By Alex Phenom, blockchain enthusiast and founder of Phenom.team

Until very recently, Initial Coin Offerings (ICOs) were all the rage, having attracted thousands of investors and venture capitalists with a new blockchain-supported crowdfunding model of investment. According to the ICORating Annual Report, the median amount of funds raised per project staging their ICOs in 2017 was $1.7 million, while the total amount of funds raised by ICOs in the past year was about $6 billion.

Despite the strong correction of crypto prices in the beginning of 2018, crypto market participants were still receiving record sums of investments. One of the textbook examples was the ICO Telegram, which raised $1.6 billion from institutional investors in two seed rounds.

This trend has been witnessed throughout the entire ICO market. According to the data collected by CoinDesk, ICOs had already raised $6.3 billion in the first three months of 2018. But as of now, it’s no easy task for ICO initiators to get their project funded. And it’s not only about the pervasive regulations and the implementation of KYC and AML procedures, but also about diminishing of investors’ interest and the significant number of ICO scams.

Following Bloomberg’s report that approximately 80% of 2017 ICOs were identified as scams, new statistics have shown that 10 of the most high-profile ICO scams have swindled $687.4 million from investors. That’s why it comes with no surprise that many would-be crypto investors are now skeptical about getting involved in ICOs. If in January 2018 $1.6 billion had been raised across the ICOs, by the end of August the amount invested in ICOs has reached the point of only $933 million.

All the pitfalls above, including scams and the ever-changing environment mean that many projects are now forced to exit the market. And high-profile players are no exception. A crowdsourced venture capital firm Cofound.it, which, by the way, raised $15 million from ICO in June 2017, has decided to scale down the project and distribute all its assets to the token holders. The company believes that the ICO market has betrayed its nature, and now the ecosystem is ‘developing exactly in the opposite direction’.

However, while on the one side, it’s deplorable that such a big player winds down its brainchild, on the other, Cofound.it has set an example of a truly trustworthy project, which shows its credibility even during the pre-closure phases. It’s quite a challenging task for every project to quit properly, as a skeptical community can consider one as an ‘exit scam’.

So, what conclusions could be drawn from the existing situation on the market? Firstly, the ICO and the crowdfunding model have not outlived their usefulness. Just think of it: how could the market be dead if there’s so much hype around even when it’s only in its infancy?

The key issue of the current situation lies not in the ecosystem, but in the participants. How could the market reach the transparency if some of players are fraudsters? Scammers use the fact that now there is no definite regulation and stable business environment, that’s why the market is oversaturated with a large number of pump-and-dump and exit scams, which only goal is to hit investors up for money.

But everything will change, as the market matures, bringing new approaches to development, security and transparency. ICOs may have become a bit of a controversy, but the process still has a lot to offer. And this must be understood by both investors and ICO projects.

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