Leaving Tokens on the Table

Monday, November 6, 2017

Day 1 Token Trading Analysis

For those unfamiliar with the land of academic research in “traditional” finance, the “Day One” trading return for IPOs (aka “trading pop”) is a mythical creature described in thousands of articles written by fledgling PhD students and the occasional Nobel prize winner. Long story short: the starting question is whether or not companies leave money on the table when offering equity through an IPO. Whether an IPO is significantly underpriced by underwriters to draw interest from IPO investors by luring them with “quick and easy” returns. If this sounds familiar to anything happening in crypto right now, you’re reading the right newsletter. One way to answer a part of this question is by measuring the first day trading return of IPO issued shares.

Looking for analogs between ICOs and IPOs, and clearly not familiar with the unchartered waters of ICOs and raucous crypto exchange trollboxes, dozens of crypto academics (actual academic people at renown universities) have contacted us over the past months for analyses on the day one trading returns for ICOs. Although we’re certainly no academics and have no interest in debating the statistical significance of any of our analyses, we’ve done the research over the weekend and expect our honorary degree to be mailed to us directly.

Here are the results:

TL;DR: There is a “trading pop” but it’s been trending down…

Full Description:

The dataset consists of all ICOs that completed fundraising in 2017 and whose tokens started trading on exchanges. We collected all the data for the first week of trading for these tokens and filtered out any ICOs with an initial fundraising effort of less than $1M. We believe that the latter category of ICOs and their tokens are not frequently traded and more prone to distortions on the first day. The “Day-1 Return” section shows the return multiple of tokens compared to the ICO issuance price on the first day of trading. The “Current Return” section shows the return multiple at the current price.

The results show that we measure an average day one return for all tokens of 2.5x and a median return of 1.4x. What’s more interesting than the outright level of returns is that the returns have been trending down. The median day one return in the current quarter is 1.1x (10%) compared to an almost 2x return in Q2 17. It could be a reflection of the ICO market cooling off and less trading interest but it could also be a reflection of decreased project quality. We haven’t completed our analyses of the variables behind this trend, and are happy to receive any tips on how to measure the driving factors of this trend. Until we have, we’ll leave it up to you to think about!

Weekly Update

  • NEW on TokenData.io: 
     
    • Token Analytics (BETA) – We just launched a new analytics section on TokenData. The first tool that we’ve built is a news aggregator that plugs into all news channels and chat applications for a token sale. If you’re sick and tired of signing up to all telegram/slack/discord channels to assess a project, this tool will make your life much easier. This is a first release, so any user feedback is more than welcome! 
       
  • Weekly Token Data:
    • Nr of completed ICO’s (wk/mo/ytd): 41 / 13 / 350
    • USD Raised (wk/mo/ytd): $165M / $46M / $3.6B
    • Calendar: 25ICOs this week

October 2017 Token Sale Results

Token Sale (ICO) Calendar

Mon (11/6)

Tues (11/7)

Wed (11/8)

Thu (11/9)

Fri (11/10)

Sat (11/11)