Nikita Anufriev, DateCoin CEO
For those who follow crypto industry trends, the growing interest to STO (Security Token Offering, token-based securities) is obvious. Many analysts expect this trend to help in recovering ICO market. Could you imagine the utility token to be almost dead and guess the reasons of a dramatic drop in users interest to it?
For the ICO market had been booming recently, is now shrinking. Experts attribute it to the growing numbers of scam projects that fail to keep promises to investors. Not surprisingly, the total funds raised have dropped dramatically and investors have turned their backs on ICOs. To put it simple, in 2017 and early 2018 average funds raised per project amounted to $12.7M, whereas nowadays just a few great projects can get slightly more than $1M.
Prospective investors can’t stop feeling nervous as the ICO market is almost dead resulting in huge financial losses. That is not to say for the majority of cryptocurrencies dropping rapidly.
Is utility the past of the market?
The majority of ICO projects launched in 2017-18 emitted utility-tokens. This approach was simpler and more safe as it didn’t require registration at SEC and compliance with its regulations. However, nowadays investors are becoming more and more disappointed about these coins because of their insecurity. As the company emits tokens it pretty often is not committed to support the token price. As a result, utility token holders have to find buyers for this asset themselves with the token emitent staying apart from this effort. That is the reason for analysts to say the utility token era is over. But is it really true?
As outlined earlier, utility tokens allow its holder to pay for services and purchase features within a given project. But…Are there many projects where users can spend tokens purchased at ICO?
Today, only a few projects make their coins useful with security mechanics implemented. Even fewer projects are capable to implement tokens as a payment method.
The very first platform that pops up in mind when talking about token listing is CEX.io exchange. There are many projects completed ICO and interested in getting listed and that is how token demand is secured.
Our project (DateCoin) is another example of a successful token implementation for in-app purchases. We added DTC token to a working dating app Denim (800K+ users). They can now pay for in-app services (for example, premium access) with DTC and get up to 50% off. That is how we achieve high demand for tokens at crypto exchange. From the moment DTC tokens were implemented in Denim for Android and Denim for IOS, our users have already spent 200K+ DTC. All the tokens will be withdrawn from circulation upon payment processing. Such an approach allows to reduce the number of tokens in circulation resulting in gradual price rise. That is how we secure the demand for token.
To revitalize ICO market, it is essential to create the products targeting not only crypto enthusiasts, but also common users. That is the path we follow at DateCoin. Thus, our key rule is ‘tokens for people’, rather than ‘tokens for tokens’.
To restore investors trust in tokens, market players should propose solutions that allow token holders to use tokens for purchases rather than simply keep it. That is how we can give utility tokens one more chance and make it great again.