A study conducted by Satis Group, the premier ICO Advisory Group, says 81 percent ICOs are scams, and only 1.6 percent of them are promising.
The group classified initial ICOs with market capitalizations of at least 50 million USD by quality, following an ICO’s evolution from white paper, fundraising, to eventual trading online.
The study begins by breaking down ICOs into 6 groups: Scam, Failed, Gone Dead, Dwindling, Promising, Successful.
“We found that approximately 81% of ICO’s were Scams, ~6% Failed, ~5% had Gone Dead, and ~8% went on to trade on a exchange,” researchers Sherwin Dowlat and Michael Hodapp said in a blog post.
They classified “any project that expressed availability of ICO investment, had no intention of fulfilling project development duties with the funds, and/or was deemed by the community (message boards, website or other online information) to be a Scam.”
Under the classification Failed, the authors understand the ICOs that succeeded to raise funding but did not complete the entire process and were abandoned.
Gone Dead ICOs succeeded to raise funding and completed the process, but were not listed on exchanges for trading.
Dwindling projects are those that have succeeded in raising funds, completed the process and were listed on the exchange. The dwindling projects are those that fulfill one of the success criteria:
- Deployment of a chain/distributed ledger or product/platform,
- Clear and transparent roadmap on website,
- GitHub code contribution in a rolling three-month period.
Promising ICO’s are the ones that meet two of the above success criteria.
The Successful projects are those that meet all the above success criteria.