In an analysis by the Center for Innovative Finance from the University of Basel for the development of ICOs in the period between 2014 and 2017 is approaching. The analysis of Remo Nyffenegger and Dr. Fabian Schär result in, among other things, that the capital invested has risen by 15,000 per cent. In addition, the researchers propose a Framework for categorization of Token Sales.
ICOs a blessing and a curse at the same time. On the one hand, they are easy prey for scammers of all kinds – reports of fraudulent ICOs increased significantly in recent years. On the other hand, they offer a new vehicle for financing a young Tech Start-ups.
These latter also arouses the interest of science – Remo Nyffenegger and Fabian Schär of the University of Basel took on the topic. The result: The invested capital increased in the years from 2014 to 2017 by 15,000 percent (!).
In the analysis, the researchers considered only Token Sales, which were completed in the period between 01.01.2014 and the 31.01.2018 successfully:
“What is striking is the enormous increase both in the number of Token Sales, as well as in the volume of financing is. During 2014 have been carried out eight Token Sales, with a total value of just over 31 million US dollars successfully, could be observed in the year 2017, thirty Times more of such Sales.“
This increase is to be put according to the study, especially from the second quarter of 2017 again a Tooth:
“Especially from the second quarter of the year 2017, an extreme increase is observed, which is probably due to the increase of the General interest in the Blockchain technology. Were invested in the first quarter of 2017, around 20 million U.S. dollars in Token Sales, amounted to the accumulated capital in the second quarter of the year, 950 million US dollars.“
Framework for the classification of Token Sales
Outside of the increase of investments, the study primarily investigated the nature of Token Sales. From their analysis they were able to derive, ultimately, a framework for the classification of Token Sales. Here is an excerpt from the study:
“Our Framework is divided into four dimensions: representation, functionality, capping, and disposal procedures. The representation describes the way a Token on a Blockchain. We define three categories [Colored Coins, Smart Contract, Token, New Blockchain]. Various tokens can be used in dependence of their functionality in different ways. Here, too, three categories can be distinguished [payment-Token-of-Sale, use-Token-of-Sale, facility-Token-of-Sale]. Representation and functionality of the Tokens are defined, the publisher, whether he is a ‘capped’ (engl. capped) or a ‘ungedeckelten’ (engl. left uncapped) sales make want. The last determines how the Token is to be sold [Dutch auction, the threshold value auction, Interactive Coin Offering, an auction with multiple rounds]. This can be done as a sale with a fixed price and the bid or by an auction.“
The study offers a breakdown of ICOs, ultimately, a guidance for companies that want to continue in the future to deal with the blockchain-based financing option.