The TokenData Take: Following last week’s newsletter, we confirmed a number of additional ICOs that successfully raised capital in September. This brings the total amount of capital raised through ICOs to $731M in September and $2.7B year-to-date. With 15 ICOs raising $105M in the first week of October, the ICO market is on track to easily hit $3B in 2017 and we currently follow a total of 150 ICOs that are still active and scheduled to close in October alone..
One of the observations from updating our database in the past weeks is an increasing amount of sales that opt for a mandatory ‘whitelist’ registration process – pioneered by Civic and 0x – for both the pre- and main-sale stage. For example: The Airswap (p2p trading protocol) token sale had to close whitelist registrations within hours – instead of days – after receiving more than 18k registrations for a ~$12.5M sale which will take place this week.
NEW on TokenData.io:
- Q&A with Radar Relay – One of the biggest questions that pops up amidst the ICO hype is where new tokens will be traded. Decentralized trading protocols and exchanges such as 0x and Kyber are being developed as an alternative and/or complement to centralized liquidity providers. We talked to the Radar Relay team about launching an order book on top of the 0x protocol, and the opportunities and challenges in decentralized trading.
- Token Jobs (tokenjobs.io) – We’ve launched a free and crowdsourced job posting board focused on crypto projects. Whether you’re a dev looking to move into the space, or you’re a project looking to attract the best talent after completing an ICO – look no further!
Weekly Token Data:
- Nr of completed ICO’s (wk/mo/ytd): 15 / 15 / 296
- USD Raised (wk/mo/ytd): $105M / $105M / $2.8B
- Calendar: 45 ICOs this week
- Crypto Celebrity of the week: Ghostface Killah (Wu-Tang Clan) announces a crypto fund called ‘Cream Capital’
- BCSHOP – Digital goods & services marketplace
- ChainTrade – Raw material and food marketplace
- Elite 888 – Low supply coin
- MEGA X – Ecommerce retail system
- Nebeus – Instant loan platform
- Science Blockchain – Blockchain startup incubator
- Secure Identity Ledger – Decentralized identification soultion
- Slot – Blockchain game of chance
- Unicoin – Art-tech cryptocurrency
- WandX – Trading platform and derivatives exchange
- A Token – Cryptocurrency diversification platform
- AAA Coin – Short and long term investment coin
- AirSwap – Decentralized token exchange/trading protocol
- Altocar – Ride-share aggregation platform
- BitBoost – Decentralized marketplace
- CrowdWiz – DAO: crowd-managed crypto funds
- Qvolta – Peer-to-peer cryptocurrency exchange
- Sun Multi Wallet – Private banking for cryptocurrency
- Vacuum – Gaming platform & marketplace
- Viuly – Video sharing platform
- Witcoin – Currency backed by knowledge
- Athena – Emotion monitoring ecosystem
- BlockV – Virutal goods marketplace
- Fintab – Accounting system for cryptocurrencies
- Flipz – Ecommerce platform with smart contracts
- Handelion – International trade facilitation
- Papyrus – Decentralized Advertising Ecosystem
- Paycent – Fiat and cryptocurrency e wallet
- Papyrus – Digital advertising ecosystem
- Gameflip – Decentralized ecosystem for digital gaming goods
- Request Network – Payment requests platform
- Valus – Platform which will connect trademarks, retailers and customers
- CamOnRoad – Decentralized real-time video logging application
- EZMarket – Decentralized eCommerce marketplace
- Stater – P2P and P2B cryptocurrency exchange
- Triforce Tokens – Rewards system for gaming applications
One name that consistently shows up in any meaningful discussion we have about tokens, ICOs, decentralized business models and cryptocurrency careers is Linda Xie: Former Coinbase PM, writer of excellent beginner guides and advisor to the 0x project — the only thing missing from her stellar crypto CV was a crypto-focused investment fund. So when we were told that she was setting out to do exactly that, we couldn’t wait to interview her about her career, opinions on the token space and setting up a fund.
From skepticism to defining moments
“Interest in crypto can explode to unprecedented levels in a matter of days”
Q: How did you first discover Bitcoin and what convinced you to start a career in the space?
A: I first discovered Bitcoin in 2011 when my classmate and I were researching topics to write about for our Economics class. We ended up writing a research paper on Bitcoin but our outlook wasn’t very positive at the time. My initial reaction was that it was fascinating technology but I did not think it would ever become mainstream because very few people had heard of it, the primary association was darknet markets, and there wasn’t a trusted or easy place to buy it.
The defining moment for me to start a career in the space was when Coinbase onboarded Overstock as a merchant to start accepting bitcoin as a form of payment in 2014. I was excited to see such a prominent company publicly show their support for bitcoin with a legitimate digital currency startup leading the charge. This event actually led me to apply to Coinbase.
Q: During your last year at Coinbase, you witnessed exponential user growth and the incredible price change in Ethereum. What is your biggest lesson about scaling a cryptocurrency focused company?
A: One of the surprising things that we witnessed at Coinbase is that interest in crypto can explode to unprecedented levels in a matter of days. While there had been a steady increase in new Coinbase customers, during the run-up in Ethereum market cap in May 2017 we had a day where 40,000 new users signed up. It’s important to create infrastructure that can dynamically scale at these rates.
Q: For cryptocurrencies to go ‘mainstream’ and/or to make it more attractive for institutional investors what are the types of companies that are missing and the critical problems that need to be solved?
A: Some of the obvious problems that need to be solved are the blockchain scaling issues. We need sufficiently decentralized blockchains that can actually support mainstream adoption today. Another one is the extreme volatility of cryptocurrencies, which can be inconvenient for people that are getting paid in digital currency. Having a reliable stable coin will be a critical ingredient for mainstream adoption of digital currencies. I’d like to see more companies focused on publishing educational materials for non-technical folks and easy ways to store and exchange crypto in every country, as well as financial instruments such as ETFs for institutions (e.g. pension funds, university endowments, etc.) to invest in.
The Token Take
“if you were to replace the token with Ether, would it operate in the exact same way?”
Q: We can imagine that you get approached 24/7 by token sales to become an advisor for token sales/ICO’s. Why did you pick 0x?
A: I strongly believe in the 0x vision that the world is becoming tokenized and everything from fiat currencies to stocks to digital game items will eventually end up represented as digital assets on an open financial network. Naturally there will need to be a low-friction method of exchange on this new open financial system. I am confident that the 0x co-founders, Will and Amir, are able to execute on this vision given their technical expertise around smart contracts, research, and trading as well as their passion for the technology.
Q: Having worked for both the most successful centralized exchange and a decentralized trading protocol, how do you see centralized and decentralized trading platforms co-exist in the future?
A: I see trusted centralized platforms such as Coinbase and GDAX as the bridge between finance 1.0 and 2.0 providing the fiat rails to crypto. Institutional investors might be more attracted to centralized platforms because they offer high performance trading, advanced tools, and are legally accountable should any issues arise. Non-technical people might find it easier to use centralized exchanges because they don’t need to worry about storing their own private keys.
Decentralized exchanges are great for those that are more comfortable storing their own private keys and are necessary for trading assets that aren’t readily available on existing centralized exchanges. In addition, not everyone will have access to a centralized exchange but anyone with an internet connection can access a decentralized exchange.
Q: What’s your view on the current ICO boom? Moreover, if this initial growth slows down — or put more bluntly, when the ICO bubble pops — which types of projects are the ones to survive?
A: I think the projects that survive will be the ones that have a clear need for a token. A key question to ask — if you were to replace the token with Ether, would it operate in the exact same way? If so, then I don’t necessarily see the value in the token besides an easy funding mechanism. Of the countless projects selling tokens over the past year, I believe most will go to zero. Especially the pre-product teams that put a heavy emphasis on marketing.
Q: Given the successful completion of the 0x token sale both in terms of capital raised and wide distribution of holders, what best practices would you advise other projects to follow?
A: I’d like to see projects raise only the amount of funds they need. Many projects set their fundraising target to maximize the amount of capital that the market will provide, but they won’t necessarily be able to responsibility allocate this capital. I do not support the notion that whales should be able to buy up a majority of the tokens, so I hope to see more projects include a process like 0x in creating a wide distribution. Only pick advisors that will truly add value to your project rather than as a way to gain credibility by association. Ideally the project has a working product before the token sale. For projects raising funds from US investors, they should work closely with a legal firm to minimize the risk that their token will be considered a security. Focus on building a strong community of token holders. This can be accomplished with little to no marketing.
There’s many other best practices to follow and I plan on co-publishing a more detailed post on this soon.
Q: Other than 0x, what are interesting token projects that you follow?
A: There are so many interesting projects. As I mentioned earlier, stable coins are critical to the crypto space so I’m paying close attention to projects working on this problem. I’m following prediction market platforms like Augur closely because I’m particularly interested in seeing how they may impact insurance markets and later on even governance models through futarchy.
Starting a fund
“For the past couple years I found myself spending all of my free time reading technical whitepapers”
Q: You recently announced that you’re starting a crypto focused fund together with Jordan Clifford (ex-Coinbase). Why did you want to make this move and what will you focus on?
A: For the past couple years I found myself spending all of my free time reading technical whitepapers and talking to other passionate people in the space. I am excited to fund and advise promising crypto projects full time. The focus will be giving our investors broad exposure to cryptocurrencies that we believe in long term. We will invest in everything from existing protocols to early stage projects, however, we won’t be actively trading as we believe our main value add will be picking out long term winners.
Q: The outperformance of crypto as an asset class and the ICO hype have led to a large interest from institutional investors. As a result, dozens of new crypto focused funds have popped up in the past quarter. What do you think about this development, and what will be your fund’s competitive edge?
A: Jordan and I have been involved in the crypto space since early on, we understand and believe in the technology and want to see it succeed for the right reasons. We’ve experienced the ups and downs; ultimately we see the path forward for the technology long term. In the current highly speculative environment we feel comfortable differentiating the truly innovative technologies from the projects that are attempting to take advantage of unsophisticated speculators. Jordan has one of the sharpest technical minds in the space, and he is able to dive deep into a codebase to find technical flaws and assess code quality.
Q: We saw an investing mantra from Stanley Druckenmiller on your twitter last week. As you make the transition to the institutional investment side of crypto, what are the main challenges you face and who do you go to for advice?
While the markets are very volatile, we want LPs to be able to confidently ride out the ups and downs with us. Recently, I’ve been getting invaluable advice from some friends in the venture capital space since they have a similar challenge in getting others to see the long term vision in their investments. That’s the main challenge to overcome and the excitement for us: getting institutional investors to understand cryptocurrencies and be excited by the grand vision.
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*Disclaimer: The TokenData team participated in the 0x token sale (general public, not presale)