Bancor, one of the most successful ICOs, has seen the price of its token declined 56 percent after raising $153 million in a matter of hours in June, Bloomberg reported.
Backed by billionaire venture capitalist Tim Draper, the Israel-based startup Bancor is the fifth-largest ICO by amount raised by startups, which totals more than $3 billion this year.
Bancor protocol enables anyone to create a new type of digital coin called a Smart Token, which can hold and trade other tokens. This allows the Smart Token contract to serve as its own market maker, automatically providing so-called price discovery, and liquidity to other coins.
"This actually guarantees liquidity," Eyal Hertzog, co-founder of Bancor, told Bloomberg. "You are not at the mercy of for profit market makers."
Around the time of the ICO, some of the burgeoning sector’s better known developers such as Cornell University’s Emin Gun Sirer had started raising questions about the application. Sirer says Bancor’s formula is less efficient than simply making the market manually and the technology could also be vulnerable to front running, where people make money off of the visibility of others’ transactions.