A Descriptive Analysis of US Initial Coin Offerings

Abstract

Initial Coin Offerings (ICOs) are blockchain-based crowdfunding ventures to facilitate access to capital. Blockchain technology promises to solve many present-day problems, however, in the past three years, a diminished crypto-currency activity and fraudulent undertakings have raised some concerns. Using a novel, hand-collected dataset, we study a range of characteristics of US-based ICO tokens, starting with the first token launched in 2015 till December 2019. The price of ICO tokens was at its highest in 2017, followed by a sharp decline in 2018 and a slow recovery since. Presence of Know-Your-Customer (KYC) and White-list due diligence procedures can be associated with an ICO receiving a higher rating from experts and a higher level of social media followers. On the other hand, an ICO’s utilization of an incentive program, such as offering bonuses and bounties, is associated with higher rating by experts, but a lower level of social media following. Following the 2018 cryptocurrency slump, teams have increased the percentage of tokens kept in lock-up to prevent large market supplies that result in a slump as before and to signal their long-term commitment to the project. ICOs’ ratings and prices show contradictory characteristics, where blockchain infrastructure, healthcare, and marketplace domain tokens attracted lowest prices while being rated the highest, whereas the converse was true for energy tokens.