How To Analyze the New Wave of Token Sales

Three years ago, the crypto world was in the midst of the now infamous ICO boom where for a brief time, funding surpassed that of early-stage equity venture capital. In hindsight, it seems nothing short of absurd that projects were raising hundreds of millions, if not billions, of dollars for completely unproven token models and pre-launch networks. Many investors learned the hard way that deploying capital at sky-high valuations, hoping for a retail-driven pump is a recipe for disaster. As the multi-year bear market ensued, the appetite for token offerings all but disappeared entirely.

As the crypto-winter receded earlier this year and the DeFi boom took hold, Ethereum once again became the platform of choice for funding and building new token projects. Even with the recent major drawdown, there are several assets up over 1,000% year-to-date with more than a dozen over 100%.

Project teams have evolved beyond the ICO with a focus on raising funds while optimizing for a fairer distribution. So far, the number of different approaches have made it difficult to assess the investability of these offerings. Looking at five of the most recent offerings, it’s apparent that several early participants made off with outsized returns while others are left deep in the red.

Most offerings experienced price increases upon initial listings and subsequently bled out. While part of the reason is the general correction in DeFi over the last month, there were telltale signs that could have predicted this behavior.

By digging deeper into the mechanics of these sales, one can glean insight to better understand market behavior around this new wave of offerings.

Idk about the IDO