Q&A with Set Protocol – Decentralized Crypto Baskets

Monday, June 4, 2018

The explosion of ICOs has led to an exponential increase in the number of ERC-20 tokens that are actively traded. There have been dozens of ICOs and matching numbers of tokens for each new blockchain use-case. As a result, many users and investors in the crypto space frequently ask the following questions:

  • “How can I transfer multiple different tokens in one transaction?”
  • “Are there crypto benchmarks and index funds that I can buy?”
  • “How can I easily invest in a whole sector or use-case?”.

In this product deep dive, we talk with the Set Protocol team. During the past months, the Set Protocol team has been building (or should we say “buidling”) a toolset that allows people to easily create, buy and transfer baskets of tokens.

The best part?

They’re doing this without an ICO AND have launched on Ethereum MainNet already. Check them out on TokenSets.com and enjoy the Q&A!

Set Protocol: Decentralized Baskets of ERC-20 Tokens

Q: What is Set Protocol?

A: In technical terms, Set Protocol is an open-source collection of smart contracts that allows users to group together different ERC20 tokens into a single “higher-order” ERC20 token: a Set.

This comes with a number of benefits:

  • Ownership: The owner of any Set has direct ownership and full custody of the underlying ERC20 tokens.
  • Transferable: Popular Sets can be transferred or listed on centralized and decentralized exchanges like any other token.
  • Redeemable: Any Set can be unbundled back into the underlying tokens whenever a user wants.
  • Cost-efficiency: Users can transfer ownership of multiple tokens in one transaction (by transferring the Set) rather than one transaction per underlying token
  • Atomically Divisible: Because a Set is an ERC20 token itself, you can transfer fractions of it.

Q: How does this apply to cryptocurrency indexes and ETFs?

A: In US equities, ETFs make up 30% of dollar volume and 23% of share volume, and 7 out of 10 of the most actively traded instruments in the US are ETFs. If there’s any translation from equities, the potential for crypto indexes is huge. Set Protocol allows a user to build Sets composed of any combination and proportion of ERC-20 tokens. If the creator so chooses this can be used to approximate a cryptocurrency index. For example, any user can create an index that includes the most popular ERC-20 tokens and then use that index as a token.

Our goal is to give these tools to the broader cryptocurrency community and see what new possibilities come up that we haven’t thought about before.

Q: What makes Set Protocol different from existing cryptocurrency index and basket solutions?

A: The cryptocurrency index sector is still small with most existing index offerings functioning in a traditional/centralized manner (e.g. CoinbaseBitwise). They’re great solutions, but bring over a lot of the issues that exist in traditional index funds and ETFs for equities etc.

Since Set is an open protocol it mitigates many of these issues by enabling:

  • Access to everyone: The divisibility of a Set means that they’re open to everyone without large minimums
  • Full ownership: Sets themselves are ERC20 tokens that can be freely transferred or liquidated (into the underlying tokens) at any time.
  • Customizability: Anyone can create a Set that represents a certain sector of the crypto ecosystem

Q: One of the questions that comes to our minds when thinking about the challenges around decentralizing indexes, is how rebalancing of a Set will take place. Have you thought about this?

In the first iteration of our protocol, the list of tokens and weights assigned to each token in the Set are static. We are exploring rebalancing mechanisms going forward, such as:

  • Vintages: Each month or quarter, a new Set can be created with the most recent quantities and tokens. Rebalancing would be opt-in by the user, trading the outdated version for the more updated Set.
  • Trustless Algorithmic Rebalancing: Instead of a user-instantiated rebalance, the smart contract itself would initiate an auction for the rebalance itself.

TokenSets: The Platform to Manage Sets

“With TokenSets we’re aiming to push the boundaries of solid UX in the crypto world.”

Q: You guys just launched the Beta version of TokenSets on MainNet. What is TokenSets?

A: We’re trying to build an ecosystem around the Set Protocol. We continuously ask ourselves “How do we make it as easy as possible for users to use our protocol?”

We believe this question is actually split into two:

  1. UX: How easy is it to create and manage Sets?
  2. Liquidity: How do people fund and transfer Sets?

TokenSets is the initiative that we’re building on top of the Set Protocol to answer both questions. TokenSets is the first consumer-facing platform and we hope it creates a standard for other developers who want to use the Set Protocol. With TokenSets, people will be able to:

  • Manage and View Sets through a dashboard that links to MetaMask
  • Bundle and Unbundle instances of existing Sets

Eventually we are looking to add the functionality to create, design, and launch a Set using a creation flow.

Managing a Set composed of Decentralized Exchange tokens

Q: What are the features in this first launch?

A: In our first MainNet release, people are able to bundle, unbundle and track the performance of a number of existing Sets. We’re launching with three example Sets:

  • EthereumX Set: The top 10 ERC-20 compliant tokens with threshold valuations, liquidity and security features. Buy one token that represents the current Ethereum ecosystem.
  • DEXSet: A Set of DEX protocol tokens that are building out the future of decentralized trading and exchanges.
  • StableSet: The composite stable coin. By bundling multiple stable coins together, you can spread the risk of price stability and the risk of one stable coin system failing.
Sets offered in the TokenSets MainNet launch

Q: Will TokenSets create Sets?

A: Initially, we will offer a few Sets as examples of what can be created with Set Protocol. However, it is our intention to only provide the tools and infrastructure that enables users to design and create their own Sets. We want to allow the developers and creatives the ability to build Sets they think people will want.

Q: How will creators of Sets, be able to make money?

A: The creator of a Set incurs costs in sourcing the underlying tokens and also provides a valuable service in researching and constructing the optimal Set. If there is an influx of demand of a particular Set, it will be reflected in the price of the Set in the market. Thus, there will be arbitrageurs who will come into take advantage of these price differences. We expect Sets to be priced at a small premium to the sum of the underlying tokens.

TokenSets serves as a proof of concept for proving out Set Protocol and does not charge users in any way. However, we’re also exploring other monetization efforts for Set creators and TokenSets as a platform.

Q: One of the main “complaints” in the crypto space is a lack of good UX. What’s your view on this?

A: Our goal is to make the dApp experience as enjoyable as possible within the constraints of the tools we have. There are a lot of great protocols out there that are facing low user adoption because of unpolished UX, and the fact that there isn’t much support for good UX in the crypto space to begin with. In the most ideal world, the end user wouldn’t even realize they’re interacting with the blockchain at all, but we have a ways to go until we get there. With TokenSets we’re aiming to push the boundaries of solid UX in the crypto world.

Q: It’s refreshing to see more and more teams like Set Protocol building a product before or without an ICO. Can you shed some light on your decision to not launch a token and raise an equity seed round?

A: Our views in regards to a token sale echo that of Dharma’s. Because token sales are a great fundraising mechanism, we’ve seen many projects pursue token sales in 2017 and the beginning of this year. However, we’re finding that many teams are thoughtlessly cashing in on the fundraising frenzy, as opposed to considering the merits of a token sale. We’ve thought about it carefully and have concluded that a token sale does not make sense for us for a few major reasons:

  1. Lack of appropriate token model: At the moment, there isn’t a sustainable token model that makes sense yet. The models that we’ve seen that could potentially work are a) money (e.g. Platform token like Bitcoin, ETH, or zCash) and b) staking tokens (e.g. ETH).
  2. Regulatory uncertainty: With the regulatory uncertainty in the US, many tokens are likely to be considered securities. We’d like to see more regulatory certainty before we consider a token sale more deeply.
  3. Optionality: Performing a token sale locks a project into a particular technical stack, investor base, and monetization model. We’d prefer to carefully consider all of our options before locking ourselves into a particular stack.

Q: Developing a protocol and ecosystem like Set Protocol is a large undertaking and feedback from other developers and partnerships within the decentralized financial stack are crucial to success. Are there any areas in which you need help or like to get feedback?

A: Try out TokenSets first! We’re always looking for honest and open feedback. We want to hear from the community what features they’re looking forward to most on Set, we’re sure there are features we haven’t even thought of yet. Here are a few features we’re building and/or thinking about:

  • Create your owns Sets
  • Non-fungible Sets (booster packs, crypto composables)
  • Developer tools. An API for Set data, price data, historical data, and images, and a Javascript library that allows you to integrate Set tools into your own wallet or dApp.
  • Trustless algorithmic rebalancing

If you have features you’re really excited about or want to chat with us, we’d love to hear from you on our Slack channel!

— — —

Thanks to Inje Yeo and the whole Set Protocol team for participating in this Q&A!

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Weighing in the heavyweight contenders

Thursday, May 3, 2018

ICOs raised $550M in April 

48 completed ICOs raised a total of $548M in April 2018. This is a significant (25%) decline since March and close to a 70% decline from the “ICO fundraising peak” in January. Total capital raised by completed ICOs stands at $4.1B in 2018 versus $5.6B for 2017.

Two trends stood out in April:

  1. Higher ICO Failure Rate: 7 out of every 10 ICOs that ended in April did not publish any data about the completion of their token sale or completely disappeared from the internet. We consider these ICOs to have “failed”. Although it’s a lagging indicator, it’s the highest failure rate since we started capturing data in 2016, and further shows that many projects are of very low quality. 
     
  2. New definition of “success”: Even for ICOs that do publish data, we’re seeing a trend towards vague reporting. For example: some ICOs claim a “successful” raise but do not report any data on funds raised (USD, ETH, BTC) and/or the smart contract address through which we verify our data. Instead, these projects report the number of tokens sold, which is meaningless, since many of these projects give heavy discounts at the start of the sale.

So – we’re seeing a downward trend – but how does the fundraising chart look if we include  Telegram’s private sale (which reportedly closed this week) and the ongoing EOS sale?

Corrected for Telegram and EOS, ICOs have raised $8B in 2018 ytd

The Telegram private sale raised $1.7B
The private filings with the SEC show that Telegram raised $850M in February and March… a staggering total of $1.7B. If we include this data our ICO fundraising estimate for 2018 increases to $5.8B, – surpassing the $5.6B raised in 2017.

It gets even crazier…

EOS has raised $3.3B and is still active for 2 months
Our analysis* of all the Ethereum transactions sent to the EOS token sale shows that EOS has raised close to $3.3B since the sale started in June 2017 with the following annual totals:

  • 2017: EOS raised $840M
  • 2018: EOS raised $2.25B year-to-date

Corrected for Telegram and EOS, ICOs have raised $8B in 2018…
Taking both the Telegram and EOS data into account, we adjust the 2017 capital raised number to $6.5B and 2018’s to $8B. It only took 4 months for ICOs to raise more capital than in all of 2017….

Slowdown in public fundraising, but uptick in private (unattributed) token sales in the US
Nonetheless – even with the large adjustments for Telegram and EOS – we see a decline in token fundraising since the start of 2018. This is especially the case for public token sales (first graph).

However, there are two caveats:

  1. Lagging Indicator: TokenData’s main methodology of looking at the end date of an ICO means we’re working with a lagging indicator. 
     
  2. Increase in 100% private rounds:  Similar to the Telegram private sale, there is an increase in capital raised through fully private rounds in which tokens are sold through a SAFT (and in the US to accredited investors only). 

    Some notable examples for April:

We’re compiling data on the private (unattributed) token sales and will take them into account going forward. If you have any data on this – we’d love to hear from you!

Cheers,

The TokenData Team

*USD value of EOS token sale was calculated by marking each day’s ETH contributions to the EOS token sale at that day’s ETH closing price. Subsequently, we calculated the totals per month.

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The 3 F’s of Crypto Index Funds

Wednesday, March 14, 2018

The TokenData Take: Fees, Forks & the Fidelity of Crypto Index Funds

Custodial services, more regulatory certainty and robust cryptocurrency index funds are all requirements for institutional capital (pension funds, endowments and insurers) to enter the cryptocurrency space. So, when Coinbase launched their aptly named Coinbase Index and Coinbase Index Fund last week, we decided to compare the handful of cryptocurrency index funds that are out there already:

It’s slim pickings in the land of cryptocurrency index funds but there are a few key differences that are worth highlighting.

Traditional vs Tokenized – Decentralized Index Fund Management
The Coinbase, Grayscale and Bitwise index funds operate similarly to existing (equity) index funds from Fidelity, Vanguard etc: They’re centralized entities with a similar legal setup and requirements for investors.

The “Tokenized” funds are (partially or completely) decentralized versions of an index fund: smart contracts control the deposits/withdrawals of funds and trading/rebalancing of underlying assets. The shares in the fund are tokenized and can be traded on cryptocurrency exchanges. One of the tokenized funds, Crypto20, even held an ICO – raising $38M in Nov ’17 – of which 98% was used to buy the index’ underlying assets. Nonetheless, the impact of tokenized funds has been very limited so far, which is evident in the relatively small size of Assets Under Management (AUM).

Number of Assets – Broad Exposure vs Outperformance
Coinbase and Grayscale position their funds as a way for investors to get exposure to digital assets in general. They achieve that by including just the top 4 or 5 cryptocurrencies which make up more than 75% of the total cryptocurrency market right now. The other indexes – especially the tokenized ones – position themselves more as vehicles to outperform the large cap cryptocurrencies and include more cryptocurrencies as a result. Fees – Not that surprising and not that interesting…Most criticism about the Coinbase announcement centered around the fund’s 2% fee. The 2-3% fees charged by Coinbase/Grayscale/Bitwise are relatively high compared to equity index funds (<1%) and you could replicate the indexes by just buying the same assets on any of the crypto exchanges. However if you take into account the small variety of index funds, regulatory uncertainty and a lack of good (and cheap) cryptocurrency custodial services, the fees do not seem that unreasonable.
Forks are the new Dividends
Crypto index funds approach forks very much the same way as equity index funds approach dividends. When a cryptocurrency forks, a fund can either include the forked token (similar to reinvesting dividends back into the fund) or the fund can exclude the forked token (not reinvesting the dividend). Both approaches are being taken by the index funds we’ve looked at.

Fidelity of Crypto – Size matters, but…
Size does matter for index funds because size equals lower trading fees, This is where Coinbase’s index fund has an edge right now, because it has access to a leading cryptocurrency exchange (GDAX). However, it’s too early to compare most of these funds on either an AUM or risk-return basis. Additionally, to become the “Fidelity of crypto index funds” any of the above mentioned funds will face new challenges besides the classic race to the bottom on fees:

What if an existing fiat focused fund manager enters the crypto game? What if there is no centralized “Fidelity of crypto”. Theoretically speaking, smart contracts could form any index or basket of cryptocurrencies.  A publicly available ‘index smart contract’  paired with (de)centralized exchanges could mean that anyone can own an index by simply invoking a smart contract. As farfetched as that might sound, we found a project (Set Protocol) that’s active in this area, and will give you a few more minutes of crypto index fund nerdiness.
More information and sources:

ICO Calendar: 57 Sales

Mon (3/12)

Tue (3/13)

Wed (3/14)

Thu (3/15)

Fri (3/16)

Sat (3/17)-

Sun (3/18)

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Legal Domiciles of ICO teams

Tuesday, March 6, 2018

For the third month in a row, ICOs have raised more than $1B, with 55 projects collecting $1.2B in February 2018. To put this into perspective: In the first two months of 2018, ICOs have already raised 50% of 2017’s total capital…and this is excluding the monstrous Telegram sale which is on track to raise $1.5-2B. There are no signs of a slowdown despite increased regulatory action – more than one hundred new ICOs launched in the first 3 days of March and the popularity of private pre-sales continues with pre-sales contributing to 55% of the capital raised in February.

Nonetheless, through the noise, we’ve seen some developments in the first two months that we’d like to dig deeper into.

Token Geography: Are ICOs moving because of regulation?

What do the US, China and Lithuania have in common? 

  1. They’ve all underperformed at the 2018 Winter Olympics.
  2. They’ve never won a prize at the Eurovision Song Contest.
  3. They’ve all been home to a large percentage of ICOs

The answer is that this was a trick question and all three answers are correct.

Our comparison of legal domiciles of ICOs in 2018 and 2017 show a few surprises:

  • The U.S. continues to be the country in which ICOs raise the most capital, despite the SEC’s increased attention.
     
  • Capital raised by teams in China and/or Hong Kong has already surpassed capital raised in 2017…PBoC who?
     
  • Switzerland, a self-proclaimed “crypto friendly” country, has not attracted significantly more ICO capital in the current regulatory climate.
     
  • For reasons unknown to us, Lithuania, one of the beautiful Baltic states, has a sprawling token community that apparently can’t get enough of ICOs.
     
  • Gibraltar, a country with only 32k inhabitants has been home to $78M worth of ICOs….

We’re curious to see how some of these patterns will change over the next few months, as we expect regulators to step in more often and more aggressively. Additionally, we have to take into account that the trend of pre-sale dominance is causing this data to be a lagging indicator due to a longer fundraising cycle.

How Token Sales get Airdrops Wrong

TL;DR: Some token sales think that airdrops of tokens can help them avoid regulations and increase valuation. This is not the case.

ICOs that have sold a majority or all of their tokens in pre-sale rounds often revert to a relatively small airdrop of tokens (<5% of token supply) to people who were subscribed to a public sale which got cancelled after all capital was raised in the pre-sale.
While airdrops can make economic sense (they broaden the initial user base, thereby increasing the potential network effects of the protocol/application), we’ve seen some ICOs revert to airdrops because they believe that:

  • a) Airdrops reduce the regulatory footprint in terms of securities laws: 

    “We’re not ‘selling’ tokens to people!”

    and/or
     
  • b) Airdrops increase a project’s valuation instantly:

    “After our pre-sale in which we sold 10 million tokens at $1/token, we’ve now created 10 million additional tokens that we’re giving away for free, so our valuation is now $20M!”

Although we’ve slightly exagerrated them, both types of reasoning are wrong. Here’s why:

  • a) Airdrops are still subject to securities regulation: Imagine you’re a team launching an ICO and you’ve just concluded an oversubscribed pre-sale of your tokens. You raised funds from accredited/institutional investors only and have done a full KYC check on them. You cancel the public sale because you have enough money and because you think that a public sale carries too much regulatory risk of selling security-like tokens to unaccredited investors. However, you now have to deal with 25k angry members of your Telegram channel and 10k twitter trolls who had all subscribed to the public sale.

    Therefore you  decide to airdrop some tokens to keep them happy.

    If [insert favorite regulator here] comes knocking on your door in a few months and you answer with “But we’ve only sold tokens to accredited investors” you really need to read this Coincenter article about airdropped tokens being subject to securities regulation. Alternatively, read this article about  Oprah’s Ultimate Car Giveaway if you prefer memes.
     
  • b) Airdrops should not affect an ICO’s “valuation”:  Imagine you’re a team launching an ICO and you’ve just raised $36M by selling 36M tokens at $1 in a private round to accredited investors. For all the right reasons you decide that’s more than enough money to build v0.1 of your dApp on ETH testnet and cancel the public sale. However, you still want people to give your dApp a try once it launches.

    Therefore, you decide to airdrop 4 million tokens to people who showed interest in your dApp.

    Despite the fact that your tokens were sold at $1/token in the private round, you’re NOT adding $4M of extra value to your project by just creating an extra 4 million tokens out of thin air. Unless $4M miraculously appears in your cold storage wallets, your project’s valuation is closer to $36M than $40M. If you still believe the latter number, tell your in-house “cryptoeconomist” to read up on everyone’s favorite Italian-American Nobel prize duo.

    (N.B. for the econ geeks among you: We acknowledge that tokens are strictly speaking not the same as equity, but we do believe that increasing the number of outstanding tokens for no monetary compensation should have de-facto dilutive effects on the price per token. Any increase in value per token attributed to increased “network effects” caused by the airdrop is unlikely to outweigh the dilutive effects)

ICO Calendar: 30 Sales

Mon (3/5)

Tue (3/6)

Wed (3/7)

Thu (3/8)

Fri (3/9)

Sat (3/10)

Sun (3/11)

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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)

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Despite Bitcoin price correction ICOs are still raising Billions

Wednesday, February 7, 2018

The TokenData Take: ICOs raised $1.5B in January 2018

67 ICOs completed their fundraising efforts in January for a total of $1.5B raised. We’re fully aware the monthly statistics are starting to sound like broken records (pun intended)… That’s why we’ll keep it short this time so that we can all go back to procrastinating at work!

Trends of January:

  • Big Raises: $20M average vs $12M in 2017 ($15M median vs $4.5M in 2017)
  • Big Failures: 58% of all ICOs that were active and supposed to end in January failed, did not report, returned funds or 404’ed 
  • Large private & pre-sale rounds: The average ICO raised more than 50% (some even +75%) through private allocations and large pre-sale blocks. Some ICOs even decided to cancel the public/main part of the sale…Read more about this trend in Token Economy #34: RIP ICO? which includes our data and anecdotes.
  • Longer fundraising cycles: The emergence of large private and pre-sale rounds has extended the duration of token sales significantly. The average duration for each of the pre-sale and public stages of an ICO is 30 calendar days. If you factor in time for KYC, whitelisting and marketing efforts, the actual fundraising cycle is closer to 3 months.

We’ve gotten a lot of questions in the past week about how the price drop in BTC and ETH will affect ICO fundraising stats. In our database we timestamp the capital raised  numbers based on the official closing dates and corresponding announcements made by ICOs. However, the above-mentioned trends – large private/pre-sale rounds and longer ICO fundraising cycles – imply that significant price volatility in crypto or even a “large correction” might not affect ICO fundraising stats immediately and that there’s a lag.

For example, despite the big drop in BTC and ETH in the past weeks, $240M of capital raised has been reported in the first week of February, the bulk of which originated from pre-sales during December and January. Although there is not much history, we can look at July 2017, when ETH dropped 50% from its high in June. It wasn’t until August 2017 when there was a corresponding drop in ICO activity.

Expect a closer analysis of pre-sale dynamics and their impact on fundraising and token trading patterns next week!

Cheers,

TokenData

NEW TokenData Publications & Features

  • State of The Token Market: A Year in Review & Outlook for 2018 –  Together with our friends at Fabric VC, we put together a full data-driven review of the token craze of 2017 and qualitative outlook for the token landscape in 2018. Unfortunately, we didn’t make it to the presentation of this report at the World Economic Forum in Davos, because, you know, crypto never sleeps…

ICO Calendar: 31 Sales

Tue (2/6)

Wed (2/7)

Thu (2/8)

Fri (2/9)

Sat (2/10)

Sun (2/11)

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The TokenData Take: New Year, NEO Me?

Tuesday, January 16, 2018

Only two weeks into the new year, token sales and ICO fundraising have kept their momentum from the last weeks of 2017. A staggering $570M was raised by 23 token sales in the first two weeks of 2018. We’ve distilled a number of insights and trends from the first two weeks that point at a strong start and things to look out for in 2018:

Capital Raised
Both total and average capital statistics point at strong momentum for ICO fundraising as evident in the following:

  • $570M in 2 weeks: Only eclipsed by the fundraising in the last 2 weeks of Dec ’17, when ICOs were rushing to close into the year
  • Higher Average Raise: $24M vs $12M in Q4 17
  • Higher Median Raise: $20M vs $4.5M in Q4 17
  • ICOs that fill up within minutes: At least 3 ICOs (TrinitySelfkeyThe Key) filled up in a matter of minutes – something we haven’t really seen since June/July 2017

The rise of NEO ICOs*
During 2017 there were only a handful of ICOs that launched on top of the NEO blockchain. The two best known examples were QLink ($20M) and Red Pulse ($13M). A few weeks into the new year, we believe that NEO specific ICOs could be the catalyst for increased ICO activity in Q1 2018, because of the following patterns: 

  • Increasing number of sales >20 NEO specific ICOs have been announced
  • Short completion time: The above-mentioned ICOs that filled up within a matter of minutes are all projects building on top of the NEO blockchain.
  • Focus on infrastructure: Very similar to the first wave of Ethereum based ICOs, many of the NEO specific projects focus on infrastructure and second layer solutions. Examples are Trinity (off-chain payments/lightning layer, raised $20M this week) and NEX (Decentralized Exchange, token sale date tbd)
  • Regulatory conditions: Pent up demand for NEO ICOs could be due to Chinese Cryptocurrency Holders who cannot cash out into fiat due to the exchange-to-fiat ban.

*For those unfamiliar with NEO: NEO (previously known as Antshares and sometimes referred to as the “Ethereum for China”) is a blockchain that is similar to Ethereum in it being Turing complete and its ability to execute smart contracts and issue tokens.

Whitelist & Social Media Activity
Nowadays, almost all token sales employ some form of pre-registration and/or whitelisting (first introduced by Civic and 0x). This is often paired with social media programs (bounties, aggressive paid marketing) or required registration and reposting in social media channels (telegram, slack, etc). In recent weeks we’ve seen exponential growth in whitelist registration and social media channel growth. Some examples:

  • WePower: 120k people on whitelist for a $5-$10M public sale
  • Gems: >30k applications for whitelist and ~50k people in a telegram channel 
  • Apex: 12.5k whitelist spots fill up within 15 minutes

Active & Upcoming Sales
60 ICOs are launching this week…. This is the highest weekly number since October 2017. A full overview can be seen below

The first “Corporate” ICO
When a defunct camera company announces a token sale, you know that this is just the beginning of a wave of corporate ICOs. In the meantime, we’ve sent Kodak management a copy of this excellent book.

If you have questions or more examples for any these trends, hit us up, we’d love to hear from you. 

Cheers,

The TokenData Team

BONUS: New on TokenData

  • New ICO Calendar: The old calendar was made for 50 items, not 400… Our new layout should make it easier to browse through the active and upcoming sales. 

Token Sale (ICO) Calendar

Mon (1/15)

Tues (1/16)

Wed (1/7)

Thurs (1/18)

Fri (1/19)

Sat (1/20)

Sun (1/21)

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Billion Dollar December

Tuesday, January 2, 2018

The TokenData Take: ICOs raise >$1B in December and >$5B in 2017

Let’s cut straight to the chase:

ICOs ended 2017 on a high by raising more than one billion dollars ($1.2B) in December, bringing total capital raised to $5.6B. It’s safe to say that this has exceeded everyone’s expectations including our own prognosis two weeks ago. The last two weeks of December saw two large closings – Sirin Labs $157M, Bankex $70M – and a large number of small to medium closings.

Source: Tokendata.io

We will publish a comprehensive data driven piece about 2017’s token hype next week, but here are the key statistics for 2017:

  • USD Raised: $5,596 Million*
  • Nr of Completed & Reported ICOs: 442
  • Average Raise: $12.7M
  • Median Raise: $4.5M
  • Average Token Return: 12.8x
  • Median Token Return: 4.9x

In terms of token returns, equally weighted portfolios of ICO issued tokens have outperformed investments in ETH and BTC that are made at the same time as the ICO. However, after comparing average returns with the median returns, we see that ICO returns are heavily skewed by a handful of projects (more on this in our full report next week).

The year is off to a stronger start than we had expected with 26 ICOs launching this week. Looking ahead, we’re counting 160 ICOs that have already been announced for Q1 2018 and a further 266 whose exact dates are still to be announced. The story continues into another year, and we will be there to provide you with all the data and transparency!

Cheers and Happy New Year!

The TokenData Team

* We’re not including the full EOS token sale, because it is still ongoing and there are conflicting reports on how much has been raised so far. Estimates vary from $200M to $900M…

Token Sale (ICO) Calendar

Mon (1/1)

Tues (1/2)

Wed (1/3)

Thurs (1/4)

Fri (1/5)

Sat (1/6)

Sun (1/7)

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Closing in on $5 Billion

Monday, December 18, 2017

With only two weeks left in 2017 we seem to be reaching a slowdown of new ICOs. A mere 16 new sales are launching this week versus the 30-50 we have seen in the past weeks. The dudes running ICOs are either too busy raising and trading Cryptokitties or figuring out which nightclub will receive their crypto gains in the form of bottles of Dom. We think it’s the former, because – you know – HODL.

As we head into these last two weeks, let’s take a look at the key stats right now: 

  • $4.6 Billion: The amount raised by ICOs in 2017 so far – December included
  • $314 Million: The amount raised in December so far (40 ICOs, $7.85M average raise)
  • 158: The number of sales that are still scheduled to complete in the last 2 weeks of 2017 – yes…one hundred fifty eight…

Unless the whole crypto community decides to watch Home Alone 5 over Christmas the sheer number of ICOs that are scheduled to close puts the $5B mark well within reach. We’ll report on progress next week.

Don’t Call it a Comeback (yet): Tokens vs BTC

The spectacular rally of Bitcoin in the past month has left us wondering if the relative outperformance of ICO issued tokens has diminished since we last published some stats around this in October. We’ve updated that analysis and the key takeaways and graph are as follows:

  • Pick your winners: Only 26% of all ICO issued tokens outperform both Bitcoin and Ether. This is consistent with our findings two months ago (27%)
  • Tokens Tokens Tokens…: On average, an equally weighted portfolio of ICO issued tokens still outperforms portfolios consisting of investments in BTC and ETH at the same time as an ICO (sidenote: heavily skewed towards ICOs launched in the first half of this year)
  • But..BTC has closed the gap somewhat: The token portfolio outperforms BTC by “only” 2x vs 3.5x back in October – evidence of the recent BTC rally

Token Sale (ICO) Calendar

Mon (12/18)

Tues (12/19)

Wed (12/20)

Thurs (12/21)

Fri (12/22)

Sat (12/23)

Sun (12/24)

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Location, Location, Location?

Monday, December 4, 2017

The Location of Legal Entities & Founders behind ICOs

Over the past months, we have worked with European VC firm Atomico on the data side to contribute to their annual State of European Tech Report. This year’s report wouldn’t be complete without a data-driven section about the crypto and ICO frenzy, so together with Tom from Atomico, the TokenData team performed the most comprehensive analyses on countries and cities out of which ICOs are launched.

We analyzed the (legal) location for >1200 ICOs in addition to capturing the geographical location of ICO projects’ founders (CEO & CTO) using publicly available social media profiles.

Here are the key takeaways from the data:

  • Legal Domicile ≠ Founders’ Domicile
    One in four ICO projects is legally registered in a different county to that of its CEO/Founder
     
  • Europe counts highest amount of ICO projects…
    There are more ICO projects coming from Europe-based entities and European founders than any other region
     
  • .. but ICO founders from North America have marginally out-raised those from Europe
    $1.3B for team ICO-USA and $1.2B for team ICO-Europe
     
  • Switzerland is a leading home to the legal entities behind ICO projects, but not always to their founders
    ICO Legal entities based in “Crypto Valley” have raised more than $800M. However, this number drops to “only” $200M when we look at where the founders of these ICOs are actually based.
     
  • Two out of three ICO projects have founding teams located in different countries
    This is the most important and interesting conclusion in our opinion. Bitcoin, Ethereum and many other blockchain protocols started off – and still are – open source projects with contributors from all over the world. This pattern continues in most ICOs. If the future is decentralized, then founding teams will be as well.

Want to see all of the data insights? Full report with sleep graphs can be found here.

Source: Tokendata.io

Weekly Update

  • We’ll be at TokenSummit in San Francisco this week, hit us up if you want to grab a coffee or beer and get some free TD swag!
     
  • Best quotes from the ICO Financing Conference @ U.C. Berkeley
     
    • “We won’t get a lot of retweets for obvious reasons” – Spankchain Founder about their project’s media strategy
       
    • “You could call something a tomato, widget or utility coin, but at the end of the day we do our analysis” – S.E.C. counsel clarifying the Howey test once again
       
    • Bonus Points: “If I denominate my tokens in a hard commodity, for example pork bellies, does that mean they won’t be securities under S.E.C. rulings?” – Founder of unnamed ICO trying to financially engineer his way out of U.S. securities law…
       
  • 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 ICOs (wk/mo/ytd): 11 / 11 / 366
    • USD Raised (wk/mo/ytd): $72M / $72M / $4.3B
    • Calendar: 32ICOs this week

Token Sale (ICO) Calendar

Mon (12/4)

  • Arbitrage Crypto Trader – Cryptocurrency trading application
  • Aurora – Decentralized banking and finance platform.
  • Dimpay – Global payment system that is built on the NEM blockchain
  • ExsulCoin – Blockchain for the vulnerable populations
  • Galactikka – Self promoting social media
  • Gameflip – Decentralized ecosystem where digital goods on all gaming platforms can be sold as liquid assets.
  • INS Ecosystem – Decentralized consumer ecosystem
  • KickCity – Social media network
  • REMME – Security system
  • Satoshi Brewery – Satoshi Brewery in the city of Murmansk, in Northwest Russia
  • Sether – Social Network Data for Blockchain Businesses
  • Squeezer – Platform that helps software developers to builds apps
  • Trade.io – P2P cryptocurrency trading platform

Tues (12/5)

  • Artex Global – Global artwork platform
  • Play2Live – Ecosystem for eSports and gaming industries
  • Rentberry – Decentralized home rental platform
  • SophiaTX – Blockchain for Business
  • VCXCoin – VCXCoin is a potential ecosytem for visionary investors.
  • VVToken – Cryptocurrency debit card

Thurs (12/7)

  • Debitum Network – SME/SMB Financing platform
  • DreamTeam – eSports platform
  • Fintrux – Small business loans platform
  • Narrative – An ecosystem that rewards content creators
  • RAISON – AI Platform for investment and personal finance
  • Sorbase – Cryptocurrency trading exchange aggregation
  • Swissborg – Private banking with smart contracts
  • ViMarket – A 3D marketplace that allows users to create and share virtual reality (VR) experiences

Fri (12/8)

  • Florio – Health monitoring application
  • Galaxy eSolutions – Ecommerce business for Pre-owned and Refurbished Consumer Electronics Sector
  • Loci – IP and patent research and registration platform
  • Spectiv – Virtual reality streaming platform
     

Sun (12/9)

  • Gaze Coin – Customizable monetization for virtual reality
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