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A Comprehensive Guide to the Next Generation of ICOs & Crypto Funding

Go to the profile of Ruben Merre

The Rise, Growth, Bust, & Rebirth

Graphic thanks to


Pricey reader,

I began writing up this text with the noble intention to:

  1. Cowl my ideas on the subsequent era of ICOs, past the interval of 2013 (when it began) till 2019 (throughout which ICOs sadly got here to be seen as “scammy by nature” by many). I consider there’s a means ahead to repair that difficulty, and one of the issues I used to be fascinated by is to coin a brand new time period to clearly distinguish between the ICOs of yore and the top quality new ones that may have to cross a number of high quality filters earlier than truly being introduced to a broader viewers (assume Binance’s LaunchPad).
  2. Embrace a fast tackle the creation of safety (STO) and fairness (ETO) tokens and why these are such robust options when speaking crypto funding.

Overlaying these two reflections in a pleasant, temporary Medium-post turned out to embody a bigger scope then I initially meant. Why? Properly, when it comes to ICOs, I consider that so as to completely perceive the place we ought to be going, it’s crucial to perceive the place we truly come from and why such a shift in mindset is required in the first place.

That being stated/written, I’ve determined to divide the article in two elements. Half I’ll cowl the core of what an ICO is and what its execs and cons are depending on who’s asking. It is going to shed some mild on the very first ICOs, even earlier than the nice Ethereum token sale. Because it seems, some of these are even omitted on most websites. To make sure that the future blockchain era will get their details straight once they take their Bitcoin examination, I made a decision to put them again properly to the place they belong: crypto historical past. Half I’s concluding part offers a visualised deep dive in all the thrilling token gross sales that occurred between 2013 — 2019. And sure, how some of them went rogue.

Lastly, if and when (hopefully sometime) the bell rings to notify me of the 300th clap on this primary piece, I’ll unveil half II: the subsequent era in crypto funding and a pair of my ideas on that.

In the in the meantime, greatest needs for the new yr and I warmheartedly welcome any claps and follows and shoulder pats and extra info that makes the world of blockchain and crypto a greater place!


Government abstract

  • 2017 was the superb yr of the #ICO aka “Initial Coin Offering”: principally anybody with an enormous love for a fast buck might current a digital so-called #whitepaper rambling about — in lots of instances — a totally fictitious enterprise, and crypto buyers — slightly: speculators — would nonetheless be throwing quantities of cash to them past creativeness. Billions of dollars obtained raised to fund ICO tasks of which sadly an awesome majority turned out to be raise-money-&-run exit scams. Tons of enjoyable although. (And sure, there have been additionally superb high quality tasks, no worries!)
  • 2018 was the yr of the bear. Many ICOs “failed”, however that absolutely is determined by the way you outline “success”. If amassing US$5M & operating off falls underneath success, it was truly fairly a very good yr. However general, 2018 made ICOs infamous for his or her scammy character. Dumping time. Gbye ICO!? Nicely, 2018 was truly not a nasty yr for ICOs, with the prime 2 tasks elevating slightly below US$6B all by themselves.
  • 2019 — ah, a recent yr! Lastly some sense in the crypto markets: corporations akin to Neufund, DESICO.IO, Polymath, SWARM, & a pair extra are making historical past in #tokenising securities as we all know them. Platforms actually attempt to align with extra conventional regulation, for example typical #IPO docs corresponding to a prospectus are required. We actually speak precise shares on the blockchain, together with possession, voting rights, dividends. But in addition artwork. Actual property. And much more.
  • Lurking round the nook? #Utility tokens coming again stronger than ever. This time with a top quality filter? In Half II of this collection, we’ll go all in on the subsequent era of crypto funding!


1. What’s an ICO?

An Inital Coin Providing — in some instances additionally referred to as Preliminary Foreign money Providing — is a kind of funding mechanism sometimes utilized by and for cryptocurrency tasks.

The easiest way to take a look at it’s truly by seeing it as some type of a mixture of:

  • The fundraising facet of a crowdfunding or crowd sale (be it fiat cash or crypto, however usually principally the latter), together with the incontrovertible fact that some type of mushy/exhausting cap has to be reached so as to be legitimate (i.e. a minimal quantity ought to be raised)
  • The product maturity of an early stage VC funding and even enterprise angel spherical (i.e. a really immature product, and in so much of instances truly simply the mere “idea” of that product)
  • The truth that in return for the funds, some type of a “token” is acquired, the latter turning into “tradable” simply as in the case of an IPO or Preliminary Public Providing (i.e. when a personal firm goes public and everybody can begin shopping for — “trading” — shares)
  • The token sale runs on blockchain infrastructure and the tokens turn out to be out there on a blockchain platform (corresponding to e.g. the Ethereum blockchain for ERC20 tokens)

Simply to ensure everybody continues to be following, I’m joyful to embrace the description provided by our associates at Wikipedia:

“In an ICO, a quantity of cryptocurrency is sold in the form of “tokens” (“coins”) to speculators or buyers, in trade for authorized tender or different cryptocurrencies corresponding to Bitcoin or Ethereum. The tokens bought are promoted as future useful models of foreign money if or when the ICO’s funding aim is met and the challenge launches. In some instances like Ethereum the tokens are required to use the system for its functions.” (supply: Wikipedia)

2. Execs and cons of doing an ICO as a firm

To get a very good understanding of ICOs, it’s advisable to remember of some of the benefits and drawbacks.

5 Benefits of doing an ICO as an organization

  1. The world is your investor. The vary and geographic distribution of potential buyers is gigantic. Actually, an enormous half of the whole globe is in a position to spend money on the firm (give or take some geographic restrictions). Wire transfers from throughout the world can get you tens of millions of dollars (in crypto) in minutes, with out being frozen up by the banks;
  2. Following from 1, the potential publicity for the firm is humongous and once more, worldwide;
  3. You possibly can increase funds quick and have it out there shortly, making it simpler to construct traction for the firm at an early stage;
  4. No in depth disclosure necessities for the fundraiser (up to now);
  5. You’ll be able to increase rather a lot of funds at an extremely (probably even too, however what the heck) early stage of your organization.

5 Disadvantages of doing an ICO as an organization

  1. You have got a substantial danger that the regulator sooner or later will begin chasing you! (simply take a look at the SEC’s current actions);
  2. The funds you increase are (at the least for now) inherently extraordinarily risky;
  3. Communication effort and potential influence is large. You might have a worldwide investor group and you’ve got to give you the option to handle the communication (particularly dangerous communication) in addition to you possibly can;
  4. Most ICO buyers are used to the extremely speculative nature of cryptocurrencies and have a tendency to be much less affected person than a standard fairness investor;
  5. Strain of the group on you making progress might be robust. In any case, you simply raised the equal of a pair of million dollars from their pockets.

three. Execs and cons of collaborating in an ICO as an investor

10 Benefits of collaborating in an ICO as an investor

  1. Early contributors can have entry to and may have extra liquidity in early stage corporations. Being early additionally will increase the potential for speedy capital progress;
  2. Relying on the ICO, there could be a huge community behind it (e.g. if the token launch takes place on the Ethereum community), producing further buzz and potential capital appreciation;
  3. Custody with out intermediaries. The one with the personal key owns the tokens;
  4. Restricted regulatory scrutiny (to date);
  5. ICO cash have the similar anonymity as cryptocurrencies comparable to BTC and ETH;
  6. Transparency of use of funds, an escrow can be utilized to confirm how the funds are being spent after the ICO;
  7. An revolutionary method to deploy capital that gives a hedge towards political and financial shocks;
  8. Contributors are often the first customers of the (utility) token — thus in contrast to holding a inventory of an organization whose merchandise a contributor by no means used, sarcastically tokens may be extra tangible than securities;
  9. A excessive danger, excessive reward asset which is (to some extent) disconnected from the inventory market and the financial system;
  10. Risk to personal an alternate asset not based mostly on FIAT (state regulated) foreign money.

10 Disadvantages of collaborating in an ICO as an investor

  1. ICOs usually are not regulated and haven’t any investor verification or safety;
  2. IPOs are sometimes supported by institutional buyers, whereas ICOs are principally supported by buyers from inside the group;
  3. As there are restricted necessities to fulfil when initiating an ICO, it is rather onerous for an investor to elicit the right and related info to make a sound funding determination (e.g. in 2017, many thought-about watching a pair of YouTube movies as doing sound due diligence);
  4. Merchandise and tasks are sometimes very immature, strongly growing the inherent danger of investing in any respect. In some instances one is merely investing in an concept with out tangible planning for implementation;
  5. Aggravating the earlier level, the firm holding the ICO will obtain the bulk of the investments at the very begin and as there’s little to no legal responsibility, there’s primarily no strain to truly ship a product. Many tasks both exit rip-off proper after the ICO or slowly wither in improvement exercise as the workforce enjoys their newfound riches;
  6. The exchanges the place the tokens are ultimately listed have comparatively restricted tips and insurance policies to forestall fraudulent actions;
  7. Even when the token sale is absolutely respectable and there’s a robust undertaking behind it, crypto exchanges and crypto wallets are hacked and stolen from each day. So the second you log in to smile at your unimaginable funding returns, it is perhaps all gone;
  8. In case your cash will get misplaced indirectly, there’s virtually no method of retrieving it. Be it you dropping your personal keys your self or hackers stealing your tokens, there isn’t a lot you are able to do when you lose token possession;
  9. Lack in transparency. There’s completely no enforceable obligation for a challenge to truly disclose the progress made, probably leaving buyers behind in a haze;
  10. Your funding may be susceptible to synthetic pump-and-dump schemes, the place the worth of your cash can develop into much more risky than in the case of a longtime high-market-cap crypto similar to BTC.

Supply: Personal analysis + honorable point out: 1) “Inclusive FinTech: Blockchain, Cryptocurrency and ICO” — Guide by Lee David Kuo Chuen, Low Linda, 2018; 2) Introduction to ICOs —


1. Origins of the ICO — The place it began. And no, it was not Ethereum!

2013. BAM! After fairly silently engaged on his concept for 2 years, this man J.R. Willett pops up on the bitcointalk discussion board explaining a supplementary protocol to Bitcoin with built-in help for a.o. customized tokens, a distributed foreign money trade (assume DEX), distributed betting (no want to belief an internet site to coordinate bets), sensible property tokens, and extra! In short, a protocol — referred to as “MasterCoin” — that might leverage the present Bitcoin blockchain by including further options and prospects to it.

Clearly, Willet wanted to fund his concept so he kindly requested for some BTC donations right here and there (sounds acquainted, proper?!). So as to encourage potential buyers in truly contributing, he additionally added that a number of options inside the protocol would solely be obtainable to these truly proudly owning MasterCoins. Et voilà, sensible mister Willet launched us not solely to what was coined afterwards as the first ICO, however to the first utility token as nicely. Now that’s getting two sons in regulation with one daughter! (my fancy approach of saying “killing two birds with one stone”).

See Willett making his mark in crypto historical past in the video under; it ought to begin routinely at 4min30sec:

Willett: “If you wanted to, today, start a new protocol layer on top of Bitcoin, a lot of people don’t realize, you could do it without going to a bunch of venture capitalists and instead of saying, hey, I’ve got this idea, you can — you’re familiar with Kickstarter I assume? Most of you? You can actually say, okay, here’s my pitch, here’s my group of developers — there’s a lot of developers in this room. If you get a bunch of trustworthy guys together that people have heard of and say, okay, we’re going to do this. We’re going to make a new protocol layer. It’s going to have new features X, Y and Z on top of bitcoin, and here’s who we are and here’s our plan, and here’s our bitcoin address, and anybody who sends coins to this address owns a piece of our new protocol. Anybody could do that. And I’ve been telling people this for at least a year now because I want to invest in it. I don’t have a ton of coins, but that’s where I want to invest my coins. And I’ve yet to find somebody who wants my coins. Does anybody in this room want my bitcoins because I want to — ”

Complete raised: US$600Okay

Enjoyable details (& thanks Eric Wall for writing an entire Twitter feed about this)

  • The MasterCoin protocol turned out to be extremely profitable. Rebranded to and recognized immediately as “Omni Layer” (#OMNI), it now serves as the underlying protocol for the Tether token (#USDT), which is the most traded crypto token after BTC itself.
  • The full funds raised in July 2013 peaked at roughly 4740 BTC, that’s quite a bit of Bitcoins. At the time value round US$500Okay, at present someplace round buttloads of cash.
  • The MasterCoin (#MSC) tokens themselves failed to discover precise utilization inside the protocol. Apparently, “requiring users to hold tokens in order to access basic features is bad UX, horribly inefficient & unnecessarily complex”.
  • The #MSC cash nonetheless exist immediately with no objective, no plan. However, in the 2017 mania, they joined in on the nice irrational pump to the moon, from US$four to US$123. Now they’re resting at US$7 a bit. Who is aware of what the future will convey…

Very noteworthy:

In contrast to how most ICOs market themselves, Willett was truly tremendous clear (what a pleasant distinction!) in itemizing and speaking the dangers of investing in his ICO. Learn for your self in the excerpt under:

2. The exceptional second — NextCoin

NextCoin (#NXT) is a peculiar second once we speak ICOs. On 28 September 2013, the additional nameless member BCNext created a discussion board thread saying the proposed launch of “Nxt” as a second era cryptocurrency. He requested just for very small bitcoin donations so as to decide how to distribute the preliminary stake. A couple months later, on 18 November 2013, the fundraising for Nxt was closed. The preliminary coin providing “successfully” — because it wasn’t the goal to increase tons of cash — collected 21 bitcoins that have been value roughly USD3,000 — US$17,000 at the time (relying on the actual timing you’re taking as BTC skilled just a little surge in the interval).

As we speak (early January 2019 as of the preliminary writing), NextCoin hoovers someplace simply outdoors of the prime 100 on coinmarketcap at a valuation slightly below US$30M.

Complete raised: US$16.8K

Enjoyable information

  • NextCoin was/is the first cryptocurrency that purely depends on the Proof-of-Stake (POS) consensus mechanism.

three. A tiny third — The CounterParty token sale

Ranked 339 as we speak on Coinmarketcap at US$6M, CounterParty (#XCP) is usually even omitted from the listing of pioneering historic ICOs. Nevertheless, CounterParty is definitely the third ICO ever, so I might argue that also deserves a particular place on this introductory record.

Merely put, XCP is used to present performance the place it isn’t technically attainable to use BTC. For example, XCP is the foreign money used to pay for the execution of all sensible contract code (whereas Bitcoin by itself initially has no such sensible contracting risk). Extra usually, XCP represents stake in the Counterparty protocol, and is the voting foreign money for modifications to be selected by the group.

If you need to know extra about it, the website explains it higher than I do:

Noteworty: YouTube video on CounterParty and the Asset Revolution with Chris DeRose at Cash in the Kingdom 2014:

Complete raised: US$1.8M

Enjoyable details

  • At the prime of the earlier bull market (January 2018), XCP peaked at round $US240M.

four. A unusually named 4th: MaidSafeCoin

MaidSafe may appear to be a wierd identify at first. However it truly simply stands for Large Array of Web Disks, Safe Entry for Everybody. So don’t go complaining about the abbreviation! The bizarre identify didn’t maintain it again from elevating a substantial quantity of funds again in the days although. #MAID raised a US$7M equal in funds in its token sale.

Standing on the shoulders of giants, the SAFE (“Secure Access For Everyone”) community hoped to (and continues to be working at present in the direction of) combining the options of historical past’s well-known decentralised networks the likes of Napster, Freenet, BitTorrent, and Bitcoin, and it goals to present the following options:

  • Absolutely encrypted knowledge storage and file sharing
  • Means to use the community anonymously
  • Censorship resistant communication
  • Serverless knowledge
  • Scalable cryptocurrency free from transaction charges

The SAFE community finally needs to “create a secure, autonomous, data-centric, peer-to-peer network as an alternative to the current server-centric model. For more info I kindly refer to the Coincentral article.

Today, it proudly holds a top 100 position on coinmarketcap, worth around $US64M at the time of writing. As you can see, its price is not only expressed in BTC, but also in OMNI (i.e. in Willett’s MasterCoin successor #OMNI for the less attentive!)

Total raised: US$6M

5. The practically forgotten 5th? — Swarm

In July 2014, this project Swarm raised US$800K in its token sale. However, it is hard to find any information on it. Some more recent endeavours have likely overshadowed the project. For instance (#SWM), which is a Security Token Offering platform (STO — we’ll talk STOs in a jiffy, well… in part II) that completed its token sale end 2017. Then there is Swarm City (#SWT), where Ngrave’s CTO Xavier Hendrickx currently holds the CTO position as well. Swarm City completed its ICO end 2016.

Total raised: US$800K

6. Enter the real deal: Ethereum

2014. Barely old enough to drink by American standards, the Russian “lad” Vitalik Buterin tries elevating funds for a brand new and noteworthy ICO for what he envisions the world’s first zero-infrastructure platform, named “Ethereum”. The token sale raised 3700BTC in the first 12 hours, now who wouldn’t need that?! And as you possibly can see, it may purchase you some good T-shirts!

Complete raised: US$18.3M

Enjoyable information

  • Ethereum’s ICO token worth on 31 August 2014 was zero.31USD. In the following years, the market worth of 1 single ETH exploded to over 1,400USD in the craze of 2017. That’s a proportion improve I’ve problem with to fathom at occasions.
  • The increase occurred in the center of a substantial Bitcoin bear market.
  • Ethereum has risen to the typical prime three in crypto in phrases of market cap, along with Bitcoin and Ripple. It usually holds a gentle 2nd place.
  • In the meantime, since Ethereum’s inception, over 1,000 so-called “ERC20” cryptocurrencies have been issued on the platform since its preliminary ICO. ERC20 itself is a protocol normal that defines sure guidelines and requirements for issuing tokens on Ethereum’s community and infrastructure. ERC stands for Ethereum Request For Feedback and 20 stands for a singular ID quantity to distinguish this normal from others.
  • In 2016 a decentralized autonomous group referred to as The DAO, a set of sensible contracts developed on the platform, raised a document US$150 million in a crowd/token sale to fund the venture. The DAO was exploited in June when US$50 million in Ether have been taken by an unknown hacker (now that’s a heist!). Subsequently, Ethereum was cut up into two separate blockchains (a so-called “forking event”) — the new separate model turned Ethereum (ETH) with the theft reversed, and the unique continued as Ethereum Basic (ETC).
  • Solidity, initially proposed by Gavin Woods in August 2014, is the main programming language (contract-oriented) used on the Ethereum platform. Most people who find themselves barely into crypto have undoubtedly heard about it. Nevertheless, when you ever end up trapped in a crypto-quiz, do keep in mind that Serpent, LLL, Viper, and Mutan are different comparatively in style languages when interacting with the programming interface referred to as “Ethereum Virtual Machine” (EVM).
  • Vitalik picked the identify after shopping Wikipedia articles about parts and science fiction. When he discovered the identify, he “immediately realised that I liked it better than all of the other alternatives that I had seen; I suppose it was the fact that sounded nice and it had the word ‘ether’, referring to the hypothetical invisible medium that permeates the universe and allows light to travel.”


1. The Growth. ICOs anno 2017.

It took a while earlier than the actual momentum kicked in. However by 2017, Preliminary Coin Choices have been on hearth. Instantly it went so onerous that the entire crypto market turned utterly parabolic. Sooner or later, principally anybody with an enormous love for a fast buck might current a digital so-called #whitepaper rambling about — in lots of instances — a totally fictitious enterprise, and crypto buyers — relatively: speculators — would nonetheless be throwing quantities of cash to them past creativeness.

Simply check out the bubble chart under. It really works interactively and you may see how the bubbles are bursting into the display as of say early 2017:

2. The cash raised. Prime tasks in 2017 & 2018.

So how a lot cash have ICOs truly raised up to now? In accordance to Bloomberg, it will depend on who you ask. They put it like this:

“Blockchain may be billed as an immutable public ledger, but in the controversial world of crypto it spawned, establishing truth can be tricky when disclosure standards are still being improvised daily. In the case of ICOs, it remains hard to ascertain the amount of funds an issuer claims it’s raised when no one has to submit any regulated filings or even reveal their identities.” (Justina Lee, Bloomberg)

An instance of how far the precise reportedly raised funds can diverge is the crypto trade venture Ruby-X. CoinSchedule says it raised US$1.2 billion; ICORating, US$200 million; Autonomous Analysis says it’s chosen to exclude it, since its on-line footprint was unreliable. Ruby-X, which hasn’t disclosed the place it’s based mostly, didn’t reply to e-mails looking for remark.

Clearly, given the risky nature of cryptocurrencies, it additionally actually is dependent upon the date you repair to be that official ICO deadline. Or was it ICO launch date? Or pre-launch? Or? Furthermore, as the “exchange rate” between the particular cryptocurrency may be pegged concurrently to the typical Bitcoins or Ethers to spend money on the challenge, one thing comparable is required in case fiat cash could be invested as properly. After which certainly the query arises on when that change price truly will get fastened. And ideally additionally to fiat, as that’s what they’re making an attempt to report right here above. It will be nice to get some type of a standardised approach of truly measuring it. However then once more, the ICO-ers in all probability care rather less about such an “accounting” “detail”.

Anyhow, for these nonetheless in search of an fascinating useful resource to lookup precise ICO associated aggregated knowledge, CoinSchedule is perhaps an fascinating website. Right here under you’ll find a pair of screenshots of the general quantity raised in addition to the prime ten ICOs in measurement (and different info) in a given time interval. In 2017, the bulkiest of the pack included US$100M — US$250M Hdac, Filecoin, Tezos, Sirin Labs, Bancor, Polkadot, Qash, and Standing. All names that ought to sound acquainted to the common crypto avid lately.

In 2018, the prime tasks every raised a a number of of the 2017 US$250M mark. #EOS alone raised over US$4B and Telegram raised slightly below US$2M. That brings us again to the entire “what-is-the-real-amount-raised-now-actually?” challenge. For example, Bloomberg studies for the Petro ICO of US$735M under:

“In March, President Nicolas Maduro said the Petro project had garnered US$5 billion in offers; in April, he said the sale raised US$3.3 billion; the token’s website says US$735 million, the figure cited by CoinSchedule and ICORating.” (Justina Lee, Bloomberg)

Bloomberg additionally stories a further layer of complexity:

“To complicate things further, the nature of ICOs is also evolving. A growing portion of tokens are offered privately to selected investors, rather than crowdfunded via the internet as the innovation was initially known for.” (Justina Lee, Bloomberg)

three. ICOs gone rogue. Scams. Shitcoins. JesusCoin.

To date we haven’t gone into a lot element about the precise shady character of ICOs. However an article about ICOs with out mentioning the phrase rip-off or shitcoin for that matter, can be unheard of! So let’s dive proper in. An fascinating web site to get you began on this excellent world is supplies a pleasant overview of a minimum of 680 “deceased” cash, 12 “hacks” i.e. ICOs that work with malware shoppers (enjoyable huh?!), 182 scams, and 60 parody cash (corresponding to JesusCoin, Bitcorn, ButtCoin, SexCoin, Asstoken, CryptoMeth, ObamaCoin, TrollCoin, ScamCoin, and so on.)

An extremely thorough analysis doc of Bloomberg, revealed in July 2018, stories that round 78% of ICOs have been recognized scams prior to buying and selling. Unnecessary to say that I’m not inventing the related scammy character out of the blue!

The report additional highlights that 70% of ICO funding (by US$ quantity) to that date went to larger high quality tasks, though over 80% of tasks (by # share) have been recognized as scams (uuff! No less than most of the funding went to high quality!). For the die-hards, you’ll find the actual which means of the terminology utilized in the graphic under on web page 23 of the report.


Nice to see you made it this far! Half II might be overlaying thrilling stuff on the subsequent era of crypto funding. Not solely STOs and ETOs, but in addition an try to coining a brand new time period to distinguish between the ICOs of yore and the subsequent era. Upon receiving 300 claps on this text, I’ll probably regain my motivation to write and I’ll fortunately jot down one other submit. So…the place’s that clap?


Don’t overlook clapping!

And be happy to ecstatically comply with me on Medium, Twitter, Linkedin.

Similar goes for my firm Ngrave’s web site, Twitter, Linkedin, Fb.

Thanks once more for studying & clapping.


About Ruben and Ngrave

Ruben Merre is CEO at Ngrave, a blockchain tech firm on a mission to make the world of blockchain know-how and cryptocurrencies a safer place, with the larger objective of sustaining and co-nurturing the know-how’s widespread adoption. To this finish, Ngrave is creating an extremely safe blockchain hardware pockets answer for safe-keeping one’s cryptocurrency investments, in collaboration with tech big IMEC and a world-renowned workforce of cryptography and hardware safety specialists.