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When it comes to initial offers of coins (ICO), the saying "here today, gone tomorrow" seems to apply, with the shelf life – from the symbolic sale to extinction – about that of a fast marriage consummated in Vegas .
But economic models must be resumed – or be summary or absent. Enter early enough on the ground floor and back? To quote an old episode of Seinfeld: They are real and they are spectacular.
What could we add: And built on an unstable basis?
The timing seems to be everything with the ICOs, as with so many other things life. In research that started earlier this month, Boston College's results show that over 4000 ICOs – or, more specifically, ICOs that have projects attached to them – have raised more than $ 12 billion so far. .
Again, at the same time as this colossal amount, more than half of these ICOs left like that, while they fail, disappear, close their doors within four months of the end of symbolic sales. .
by category, 83% of the 694 OICs that do not declare capital and are not listed on the stock market are inactive after 120 days. For the 420 OICs that collect capital but do not list it, this figure drops to 52%, and for the 440 OICs that are listed on the stock exchange, only 16% are inactive in the fifth month. "[19659009] The promise and danger are clearly reflected in a single figure: only about 44 percent of ICOs are still in the fifth month of the trip, at least to the extent that Twitter and other online leads show. tweets, not ICO, it seems.
All this is barely enough to see if a business model really works.
And in an interview with Karen Webster, a paper duo, Hugo Benedetti, Ph.D. Candidate, took note of the gold rush that comes when the time is right.
Consider the fact that Benedetti and co-author Leonard Kostovetsky said that unlike IPOs, "the crypto tokens continue to generate abnormal average returns after the ICO. "
Make these returns eye-catching – an average of 179 percent, to be exact.
About Timing and Undervaluation – or the Time of Undervaluation
But to get there 179 percent of lottery ticket? It seems less due to the enthusiasm for the prospects of an ICO via a finished project than to an undervaluation in the secondary field of secondary trading
"We find evidence of significant undercutting by ICO … even after -100% returns to ICOs that do not list their chips within 60 days and adjust for asset class returns, the representative ICO investor earns 82 percent, "noted the paper.
Benedetti has developed some of the findings. There is a bifurcation at work, a he says, while investors view securities as securities or public services. "It all depends on the investment you are trying to do [with the ICO]"he told Webster. "If you start thinking about the separation between utility tokens … that ultimately go to [be used] for the platform, it's a bit weird to think in terms of back." This is because, as he said, a token service, for example, means that the price of this service keeps increasing.
So, could we assume that it's speculation, rather than anticipating use cases (you know, in the real world), that would boost these three-digit returns? ? It may be said, perhaps: Benedetti also noted that the research did not support particular verticals as favoring investors.
As for the surprises that came from the research: "The most surprising was that on average, yields were still positive," he said. "I really thought that overall, the IFAs would have a negative return … because you see so many failed ACI items … even taking into account all the ACIs. who did not list it, [returns] came out positive. "
The argument that ICOs are initially dumped is an argument that best fits what is called the theory of "rational finance," Benedetti said. Here, rational finance is based on the idea that early investors can get tokens at a price that reflects the underlying risk of buying without the benefit of knowing how and when (or if) the forms will be launched successfully. This can be illustrated by the fact that 75% of investors who buy buy tokens that can not be used at the time of purchase.
"Another hypothesis might be that the market does not know how to price [the tokens]" said Benedetti. In this scenario, investors are not able to buy chips at the ICO, but can do it in the secondary market, regardless of the price.
"This could be a history of greater demand, and what is not satisfied through the ICO, that is the demand that will be filled on the secondary market", was -he says.
Beyond the timing – the moment – it seems that there too, it counts. A global map of ICOs would show concentration in North America, Russia and relatively richer countries, such as Singapore, Switzerland and other similar countries, as research shows. Deeper pockets, to be sure – and, as Webster noted, in Silicon Valley, there is rarely a brilliant new tech bubble related to crypto that investors do not like.
The Twitter Effect
Twitter Effect? Do not confuse the social media platform with a hype machine, warned Benedetti.
"We do not say that there is a causal effect of Twitter's activity on the price," he said. "But we also felt that some of the ICO projects that were very active on Twitter could potentially be scams … it's so easy to buy Twitter followers." so simple to tweet all day, we thought the projects would be disguised as being productive just by tweeting a lot. "
" And we did not find it, "he told Webster . "We found that projects that work and trade are the ones that have the most presence online."
The Blockchain Debate
No discussion of ICOs. is complete without a talk about the whole. The course includes blockchain. Said Benedetti: There is the case of basic use of the transfer of value, he said, which can help improve the speed and efficiency of financial ecosystems, as in the United States. But it is also possible to use the blockchain to stimulate financial inclusion.
But by and large, and considering the blockchain beyond cryptos, "I think it's a lot more challenging," he says.
From here … to the place where
Speaking for him alone, Benedetti told Webster that he thought regulators should, well, regulate. But how to regulate a decentralized network? "If I were the SEC, I would be more interested in secondary marketplaces and so-called crypto exchanges," he said. "It's potentially where you could start regulating and making sure the exchange is effective." Such efforts could include holding periods for the management team in order to ensure that it is effective. ensure that there is no insider trading
. some value was provided through the ICOs, in a market that many thought was headed for oblivion. The results should also stimulate reflection on the future of ICOs. The ICO's secondary markets will start to look like other secondary stock exchanges, with advisers and underwriters, he says.
Asked how the markets will evolve, Benedetti said the secondary markets will grow rapidly as more people trade and trade,
Investors looking to allocate their money will turn to some exchanges rather than stalking scattered OICs scattered throughout the world. "Once registered, it's easy to see what the market thinks of the ICO," he noted.
It is therefore not surprising that the next phase of Benedetti's research is on enrollments and their impact on symbolic prices. with an eye towards an early autumn of his discoveries.
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