The crypto ICOs seem to have disappeared. What happened to them?
In reality, they haven’t completely disappeared, but they have changed shape.
In order to answer the question, we need to clarify whether we want to consider ICOs in a strict, technical-formal sense, or if we want to consider the launch of new tokens.
Summary
- What are crypto ICOs?
- The launch of new tokens
- I launchpool
- The airdrops
- The failure of crypto ICOs in 2019
What are crypto ICOs?
From a technical-formal point of view, ICO simply means Initial Coin Offering, which is the initial offering on the market of new cryptocurrencies.
Usually they are tokens, and not cryptocurrencies with their own blockchain, that are put on the market to finance the start of a project. So the tokens are sold before the project actually begins.
Nowadays, no one uses the term ICO anymore, because it reminds of the collapse of tokens launched with ICO in 2019/2020. But if we also focus on all those tokens that are launched on the market to raise funds before a crypto project starts, but using other terms, then there are still many disguised ICOs.
Generally, the most commonly used term is pre-sale, which means private sale of tokens before they are listed on exchanges.
Sometimes instead IEO (Initial Exchange Offering) is used, which means the launch of new tokens directly on exchanges, and sometimes the term launchpool is used, which is similar to an IEO but with a more complex pre-launch process.
The launch of new tokens
Instead of considering actual ICOs, i.e. those that still use this term, it is better to consider all launches on the market of new tokens to finance a project before its actual and concrete start, regardless of the name they use.
In fact, although ICO was a term inspired by IPO (Initial Public Offering), which refers to the initial public offerings of stocks on the stock exchange, it did not refer at all to existing companies that sell their shares on the stock exchange, for example, to finance themselves.
The peculiar characteristic of the vast majority of ICOs was that the tokens were sold even before the crypto project actually started working. It was a kind of pre-seed round for startups, that is, the initial phase in which capital is raised to get started, and not when shares of an already established company are sold.
It should be said that in this type of ICO disguised with other names there are not many left, because often the tokens launched on the crypto markets are tokens of projects that have already started, for example with an existing blockchain (such as Celestia).
So the number of token launches as a form of “pre-seed” funding has actually decreased a lot, especially considering what happened between 2018 and 2020.
I launchpool
Many new tokens, and especially new native cryptocurrencies, are actually launched through launchpool.
The most famous ones are definitely those of Binance. On launchpad.binance.com you can find all the numerous crypto projects that are launched in this way on the world’s most famous exchange.
However, these are always forms of financing for crypto projects that sell their tokens on the market to collect stablecoins, fiat currencies or high-value cryptocurrencies.
The main difference lies precisely in the fact that projects launched in this way are often already underway, just as is usually the case with IPOs on the stock exchange.
If, on the other hand, tokens were launched in this way to finance crypto projects that are still in the pre-seed stage of capital raising in order to start, then they would be disguised ICOs.
The airdrops
Sometimes, instead, to launch tokens on the market nowadays, the airdrop technique is used.
In theory, the airdrop would not be a fundraising methodology, because the tokens with airdrops are actually given away as gifts.
However, it can happen that the airdrop is used as a marketing and communication technique to launch a crypto project on the market, attracting attention.
In fact, almost always not all tokens are given away through the airdrop, but their creators keep some aside to sell on the markets at the time of launch.
So even though technically airdrops should not be ICOs at all, sometimes they can be used as communication tools to effectively advertise a disguised ICO.
By the way, many memecoins start in this way, and the crypto “projects” of memecoins resemble a lot the ICOs of the past.
The failure of crypto ICOs in 2019
ICOs became very popular during the speculative bubble of 2017, which, as far as altcoins are concerned, extended until January 2018.
Unfortunately, many of the tokens that were launched at that time turned out to be nothing more than fundraising schemes, in other words, scams that harmed unsuspecting investors who didn’t realize they were just giving away money to those selling them those tokens.
However, some ICOs were successful, including perhaps the most famous one of all, namely Binance’s BNB.
It must be said that successful ICOs were really few, in percentage, compared to the total number of tokens launched on the crypto markets in this way, and even fewer were those that led investors to obtain significant profits. Those who benefited the most were mainly those who created those tokens and sold them.
Actually, the most successful ICO in history was Ethereum (ETH), even though it took place in 2015 and with slightly different methods. It was the first of its kind.
Another ICO that went well was that of Chainlink (LINK) in 2017, as well as that of Cardano (ADA).
One of those that seemed to have gone very well, EOS, instead over the years has lost a lot, so today it cannot be compared to the other top ICOs.
In reality, even on Cardano, one can start to have some doubts, although those who bought ADA in 2017 and have not yet sold would have accumulated an excellent gain to date.
2019 was the year of the end of traditional ICOs, although the real collapse had already occurred in 2018, especially towards the end of the year when the crypto markets crashed.
Since then there have been other ICOs, but to a much lesser extent and none as successful. There are still some today, but more solid forms of fundraising prevail, no longer based on a PDF promising something.