Token Sales Continue to Boom Despite Changing Crypto Market by Alex Lielacher
The token offerings are spread across the ICO (69%), IEO (21%) and STO (10%) sectors. The U.S. has emerged as the global leader with 66 token offerings. Second is Singapore, growing in popularity as a favorable jurisdiction for token sales with 52. China with 30 token offerings, raised the most capital through token sales in 2019, despite the country’s anti-crypto stance.
A thawing market
The Half Yearly Report: Deciphering Token Offerings: IEOs, STOs, and ICOs, compiled by token sale analysis platform InWara, identifies new trends in the token sale market such as the emergence of a new blockchain-based investment vehicle, the Initial Exchange Offering (IEO). It says that the entry of major players from established industries such as the Facebook Libra Project and JP Morgan has helped revitalize interest in the sector.
2019 Token offerings in numbers
In the first half of 2019, blockchain startups raised $2.26 billion through blockchain-based venture funding. The first quarter of 2019 saw a total of $560 million raised. However, Q2 saw significant growth with a total of $1.7 billion raised. However token-based funding is down by 46 percent year-on-year due to the collapse of the ICO market.
A total of 583 blockchain-based token offerings were launched during the first half of 2019. While ICOs have been steadily declining in popularity, they are still the most popular type of token offering. 69% of the 583 token sales in the first half of the year were ICOs with a total of 403. However, the total number of ICOs has declined by 74% when compared to H1/2018. Similarly, the total amount raised by ICOs has plummeted. ICOs raised $1.32 billion in H1/2019, which constitutes a sharp decline of 91% from 2018.
In contrast, the emergence of IEO projects in the first half of 2019 represents a 6000% increase to a total of 123 projects. This number constituted 21% of the total number of token sales. In the last six months, IEO projects raised $1.63 billion. As ICOs continue to fall out of favor, the number of IEOs is expected to grow in the second half of this year.
However, one single project was responsible for a large portion of the total amount raised by IEOs. The Bitfinex LEO token IEO raised $1 billion in May 2019. The IEO was floated through Bitfinex’s IEO platform Tokinex. As a result, Bitfinex claimed the title of the leading IEO platform in H1/2019 due to the success of the LEO token raise. Another leading IEO platform is Gate.io through which projects raised $320 million.
While Bitfinex and Gate.io raised the most amount of funds, LATOKEN claimed the lead in the number of single IEO projects launched with 30 offerings floated on its platform. The Probit exchange was second with 18 IEOs, and ExMarket was third with 10 IEOs.
STOs also grew in popularity in H1/2019, increasing by 16.32% in comparison to H1/2018. 10% of the total token offerings were STOs. However, while the number of STOs has dropped since March 2019, the few STOs that have launched have raised more funds. This may be because the projects launching STOs are perceived to be of higher quality or simply because there are fewer projects meaning that investors are willing to spend more. STOs raised $419 million in H1/2019, according to InWara.
Regional and sector trends
The U.S. led the way with 66 token offerings. Singapore, growing in popularity as a favorable jurisdiction for token sales, had 52. The UK had 50 offerings. China and Estonia were also notable jurisdictions with 30 and 27 token offerings respectively.
Despite fewer token offerings, China raised the most capital at $1.18 billion or 33.2% of the total amount raised in token offerings in H1 2019. This is due to the success of the Hong Kong-based Bitfinex LEO token IEO, which alone raised $1 billion.
The U.S. is also a notable region in terms of funds raised having accumulated $255 million. This number represents 7.6 percent of the total funds raised globally. Singapore comes third with $232 million raised within its borders.
Financial services continue to be popular sectors for startups launching their token offerings. Payment solutions and other similar services each had 66 and 47 offerings respectively. Mineable cryptocurrency coins projects were also popular within the token offering market. Other notable sectors are gambling, healthcare, and energy.
Trading and investing-focused startups raised the highest amount of money coming at $1.25 billion. Blockchain technology startups raised $338 million while energy, gambling, real estate, and healthcare also raised large amounts.