To ICO or not to ICO – Empirical Analysis of Initial Coin Offerings and Token Sales

25 Pages Posted: 27 Jul 2018 Last revised: 2 Nov 2018

See all articles by Dmitri Boreiko

Dmitri Boreiko

Free University of Bozen-Bolzano - School of Economics

Navroop K. Sahdev

Massachusetts Institute of Technology; Centre for Blockchain Technologies, University College London; Centre d'Économie de l'Université Paris-Nord

Date Written: July 6, 2018

Abstract

The current paper is the holistic study on ICOs and token sales and presenting key stages of the industry evolution from 2013 to date. We argue that blockchain technology has created a new viable vehicle for early stage capital raising. We trace the evolution of ICOs and token sales using a hand-constructed complete database from small contribution campaigns from a project’s backers and the community in 2013, to the multibillion-dollar industry as it is at the beginning of 2018. We show that successful ICOs tend to be more self-compliant with the forthcoming potential regulation and spend more effort on signalling their quality and reducing the asymmetric information problem. We also look into various proxies for ICOs’ success and show these are only weakly correlated with projects’ tokens long-run performance that is instead mostly influenced by the Ether cryptocurrency performance.

Keywords: Financial industry, crowdfunding, venture capital, ICOs, token sales, blockchain, distributed ledger technology, DLT, tokenomics, blockchain economics, token models, crypto assets, cryptocurrencies, token offering, Ethereum, bitcoin, fintech, financial technology

JEL Classification: G32, G11, E22, M13

Suggested Citation

Boreiko, Dmitri and Sahdev, Navroop K., To ICO or not to ICO – Empirical Analysis of Initial Coin Offerings and Token Sales (July 6, 2018). Available at SSRN: https://ssrn.com/abstract=3209180 or http://dx.doi.org/10.2139/ssrn.3209180

Dmitri Boreiko (Contact Author)

Free University of Bozen-Bolzano - School of Economics ( email )

Sernesiplatz 1
Bozen-Bolzano, BZ 39100
Italy

Navroop K. Sahdev

Massachusetts Institute of Technology ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

HOME PAGE: http://connection.mit.edu/

Centre for Blockchain Technologies, University College London ( email )

UCL Computer Science
Malet Place
London, London WC1E 6BT
United Kingdom

HOME PAGE: http://blockchain.cs.ucl.ac.uk/

Centre d'Économie de l'Université Paris-Nord ( email )

France

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