After analyzing the second quarter of 2018, we present to you the detailed insights of various tokens offered by ICOs and their performance in the ICO market. The second quarter of 2018 was quite interesting as we saw ICOs abandoning old ideas and coming up with new ones. Some of these ideas were successful while others failed to capitalize on the market.
Let us examine the different tokens offered in Q2 of 2018.
Utility Token: As the name suggests, these tokens provide utility to the token owners as they represent tokens of a protocol. There are essentially two ways in which utility is provided to token owners:
1. By granting access to network or service features.
2. By allowing token holders to actively contribute work to the system.
Some tokens offer both of these facilities, while others do not provide any utility. Q2 of 2018 witnessed a surge of 32% in projects offering utility tokens. The token that raised the highest average funds was a utility token, raising approximately $22 million.
Security Token: These tokens are issued with the promise of dividend payments, company shares, credit tokens, etc. These tokens are subject to federal security regulations, and failure to comply can result in penalties and even project failure. Security tokens accounted for 4.88% of project shares in the ICO market. However, Q2 of 2018 was disappointing for security tokens, as there was an 8% decrease in projects offering them. The average amount of funds raised by security tokens was meager and far below $5 million.
Vote Token: These tokens empower the token holder by granting them the right to vote and the ability to influence the development of a project. Vote tokens accounted for only 0.27% of the total number of ongoing projects in Q2 of 2018. The average amount of funds raised by vote tokens was less than $1 million.
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Service Tokens: Now, let’s discuss the tokens for which most projects sought funds. Service tokens are exchanged in return for the services offered by the project. Although the number of projects offering service tokens decreased by 24%, they still accounted for 42.5% of all projects. The market capitalization of service tokens lags far behind utility tokens, with an average amount of funds raised of about $6 million only. Interestingly, the highest number of unsuccessful projects were based on service tokens. Q2 of 2018 witnessed over 150 unsuccessful projects out of a total of 827 projects initiated in Q2.
Reward Tokens: These tokens are awarded to participants of the network for their contributions. A total of 0.81% of projects were based on reward tokens. The performance of reward tokens was better than service tokens, hybrid tokens, and vote tokens. The funds accumulated by reward tokens exceeded $6 million. The success and failure rates were almost equal for reward tokens, meaning an almost equal number of projects succeeded and failed in Q2.
Hybrid Tokens: This is an intriguing type of token where tokens are given for both services and work performed for the network. 15.04% of total projects offered hybrid tokens to network participants in Q2 of 2018. The average amount of funds raised by hybrid tokens was about $6 million. There were approximately 60 successful projects that offered hybrid tokens, while the number of failed hybrid token projects was less than 50.
Cryptocurrency: Now, let’s talk about the buzz of the decade. This is evident from the number of ICOs launching their own currencies. 1.36% of total projects introduced their own cryptocurrency without any additional exceptional features. These new cryptocurrencies raised an average fund of about $7 million. However, most of these projects were unsuccessful.
The second quarter of 2018 highlighted the fact that innovation is the new normal in the blockchain industry. Experts are following this trend, and investors are seizing the opportunities. Entrepreneurs are finding new ways and means to implement their ideas. We expect this trend to continue throughout the rest of the year.
