaller teams.<\/p>\n Similarly, larger LinkedIn networks are associated with higher percentages of successful projects (29%) compared to 19% for smaller ones.<\/p>\n ICO Scams and Controversies<\/span><\/h2>\nFraud remains one of the greatest challenges and threats to the ICO market \u2013 a fact that was recognized by regulators and market agents during the 2017-2018 boom.<\/p>\n In 2017, Securities and Exchanges Commission (SEC) chairman Jay Clayton expressed concern over the levels of fraud being committed in the ICO market and stressed that regulatory action was necessary to protect investors.<\/strong><\/p>\nClayton said, “A number of concerns have been raised regarding the cryptocurrency and ICO markets, including that as they are currently operating, there is substantially less investor protection than in our traditional securities markets, with correspondingly greater opportunities for fraud and manipulation.”<\/em><\/span><\/p>\nIn a study of over 5,036 ICOs between August 2014 and December 2019, only 20% or 1,014 had available funding data<\/strong>.<\/p>\nOf these ICOs, 576 or 57% turned out to be scams and led to losses of over $10.12 billion. The largest scam recorded was the ‘Petro-scam’, which cost investors a total of $735 million.<\/p>\n The same study identified that phishing and fraud scams were the most common types of tactics used on investors. These scams typically involve spam emails, suspicious links or popups, errors on withdrawals, and balances disappearing from wallets.<\/strong><\/p>\nAdditionally, if an ICO project turned out to be a phishing or fraud scam, estimated losses amounted to about $54.1 million, which is three times the general average of $17.6 million.<\/p>\n Other top ICO scams identified by the study were:<\/strong><\/p>\n\n- Dead\/fake ICOs: Scammers fool investors into funding dead or fake projects.<\/li>\n
- Bounty scams: ICOs fail to pay promoters who were promised payment for PR and advertising.<\/li>\n
- Exit scams: ICOs that simply disappear, leaving investors to deal with major losses.<\/li>\n
- Airdrop scams: Scammers use the promise of free tokens to steal private keys from investors.<\/li>\n
- Exchange scams: Scammers deceive investors by launching on a fraudulent exchange.<\/li>\n
- Pump and dump: Once scammers create hype and sell their ICO, the price drops rapidly and dramatically.<\/li>\n
- URL scams: Investors are tricked into investing by websites imitating existing projects.<\/li>\n
- Porn scams: An ICO pretends to offer premium access to its porn site, preying on victims’ reluctance to report being scammed.<\/li>\n
- Market manipulation or pre-mines: Tokens are shared among developers or promoters after the final token sale and not burned, leading to higher token circulation and a lower token price.<\/li>\n<\/ul>\n
\n \n\n\nICO Scam<\/strong><\/td>\nAmount Stolen<\/strong><\/td>\n<\/tr>\n\n| Bitconnect<\/td>\n | $2.6 billion<\/td>\n<\/tr>\n | \n| Pincoin<\/td>\n | $660 million<\/td>\n<\/tr>\n | \n| ACChain<\/td>\n | $60 million<\/td>\n<\/tr>\n | \n| Savedroid<\/td>\n | $50 million<\/td>\n<\/tr>\n | \n| Plexcoin<\/td>\n | $15 million<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n A 2018 report by Satis Research Group analyzed over 1,500 ICOs in 2018 and found that 78% of projects were scams valued at approximately $1.3 billion.<\/strong><\/p>\nEven though a majority of projects were scams, over 70% of ICO funding went to higher-quality projects. Additionally, 54% of ICO fundraising went to projects that were classified as successful at the time of writing.<\/p>\n Meanwhile, a significant share of the $1.3 billion went to three projects that were later subject to extensive regulatory action. Namely:<\/strong><\/p>\n\n- Pincoin: Raised $660 million, disappeared with investor funds, and is under investigation by Vietnamese authorities.<\/li>\n
- Arisebank: Raised $600 million and was brought to a halt in January 2018 by the SEC.<\/li>\n
- Savedroid: Raised $50 million and was under preliminary investigation by the public prosecutor in Frankfurt in April 2018.<\/li>\n<\/ul>\n
Bitconnect is by far the biggest ICO scam to date. <\/strong>Bitconnect was an open-source cryptocurrency that promised investors returns of up to 40%. However, it turned out to be a Ponzi scheme that cost investors over $2.6 billion.<\/p>\nACChain, a promising ICO created in Shenzhen, China, makes the top 3 of the biggest ICO scams.<\/strong><\/p>\nACChain raised over $60 million during its ICO, however when a picture of its headquarters was leaked, investors learned it was nothing more than an empty room. The company subsequently vanished, leaving investors to deal with major losses.<\/p>\n The Plexcoin ICO scam promised investors a return of 1,354%. <\/strong>Plexcoin managed to raise $15 million before it was shut down by the SEC and ordered to pay back investors.<\/p>\nIn July 2017, CoinDash\/Blox was hacked, resulting in losses of $7 million in just half an hour. <\/strong>Hackers hijacked CoinDash\u2019s ICO, changed payment instructions, and rerouted all funds to their own accounts.<\/p>\nFAQs<\/span><\/h2>\n<\/time> | | | |
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