I wrote this before, and am writing it here now. I would really like to advocate for institutions and VC money entering this space. Let me know your comments.
The fervour and bullishness of the Initial Coin Offering (ICO) of 2017 is long forgotten, and markets are maturing to a steady state. Regulations are becoming clearer, and talks of the Security Token Offering (STO) become common place. Where has the ICO gone? Simply put, its still there. Just not so ‘public’ and often anymore. Indeed, the velocity of token sales done in recent months are declining exponentially.
Private and/or institutional sales
It is well-documented that most ICOs today are sold largely (up to 95%) to private placements, consisting of institutions and High Net-Worth Individuals (HNWIs). These private offerings are completed with generous discounts before release to the public (no discount), or at times listing straight to a crypto exchange thereafter.
Equity and/or hybrid token offerings
As more VCs venture into this space, more traditional instruments of financing are being promoted- be it equity, convertible loans or token buy-back agreements. These instruments are important to ICO progress in two ways:
1. They bring about security to investments by holding the issuer/start-up accountable to the ICO.
2. They allow institutional investors a channel to buy into ICOs. Without which, most VCs do not have the authority or mandate to buy tokens.
The future of ICOs
Due to predominantly private, VC-driven ICOs, it is easy to mistake that the democratised, token-based ecosystem is regressing, or worse, ceasing to exist. ICOs today seem to model traditional fund-raising routes (which kind of defeats the purpose doesn’t it?).
However, it is useful to consider that blockchain start-ups and projects are not at all like other start-ups due to the existence of a secondary market (crypto-exchanges)— a very large one in fact. This means that most projects will still have their cryptocurrencies distributed over a larger pool of users/customers/investors.
As the crypto industry and regulatory environment continues to evolve rapidly, the idea of more compliant, accountable and funded ICOs cannot be bad.
I am sure that market will begin growth when all the people that have no chance of undestanding it, will step aside. This is the best solution.