A new study by Satis Group used publicly available data to show that 80 % of all ICOs are scams while a mere 8 % of tokens actually make it to exchanges.
The company prides itself as the premier ICO advisory agency and the research they published using information from public domain was titled ICO Quality: Development and Trading. They went on to classify ICOs into categories as either scams, failed , gone dead, dwindling, promising and successful.
With the result showing that up to 81 % of ICOs were considered scams. These are the crowdsales people behind them never really had intention to follow through with the project promoted in the whitepaper.
The study reported that 6 % of ICOs can be classified as failed. These are those projects that were unable to meet their target for an ICO and had to return investors’ funds or were abandoned halfway. They are the crowdsales that couldn’t meet their soft cap, classified as failed.
5 % of ICOs were classified as gone dead. These are those ICOs that went through the processes of ICO but were not listed in an exchange, neither have they continued with the code development of the project at Github for 3 months. The absence of coding activities at Github and lack of communication to investors determined classification of an ICO as gone dead. The paper didn’t seem to have taken cognizance of projects that may have moved on to another platform from Github to continue with their coding development.
The study used a set of criteria and the ability of teams to meet them to classify ICOs as dwindling or promising or successful. The criteria are: deployment of beta version of the concept, a deployment of advances made in project on the website in a lucid manner with evidence of process and progress seen in a three month code work at Github. According to the analysis, a dwindling ICO has accomplished one of the criteria, a promising one, two of the criteria while a successful one has accomplished all the listed criteria.
The group said they will keep on researching and developing this method of ICO classification for the benefit of industry. The lead researchers are Sherwin Dowlat and Michael Hodapp.