Daniel Blaseg

2nd of July 2018

Jours fixes usually take place on the first monday of the month, starting at 5:00 p.m., in HoF E.01 / Deutsche Bank of the House of Finance (Campus Westend).

[Daniel Blaseg, E-Finance Lab]

From Crowdfunding to Crowdsales: An Exploratory Study of Token Sales and Initial Coin Offerings

Disintermediated funding sources such as crowdfunding have experienced exponential growth in recent years and have become a valuable source of funding for entrepreneurs to finance their projects. The emergence of the distributed ledger technology has since given rise to a new phenomenon in the landscape of entrepreneurial finance: initial coin offerings (ICOs), also termed token sales or crowdsales, are a novel fundraising mechanism in which new blockchain projects sell their underlying blockchain protocol tokens that become a functional medium of exchange to be potentially traded on the secondary market, grant a potential financial return or other forms of extrinsic reward if or when the funding goal is met, and the project launches.

Drawing on a unique and hand-collected dataset of more than 1,000 token crowdsales that raised over $7B since 2013, this study offers a first-ever empirical classification of token sales and examines the characteristics of success and failure of token sales. The findings suggest that quality and depth of the information disclosed as well as other characteristics of the project do not predict the success of a token sale regarding the amount raised. Finally, I find that only 30% of projects get listed on one of more than 170 exchanges after the token sale, mainly explained by the quality characteristics such as preparedness or availability and quality of source codes.