State of the Token Sale Market, Part 1: Signs for Concern?

By Matt Chwierut Apr 27, 2017 2:23 AM EDT

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The controversial Gnosis reverse dutch auction concluded on Monday and sent shivers through the emerging token sale market. The sale gave the token an effective valuation of over $300 million, more than three times what Augur, its closest competitor, is currently worth. The mechanics of the reverse dutch auction meant that the development team kept over 95% of the GNO tokens, while still having $12 million in direct funding.

This on the heels of several high-profile token sales in April have stoked suspicions of market mania and a possible bubble. The attention has spilled over into mainstream news, with mentions in Wired, Bloomberg, and Harvard Business Review.

There is no doubt that token sale activity has been steadily increasing throughout 2016 and into 2017. In the first quarter of 2017, projects raised almost 40% of what they raised in all of 2016. The average amount per sale didn’t significantly rise either, staying just less than $2 million, showing that there was an increase in both high-raise sales and the low-raise sales that don’t see much press. The market was continuing a steady but standard growth, made seeming more extreme due to the increasing attention paid to it.

Until April.

April has raised more money than any other month in token sale history. Given the spikiness of the monthly amounts, we also look at rolling monthly averages to better show increases over time. The increase over the past twelve months has been consistently averaging around 20%, much more steadily than popular interest has. April has been a radical divergence.

April so far has seen eight token sales that have raised on average almost $10 million. Several more should conclude that have above-average raise amounts, and the market does not yet show signs of slowing.

Even more concerning are

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