How it all began?
ICOs were considered the evolution of crowdfunding. Besides allowing smaller investors, it excludes no one. Anyone with an Ethereum wallet to store ERC20 tokens can participate in a token sale. Following all the hype with bitcoin and subsequent media frenzy, people fancied investing in other coins as well. They believed some of these coins will mirror the success of Bitcoin, if not outdo it. In addition, some of these coins doubled up as utility tokens too.
Token purchase frenzy
By 2017-18, the industry pumped millions and millions of dollars into every mainstream ICO. Even with decent backing, it did not take too long for the ICO projects to reach a hard cap. ICO investors tracked and participated in airdrops of every promising project. Sometimes, the tokens were sold out within a few hours, if not minutes, thereby causing ripples in the entire Ethereum network. It questioned the scalability issues in Ethereum platform.
ICO decline is not a fluke.
The prolonged decline since 2019
Even in 2019, the ICO frenzy was getting subtle. It had experts into splits on how the ICO industry would move forward. Some experts were convinced that the hype had died down, while others considered an ICO renaissance was about to come. Firstly, a lot of ICOs were congesting the Ethereum network. When investors pushed fees to bag as many tokens as they can in an airdrop, it delayed other transactions over Ethereum.
The ugly side of ICOs
Secondly, the lack of standardization paved the way for false accounting and cheap scams. Some of the projects were just scams that never intended to function once the public sale is over. Some of the ICO investors turned to IEOs, where an exchange sold the tokens through its launchpad/IEO platform, rather than the team itself. IEOs helped projects in getting validated by regulated markets of Europe and also boosted investor confidence because Exchanges list a project as IEO after complete due diligence and analysis, this process helps infiltration of low or bad quality projects and made sure that only high-quality projects get a chance to raise funds, as the market was sick and tired of scam or low-quality ICOs, IEOs have become a new trend and a ray of hope for investors and the community now.
Thirdly, people never saw a bitcoin-level overnight success that brought them here in the first place. A lot of these ICOs did not even become active projects later.
2020 – A dicey year
How things transpired in 2020?
ICO industry is still a cat on the wall situation in 2020. The dicey market conditions are very hard to comprehend, let alone speculate. The year has also been marked by the COVID-19 global pandemic fiasco. Business is just about usual in the case of bitcoin, but not in ICOs. Teams cannot travel around the world to present an idea. The bitcoin halving brought back interest towards the first-ever cryptocurrency yet again. As far as we noticed, most ICOs have not even extended their team or hired advisory boards. The promises of January remain yet to be fulfilled, with the first half of the year done in lockdowns.
Highly funded projects
ICO is not the only crypto funding option anymore. People are into IPOs, IEOs, STOs and more. There is no clear winner in the race of ICOs. The cloud is expected to clear by August or later. Nevertheless, the millions are still rolling at the ICOs. Gdigit offers GLDS tokens that are backed partly by gold. With over a couple of months away from the finish, their presale amassed over a million USD. Similarly, Burstex, a crowd owned cryptocurrency project amassed over $2.25 million with their ICO not ending in a couple of months. The top of the line IEOs at Binance launchpad was also able to raise good funds. The last two projects there were Harmony and Cartesi, and Other exchanges are also trying to follow the trend by offering IEO launchpads which will improve the fundraising trend over time.