Comparative Analysis of ICO, DAOICO, IEO and STO. Case Study

Abstract

The article examines the problem of the ICO (Initial Coin Offering, from English — “initial offer of coins, initial placement of coins”). The information source is the ICO rating data of the return on investment in blockchain startups. The methodological base of the research is a situational comparative analysis of the ICO, DAOICO, IEO and STO and systematization of information. The author analyzes three new ICO models. The first one includes elements of Decentralized Autonomous Organizations (DAO). Its aim is to minimize the difficulties and risks associated with the ICO. The second model (Initial Exchange Offering (IEO), from English — “primary exchange offer”) is designed to minimize risks, liquidity problems and a delay in listing tokens at the end of the token sale. The third model — the Security Token Offering (STO, from English — “offer of security token”) — was designed to support real assets and comply with the SEC requirements. These models are a new direction for small and medium enterprises and investors. The absence of any scientific work emphasizes the relevance and scientific novelty of the study. The article is a follow-up of the empirical work related to the success of the ICO, as well as the basis for its revision using the case study results.

Fundraising Campaigns in a Digital Economy: Lessons from a Swiss Synthetic Diamond Venture's Initial Coin Offering (ICO)

“…By the end of 2019, the number of ICOs had drastically reduced, with a 95 drop in capital raised compared to 2018. Scams and juridical battles that ensued after the ICO hype might certainly explain the recent decline (Myalo, 2019). However, the decline in ICOs is also due to the development of alternative crowdfunding models that have emerged more recently (Oosterhout, 2019).…”

A topic modelling analysis of white papers in security token offerings: Which topic matters for funding?

“…All these results bring new insights to the nascent literature about determinants of STOs success (Ante and Fiedler, 2019;Beinke et al, 202;Lambert et al, 2021;Myalo, 2019) focusing on white paper content.…”

“…The higher investor protection for STOs, compared to ICOs, has increased expectations of continuous growth in this market (Lambert et al, 2021;Mazzorana-Kremer, 2019), which has achieved growth in the total amount raised from $22 million in 2017 to $442 million in 2018 (PwC, 2020). However, research on STOs is nascent and limited to a small number of papers (Ante and Fiedler, 2019;Beinke et al, 2021;Lambert et al, 2021;Miglo, 2021;Myalo, 2019). In contrast, because ICOs emerged before STOs, the literature on ICOs is more mature and has produced significant insights into the functioning of this market (Bellavitis et al, 2021;Huang et al, 2020) and the determinants of venture funding (Adhami et al, 2018;Ante et al, 2018;Fish, 2019;Fish and Momtaz, 2020;Howell et al, 2020;Meoli and Vismara, 2022;Momtaz, 2019;Xu et al, 2021;Zhao et al, 2020).…”

ICO vs. Equity Financing Under Imperfect, Complex and Asymmetric Information

“…Obviously total net pro…t of the …rm in period 1 will respectively be lower as well which is intuitive since it is a start-up …rm. The prediction that the token price signi…cantly increases from period 1 to period 2 has not been directly tested although it seems like ti is consistent with some evdince in O…r et al 2018and Benedetti et al (2018) that show the token price growth after the initial issue (see also Myalo (2019)). Interestingly, eventhough the price of tokens is lower in period 1 but the product price remains the same (in real terms) and the product price in tokens can be lower.…”

“…DAICO means Decentralized Autonomous ICO. It repesents a type of ICO with a smart contract that improves the control of token circulation and reduces the chances of fraud by founders (seeMyalo (2019)).…”