Irrational Appcoin Exuberance

Something unusual is going on in the crypto world: irrational exuberance around ICO investing.

What is an ICO?

This week’s ICO activity

Not the best way to lead off a white paper 🤔

What is unusual about this?

In crypto land, this week we’ve seen two projects raise $5M+ in a matter of days by selling a vision rather than demonstrating traction, ability to execute, or evidence of technical research. The crypto market has set the bar shockingly low for entrepreneurs to raise money and this is dangerous for everyone involved.

Why is there such a significant divergence between venture and crypto funding?

  • Crypto enthusiasts have experienced significant gains from BTC and ETH recently and are now overweighting vision and underweighting execution when making investment decisions. It’s easy to get excited about an eSports competition platform (Firstblood) and a platform for managing crypto funds (ICONOMI), especially if you’ve benefited from the rapid appreciation in BTC and ETH over the past few years. Crypto enthusiasts (myself included) want to see these types of projects come to fruition; the visions are alluring. The projects haven’t delivered anything tangible yet though. These fundraises are getting done based on vision rather than any semblance of execution. This has been a problem on Kickstarter for years and I’m fearful we’re going to see a lot of the same in the ICO world.

What happens next?

I’m concerned with appcoins because of the irrational behavior taking place in the crypto investor market. While it sounds attractive to a founding team to raise $5M+ right off the bat with little effort, what comes with that is expectations that are incredibly hard to manage. And navigating a successful startup project is all about managing expectations. Unfortunately, it’s my sense there will be some more pain before there’s progress in the space and the activity around Firstblood and ICONOMI cemented that for me this week.

I’m excited about crypto token protocols long-term and think there’s several promising projects in the works currently and many more to come. But there needs to be some standards around launching an ICO and investing in ICOs in the space and I caution all to tread carefully until those standards emerge.


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Founder @1confirmation

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