CoinGecko — the crypto market analysis and research website — released its Q3 Cryptocurrency Report last week highlighting several major trends within the industry over the last few months. Notably, the report covers topics including the prevalence of trans-fee mining on exchanges, declining ICO performance, and a surge in masternodes interest as well as non-fungible token proliferation.
ICOs Declining Amid Extended Bear Market
The notion that ICO interest has significantly declined has already been identified and corroborated by multiple reports, including a recent Morgan Stanley Report. CoinGecko’s conclusion mirror the analysis of other reports that capital raised by ICOs has continued to decrease in 2018, in stride with downward pressure on Ethereum’s price as ICOs convert ETH to USD to salvage fundraising value.
The downward pressure on ETH’s price has also led to Ethereum being the only top 5 cryptocurrency not to have a year-on-year positive return. Overall, 36 percent less ICOs were launched in Q3 2018 compared to Q2 2017, and 81 percent of ICO funding came from Singapore in Q3. This trend follows news in August that ICOs launched in Singapore had actually surpassed those initiated in the U.S. that month.
According to the report, ICOs have also raised 55 percent less in Q3 than Q2 — excluding the EOS ICO. Similarly, only 34 successful ICOs were listed on exchanges in Q3 compared to 75 in Q2. However, funds allocated to ICOs were substantially more distributed than previous quarters, where EOS accounted for 50 percent of the total in Q2. Only 7 ICOs were able to sustain their market cap higher than the total amount raised in the crowdsale.
Non-Fungible Tokens and Masternodes Surging
CoinGecko conducted studies focusing on the market for non-fungible tokens (NFTs) and masternodes as part of an exclusive initiative for Q3. Both NFTs and masternodes have garnered significant growth recently, with NonFungible.com and Masternodes.Online providing CoinGecko with the necessary data.
DASH leads all cryptocurrencies with masternodes by market cap at a valuation of $1.5 billion. However, Horizen and SMART dominate the active masternodes metrics with roughly 20,600 and 15,200, respectively. DASH comes in fifth in active node count with approximately 4,900. Masternodes saw increasing interest and investment in Q3 despite median returns of masternode coins from their all-time highs at -71.37 percent.
Non-fungible tokens have emerged as a particular asset class focusing on cryptocollectibles for virtual real estate and gaming. Games like Gods Unchained — an NFT-based card game — raised significant amounts of money, and the trading volume for Gods Unchained peaked at $2.13 million/week in late July and early August. Similarly, Decentraland has recently experienced a low-volume/high-value dynamic with 1,110 transactions accounting for $1.5 million in its native MANA token for virtual real estate in September alone.
NFTs have the potential to disrupt the traditional financial system as well. There has been a flurry of developments and emphasis on security tokens recently, but non-fungible assets such as commercial real estate and intellectual property rights could eventually be represented by standardized blockchain interfaces (i.e., ERC-721 or ERC-1155) in the future.