A post-mortem on the ICO bubble: at least 89% of ICOs are in the red

It’s now clear that initial coin offerings (ICOs) were a massive bubble. The median ICO return in terms of USD is -87% and constantly dropping.

The ICO failure can very easily be explained by misaligned incentives between founders and investors. Unlike in the venture capital model, the founders raised money from unsophisticated (mostly retail) investors with a product in very early stages. Moreover, ICO investors had no claim on the project’s assets or to a percentage of the company profits in perpetuity. With few exceptions, nearly no ICO projects were able to capture value in its utility tokens.