In this research summary, you will get an understanding of the average retail investor, his beliefs and fears, and the average investment amount. You will also get a sense of what a successful ICO project is and how to construct your strategy to meet investor goals.
The data provider is the marketing agency Olshansky and Partners, who specializes in data and customer research.
Every token buyer is worried about the price of ICO token he bought. No one wants to get some zero worth coins he can’t use or trade.
ICO is a fundraising journey where a company doesn’t share equity but sells tokens by means of an initial coin/token offering.
They don’t re-check actual ICO token prices (at the end of the ICO) and use data for July-August 2018 with prices of 350–500 ETH/USD and 7500–8500 BTC/USD.
Today they see a real project’s evaluations without any hype over the crypto niche overall. There is no data regarding the biggest and average discounts during the ICO phase, so this research shows minimal (public) return on investments for token buyers.
X, X opportunity — meaning a chance to double, triple, quadruple, etc. the money paid for tokens
Utility token — a token that is not meant to be traded, and/or be a way to earn fast money on it.
How many projects are still USD Positive?
Various token holders choose different strategies for buying tokens. Some perceive a token solely as a utility and plan to hold them for a long period of time in order to use later; others are looking for short-term buy-sell opportunities.
Based on O&P local survey/research, we can see that 84% of buyers are looking for short-term opportunities in 2018.
Purpose of Token Purchase, based on O&P research
More than half of token holders plan to exit and sell tokens when they have X opportunity to do it.
There are 2 types of ROI Positive (USD) projects
First type is two XX%
Second type is one X%
There are only 6 double digit Xers (USD value) among ICOs listed on ICODrops. For example, if you invested 100 USD in OmiseGo during it’s ICO, today it would be worth a whopping 20 450 USD.
Let’s take a closer look at them:
- 4 out of 5 are Blockchain/Blockchain-related service projects or protocols.
- Ontology doesn’t share info regarding token sale numbers; looks like private sale closed project.
- Most of the projects did their ICOs in 2017, early 2018.
- Omise.co was active from 2015 (web.archive data), ICO dates are correlated with ETH growth back in May-June 2017 (100–300 USD/ETH). The project was among the first peer-to-peer services to send, cash in, and cash out money. Got funded by a major VC fund.
- 0xproject.com was created on 20 May 2017 (web archive) as a Protocol for trading Tokens. Decentralized exchange protocol, DApps in the WhitePaper, Pantera, Polychain Capital as partners and project raised its money without any hassle, closing its token sale in August 2017.
- Tron Protocol founded by well-known founder from the Forbes 30-under-30, solid investor list. Blockchain-based, open-source protocol for the global digital entertainment industry.
- 2017 ICO funding was a diversification of the Bitcoin capital gain (i.e., 5–10% thereof) into new assets. 2017 ICOs sold out rounds above traditional fintech comps within minutes due to a low supply and high demand, plus opportunism, and lack of governance.
Who is this guy who invests?
There are 4 types of ICO buyers, based on research:
- Irrational Exuberance or bubble-players who understand this is a nice bubble to be in.
- Conventional Wisdom. Drug-money invested.
- Crypto Winnings. Diversifying crypto holdings from previous ETH, BTC price drops.
- Smart Money. VCs, family offices. Bubbles are profitable for smart money too, as long, as they can cash out before the music stops.
O&P, as marketers, use the buyer persona approach as they target groups of visitors to perform target actions, like token buying. Those guys are known as retail investors. They used a set of questions and performed hundreds of interviews and surveys. O&P came up with this investor profile:
Chang is worried about a new big hype, he can’t miss. He dreams about a new project or technology he can spot in time. He usually invests 1–2 ETH, up to 150 ETH if he is backed by a group of friends or partners, and they are sure about the project. This was his hobby that suddenly became a real business for him. Everything stopped after a few bad exits with 0.5X, 0.3X from the initial token price he bought.
Chang understands that this is mostly a lottery, where one big win takes it all. His crypto holdings are still more valuable compared to USD than when he bought them. So he is still looking for a new wave and believes in the crypto space.
He got his own evaluation checklist before buying a new token, his average questions are:
- Who is the team?
- What is this project about?
- Is it realistic to achieve? Or we can make some money just on hype?
- Who else believes in it? Bloggers? Advisors? Companies?
His average investments drastically decreased from 5–10k USD/project to 1–2ETH. He needs now even more time to evaluate a project, it takes him 7–14 days at least to complete his decision.