When crowdsales first emerged, they were presented as a democratic means of raising funds and creating a diverse, engaged community. For a while, that’s more or less how it played out, but in 2018 the ICO landscape has changed. Last year, private investors still got first dibs on the best crowdsales – BAT was notorious for selling out in minutes after a handful of whales took their fill of tokens – but this year, the public sale is almost an afterthought. All the action is taking place at the pre- and private stage, leaving slim pickings for the crowds.
Recent figures released by Tokendata show that of the $1.97 billion invested in ICOs this year, $1.63 billion – or 84% – went to private investors. Moreover, this data doesn’t take into account the reported $850 million being raised in the Telegram private sale, an event so exclusive that only the biggest of the big shots are invited. Telegram’s $600 million pre-sale finishes at the end of February, but already investors are supposedly flipping their token allocation for as much as 2x. Projects such as this are good for helping the rich get richer, but they fail to give the platform’s users a stake in the project.
Of the 94 ICOs Tokendata has been tracking this year, 28 now have tokens available for trading on exchanges. At this stage, the average ROI for tokens purchased via ICO and sold on an exchange is a mere 2.17x, and the return on ETH is just 0.75x. In other words, it would have been more profitable in many cases to hold onto ether since the start of the year than it would have been to swap it for tokens. It’s still early days of course, and there’s plenty of time for the crop of 2018 to come good.
Thanks to the generous discounts applied during pre-sales, it’s a lot easier for private investors to turn a profit than it is for public sale participants. Moreover, with pre-sale tokens often ending up on decentralized exchanges immediately, the role of the public sale has been relegated to a footnote. On paper, crowdsales are more popular than ever. But in reality, their biggest benefactors are the 1% with the connections and the capital to profit.