ICO Pre-Sale Mania

Wednesday, February 14, 2018

The TokenData Take: Pre-Sale Rounds Contribute 60% to ICOs

Correction for January 2018: We updated our database with a few more confirmed ICOs reflected in the graph above

In our last update we mentioned the trend of ICOs raising a majority of capital through private rounds and pre-sales rounds. Some ICOs have even cancelled the planned public/main sale part in the past months, because they already reached their hard cap in the private and pre-sale rounds (we’ll refer to the sum of these two rounds as “pre-sales”). The dominance of pre-sales has been a relatively new theme in the market and worth investigating further.

We’ve analyzed all the ICOs that have closed in 2018 to see how much the pre-sale stage contributes to an ICO and what the implications are:

Pre-Sale Stage > Main-Sale Stage

The data shows that ICOs raise a majority of their capital (58%) through private rounds and pre-sales. They do so by giving pre-sale participants an average “Bonus” of 34% on the ETH:Token exchange  rate compared to participants in the main/public stage of the ICO. Unsurprisingly, the size and timing (lock-up) of the “bonus” are often the subject of debate and can lead to controversy among token sale participants and in secondary trading.

Pre-Sale Dominance Affects Secondary Token Trading

One potential consequence of the dominance of pre-sales is a lower return in secondary market trading. The price of the token in the main/public stage is often regarded as the floor once a token starts trading. Because they receive a bonus on relatively large blocks, pre-sale participants can sell their tokens at the price of the main/public stage and still generate a financial profit. With more and larger pre-sale participants in the market, one could expect more participants to sell their tokens right away and still generate a financial return (the bonus). 

A closer look shows that the average return of ICOs with pre-sales still generates a 2x return from the main/public sale price. However, the median return shows a more nuanced picture with a 1.42x return and we take into account that the returns are much lower than what we’ve seen in 2017. While we believe that there is not enough data (yet) to prove how pre-sales are affecting trading dynamics we did take a closer look at the order books of ICOs that were pre-sale “heavy”.

The graph below shows the day-1 order book of an ICO that filled more than 75% in the pre-sale stage and limited main/public stage buyers to contributions below 1 ETH. The order book shows an abundance of sell-orders which consisted of large blocks of pre-sale allocations. As a result, the upside that many main-sale participants often hope for has completely disappeared….

Asymmetrical order book with most sell orders consisting of pre-sale block trades. The addition of characters from the epic game “Worms: Armageddon” is completely ours.

ICO Calendar: 56 Sales

Mon (2/12)

Tue (2/13)

Wed (2/14)

Thu (2/15)

Fri (2/16)

Sat (2/17)

Sun (2/18)