Token Report: most tokens are speculative instruments

Token Report states that only 1 out of 10 tokens really comes in use nowadays
25 October 2017   1051

More than 200 Initial Coin Offerings raised over $3 billion during 2017. Token Report, a large ICO database, analyzed the use of tokens from 226 coin sales and found out that only 10% of tokens are actually used in running their networks following the sales. For different undiscovered reasons all the other projects did not work out and their tokens could be only traded.

The U.S. Securities and Exchange Commission highlighted that some tokens can be considered to be securities as they are not in use, and this can lead to fines and judicial proceedings.

If the coin is regulated as a security, rather than a utility, that limits how it can be traded and raises questions about whether developers are prepared to comply with securities regulators.

Galen Moore
Co-founder and chief executive,Token Report

The Commodity Futures Trading Commission issued a Primer on Virtual Currencies on October 17, stating that virtual tokens can fall under its authority.

Thuswise, investors remain at risk that the projects that their tokens are supposed to run on will never be implemented.

ICOs May Allocate $24B Tokens to Themself

As reported, price of tokens, "left to cover the operating costs", reached $80B at the peak
17 January 2019   145

The total cost of the tokens that the organizers of well-known ICO projects have left to cover the operating costs and remuneration of developers at the time of release was $ 24.2 billion. At the peak, their price reached almost $ 80 billion. This is evidenced by the results of a study conducted by BitMEX together with the TokenAnalyst.

At the current illiquid rate, the assets of ICO-projects in their own tokens amount to about $ 5 billion, having depreciated by more than $ 70 billion.

However, the researchers note, this value is rather arbitrary, since the liquidity of tokens at peak levels was low. It is also incorrect to classify changes of this amount as losses because the organizers of the ICO transferred tokens into their wallets in accordance with the crowdsale conditions.

Having studied the archive of token transfers from ICO-team wallets, BitMEX and TokenAnalyst came to the conclusion that the realized profit from the sale of such tokens could be $ 1.5 billion, with the proviso that some of the tokens might not have been sold or left the wallets for other reasons .

The largest amounts of tokens in their wallets were credited by the Veritaseum and Noah project teams, which, as analysts say, looks “almost comical” against the background of real trading volumes.

Token data up to Dec 2018, data based on prices at the time(s) of issuance
Token data up to Dec 2018, data based on prices at the time(s) of issuance

This analysis highlights the lack of standards and transparency in the ICO market, especially when it comes to the allocation of tokens to the founding team’s wallet. Teams were often able to mint, burn, buy, and sell (their own) tokens at will, without analysts being able to easily track what is occurring. We would often see tokens in exchange clusters, and it was hard to tell whether the token project “paid” the exchange to list tokens or the token project just transferred their treasury to the exchange to cash out.

BitMEX Researchers' Report

In November 2018, BitMEX CEO Arthur Hayes said that the tokens of the largest ICO projects would collapse after entering the secondary market.