5 Biggest ICOs

Filecoin

The Filecoin ICO has raised over $257 million during its September 2017 token offering after already having raised $52 million from leading venture capital firms such as Union Square Ventures, Andreessen Horowitz, and the Digital Currency Group prior to the token sale. Filecoin aims to build a decentralized cloud storage network using the InterPlanetary File System (IPFS) to securely record and store data on a peer-to-peer basis.

This ICO stands out since it complies with the new SEC regulations on ICOs, only allowing accredited investors to partake in its token sale.

Why This Worked

Not only was Filecoin the first regulatory-compliant initial coin offering in the U.S., the project also offers a top-tier technological solution for a growing market. Furthermore, the project has received financial backing from several of the world’s leading blockchain venture capital investors ahead of the ICO, giving the project the needed stamp of approval to raise the staggering amount they were able to secure during its token sale.

Lessons Learned

• A project that provides an innovative solution for a growing market with real-world demand has a good chance of performing well.
• Backing from leading blockchain investors usually leads to a successful funding round.
• A stellar team behind a project increases the likelihood of a successful crowdsale.

Tezos

The Tezos project raised over $232 million during its ICO in July 2017. The Tezos team is developing a self-amending distributed ledger that allows for the creation of smart contracts. Tezos stands out from other blockchain projects since it allows token holders to approve and fund new protocol updates and, therefore, pre-emptively mitigate scaling or development disputes that may arise for the network in the future.

Tezos’ token, called Tez (XTZ), will become tradable on digital currency exchanges in the coming months.

Why This Worked

The Tezos project is addressing pressing issues in the cryptocurrency community, which are governance and the decision-making process in relation to blockchain technology. The team behind the Tezos projects has been developing a blockchain that enables its token holders to become the decision makers when it comes to important protocol updates and thereby democratizes the governance of its blockchain.

Ironically, the founders of Tezos are currently embroiled in a legal dispute with the director of the Tezos Foundation to access the ICO funds to continue the development of their platform. As the ICO funds are being held in the foundation, Tezos’ founder can currently not access the funds they need to continue the development of the Tezos platform, leaving investors in the dark as to whether they will ever be able to trade the XTZ token on exchanges or not.

Lessons Learned

• Innovative solutions that address real challenges such as blockchain scalability and governance have a good chance of raising substantial funds.
• Initial coin offerings are still a highly risky asset class and only a tiny percentage of your overall portfolio should be invested in these newly issued digital assets.

EOS 

The blockchain startup Block.one launched the ICO for its EOS platform in June 2017. So far, the EOS ICO has raised over $185 million to fund the development of its next-level scalable smart contracts platform. EOS is considered by some to be the “Ethereum of China” and has attracted a substantial amount of its investments from individuals based in the People’s Republic.

The EOS (EOS) token started to trade on exchanges on July 1, 2017. After spiking to a value of $5.09 per token, EOS has been trading in the $1.50 to $2.00 range for most of its existence. Interestingly, EOS’s crowdsale is actually still open until June 18, 2018, or until all of its 1 billion tokens have been sold. Today, EOS is trading at around $3.80.

Why This Worked

EOS is developing a scalable smart contracts platform that has the potential to become a “better” Ethereum, as the Ethereum network suffers from severe congestion issues at times. Scalability is a very important for mass adoption of a blockchain network. Hence, EOS is well-positioned to become a major blockchain and smart contract platform in the future.

Lessons Learned

• Improving on popular existing technologies can be a good recipe for success.
• A stellar team behind a project increases the likelihood of a successful crowdsale.
• Backing from leading blockchain investors usually leads to a successful funding round.

Bancor

The blockchain-based prediction market project Bancor held its ICO on June 12, 2017, where it managed to raise $153 million worth of ether for the development of its platform. Investors in the crowdsale also included VC firm Blockchain Capital as well as seasoned blockchain investor Tim Draper.

The Bancor (BNT) token experienced a spike on the day it launched on exchanges to hit a high of $4.49 and then dropped off to trade at a low of $1.49. In late August, the BNT token recovered and surpassed the $3.00 mark again. Today, the BNT token is trading at $2.64.

Why This Worked

Bancor is a protocol that allows anyone to issue new cryptocurrencies called ‘smart tokens’ that can be easily exchanged against reserve tokens, which alleviate the issues surrounding liquidity and price discovery for newly issued tokens. As the demand for digital currencies rises, the need for an easy-to-use issuance and trading platform increases too. That is where the Bancor protocol comes into the picture.

Lessons Learned

• Backing from leading blockchain investors usually leads to a successful funding round.
• Attracting a wide range of prominent individuals as advisors usually increases the chance of a successful crowdsale.
• Projects that invest heavily in PR and marketing tend to raise the most funds.

The DAO

The fifth largest ICO to date was also one of the most controversial. The token sale for the DAO (Decentralized Autonomous Organisation) raised $152 million worth of ether in May 2016 to a create a decentralized investor-driven venture capital fund that would invest in promising new projects built on the Ethereum blockchain. The controversy around the DAO started a month after the crowdsale when it was discovered that a vulnerability in the DAO’s smart contract allowed a hacker to steal around one-third of the invested ether.

What became known as “the DAO hack” later led to the dissolution of the DAO and a hard fork in the Ethereum blockchain that allowed ether holders to restore their ether holdings back to prior to the hack. The DAO hack also caught the eye of the SEC, which announced in July that the sale of the DAO tokens would have been considered as the issuance of securities and should, therefore, have been subject to regulation. This statement initiated new ICO regulations that are currently being put in place in the US.

Why This Worked

Despite the DAO’s abrupt downfall, this initial coin offering was able to raise such a large amount of money as the project – in theory – allowed investors to gain exposure to blockchain projects in a decentralized manner. In other words, it was one of the very few ways to gain investment exposure to various blockchain projects without having to invest in each individually, which was rather revolutionary at the time.

Also, the DAO focused on a highly active community, the Ethereum community, which helped the project gain so much traction in such a short period of time.

Lessons Learned

• Projects specifically targeted at highly active communities tend to attract more funding.
• There is high demand for blockchain and cryptocurrency investment projects, which can also be seen by the performance of Iconomi, TaaS, and Melonport.
• Initial coin offerings are very risky investments and can be subject to cybertheft, which can lead to a complete loss of your invested funds.

Investing in the ICOs that raised the most money does not necessarily mean that their tokens will also outperform. This can be seen by the price action in Bancor and EOS tokens compared to those of the biggest ICOs measured by return on investment on their tokens.

What is the lesson for investors? It is vital to look at each project in detail before making an ICO investment and not let yourself be influenced by strong crowdsale figures alone. Click here for our list of all completed ICOs, to compare their strategies.