The past 2017 was marked by a real explosion in the ICO market. 300 projects raised almost $ 4 billion in investment and … for the most part failed at the implementation stage. Many expected that this year the market will decline, but it was not. ICO projects have already brought more than $ 2 billion to their organizers in the first months of 2018. True, it has become very difficult for ordinary investors to get into the best ICOs. How to get into better ICO projects and what awaits the ICO market in the future? We will describe in thisarticle!
Best ICO: what happens with the projects?
ICO projects are closed. 84% of tokens were distributed within closed presales in the first quarter of 2018. Only 16% of ICOs were held in an open format, when anyone could join the purchase of tokens.
Many startups tried to combine closed and public sales, but still a large proportion of tokens were sold behind closed doors. Some even abandoned public ICOs (such as the Telegram), which caused a hype in the cryptocurrency community.
Take, for example, Refereum – one of the most popular ICO of this year. The developers offered a high-quality product (a platform for developing and promoting video games) and gathered thousands of ordinary investors around it. They were promised rewards for reposting, attracting friends, registering in a test application and buying games through the platform.
As a result, the developers gathered about 100 thousand subscribers on their channel in Telegram and suddenly sent out to the majority of the participants a message that the sale of tokens was completed. Many investors are still confident that the creators of Refereum promoted their project at the expense of ordinary users and then sold tokens to a group of privileged participants.
There are other examples of how ordinary investors could not get into projects that they were interested in. For example, after registering with ICO WePower, many participants received an alert about a failed verification in the system.
The event caused a resonance, since the majority of investors who applied for the purchase of tokens, have already participated in many ICOs and have never encountered such problems.
The suspicions that ordinary investors are simply cut off from the ICO market have appeared in the cryptocurrency community. They were confirmed by the developers themselves – they began to carefully select those who can buy their tokens and actively switch to closed sales.
In practice, it really turns out that the developers have reoriented themselves to large investors and abandoned smaller investors. However, the last are looking for the opportunity to participate in the ICO.
Fortunately, they still have it. This is a collective investment in which different people unite to enter a project that is not accessible to them individually. To participate in the ICO most often going to the investment pools, which we have already talked about before.
Cryptocurrency startups in 2018 are markedly different from the projects of last year. According to experts, they are more technological and have a much better chance of developing into a full-fledged product that lingers on the market. It is not surprising that the number of people willing to participate in the ICO is growing exponentially. The organizers of the top crowdsales receive thousands of applications for participation in the auction and are often forced even to refuse anyone. This allows them to quickly sell tokens, but takes away from many investors the chance to participate in ICO. They just do not have time to apply – all the places are already taken.
Collective investing solves this problem. Pool administrators monitor top ICOs, quickly fill out applications for participation and often have access to private sales.
In conditions of increased excitement and the queue of those who wish to take part in the ICO, the organizers can set almost any threshold of entry. For example, participation in the first rounds of the pre-sale ICO Telegram started from $ 20 million – an amount that is very heavy for an ordinary investor.
Collective investments are huge sums of money that are poured at one time into the cash register of the ICO. Therefore, representatives of investors (for example, pool administrators) are seeking the most favorable conditions for the purchase of tokens. ICO organizers can make discounts for them or add bonus coins after the crowdsale has been completed.
In an environment where many states have seriously taken up the regulation of the cryptocurrency market, the organizers of the ICO can not conduct trading at their own discretion. If they are subject to the regulators, you have to follow a number of rules.
For example, the USA, Canada, and many European countries require KYC, an investor identification procedure. Simply put, if you want to participate in the ICO, you will have to go through verification in the system and submit scans of your documents. You will also need an extract from the bank (if you are going to buy tokens for the money you hold on the account) or other payment information (if you transfer money from the card) in most cases.
The problem is not even that you may simply not want to provide information about yourself. Chances are good that you still will not pass the KYC procedure. The fact is that many ICOs set conditions for participation in bidding, dictated by government regulators. These conditions concern citizenship and the banking history of investors very often.
For example, if the ICO is organized in the USA, investors who live in the CIS and are not clients of US banks may not be allowed to do so.
Such restrictions can be circumvented only in case of collective investment, when you transfer money to the pool and all its organizational matters are handled by its administration. By the way, KYC is not necessary at all. After all, the pool participates in ICO as one collective investor with a single current account.
With a properly selected pool, collective investment becomes not only a more profitable, but also a less risky way to participate in an ICO. You do not need to look for projects on your own and try to assess their availability and reliability. This is done by the pool administrators. And if they themselves invest in the chosen project, the investment risks are reduced to a minimum.
In addition, in case of failure, the losses will be distributed among all participants in the pool, in proportion to their investments. So it’s much easier to go into a serious minus when you search for yourself and participate in an ICO than with collective investment.
Top ICOs: What Changes Expect the Market?
Today there are already about 200 investment pools for joint participation in the ICO. Their number will only grow. After all, every day there are more and more people who could not get into the project of interest, received a vague refusal (as in the case of Refereum or WePower) and decided to join the cryptocurrency pool.
At first, this may reduce the effectiveness of collective investment. After all, now many investors are registered in all pools that they can find. Even without delving into the details and not trying to assess the reliability of the selected sites.
Analysts call the current state of the market fermentation. Investors are torn between pools, trying to have time to join at least some top-down ICO, they do not have time, are frustrated or even become victims of fraudsters.
However, according to experts, during 2018 the situation has stabilized. Ratings and listings are expected in the near future, in which basic information on the activities of investment pools will be collected.
On the one hand, this will reduce the level of market decentralization. However, on the other hand, it will allow a wide range of users to take part in top projects and give them at least some kind of security guarantee. After all, the main reason why private investors are afraid to invest in ICO and other cryptocurrency projects is the fear of losing money.
However, not only ordinary investors will benefit from collective investment. The mediators (who charge a percentage of the pool’s profit) and the organizers of the ICO (who quickly receive the investment volumes they need) will win.
However, what will happen to the ICO market itself? Can it survive in the new conditions? Despite current problems (frequent failures, increased state control, and so on), most experts are confident that it can.