Initial Coin Offerings (ICOs) were heralded as a groundbreaking means for blockchain and crypto startups to raise capital. However, the trajectory of many of these ICOs illustrates the volatile nature of this innovative fundraising approach.
This analysis examines the trajectories of the top five ICOs, assessing their initial promises against their current realities.
Evaluating Post-ICOs Of Top Tokens
EOS (EOS)
EOS raised $4.1 billion in its year-long ICO, which it concluded in 2018. Positioned as a blockchain platform for decentralized applications, EOS promised groundbreaking scalability and user-friendliness.
However, governance issues destabilized the project, which has reflected in its price decline. The EOS token is trading at a significant loss from its all-time high, reflecting a stark downturn of 97%.
Telegram Open Network (TON)
There were huge expectations about the Telegram Open Network (TON), a project owned by the renowned messaging app Telegram. The firm amassed $1.7 billion in its ICO.
However, regulatory issues, particularly the SEC deeming its token security, abruptly halted the usability of the TON token, prompting a return of investor funds and a hefty penalty payment.
Venezuelan Petro
Launched by the Venezuelan government in 2018, Petro’s ICO raised $735 million. However, constant debates surrounding its legitimacy and transparency have overshadowed any little success it might have achieved.
Filecoin (FIL)
Filecoin, securing $257 million in its 2017 ICO launch, aimed to revolutionize data storage through decentralization. Despite early optimism and a significant surge in token value during the 2021 crypto bull run, technical challenges and market competition have led to a substantial decline, with FIL currently trading at a 98% loss from its peak.
Tezos (XTZ)
Tezos garnered $232 million from its 2017 ICO to offer a more secure and democratic blockchain infrastructure. However, legal battles and internal conflicts post-ICO have impacted its trajectory. Nevertheless, it maintains a notable presence in the blockchain space.
Regulatory Impact On ICOs
After several failed ICOs, regulators have enacted strict rules for launching ICOs. In the US, the Securities and Exchange Commission (SEC) has classified several ICO tokens as securities. Thus, ICOs need to follow guidelines governing other securities assets.
Other countries are also making similar efforts to ensure that ICOs are safe for investors and not a crowdfunding scheme for malicious actors. While these regulatory interventions safeguard investor interests, they also introduce challenges and uncertainties for ICO projects.
Compliance with new regulatory frameworks adds some complexities to conducting ICOs. Moreover, the evolving nature of regulations across different jurisdictions requires ICO projects to navigate different compliance standards in various regions.
Furthermore, this evolving regulatory landscape presents an ongoing challenge for ICO projects to adapt and comply with changing guidelines. This necessitates a thorough understanding of the legal and regulatory requirements consistently.
With all these changing rules, some ICO projects would find it challenging to raise funds. Also, it may deter some projects from pursuing ICOs, limiting their access to much-needed funds.
The ICO saga, characterized by early successes followed by challenges, underscores the critical need for investor diligence before investing in the volatile crypto landscape. This study highlights the risks inherent in ICOs, emphasizing the importance of a prudent approach by potential investors.
