August 5, 2019
According to a recent analysis, it seems that ICO projects that accepted ETH coins during their token sales are slowly but surely emptying their wallets of Ethereum. The last 12 months alone have seen over 1.8 million ETH removed from the projects' treasuries.
Ethereum has been one of the most important cryptocurrency projects ever since it emerged. Not only did it shift the attention from cryptocurrencies towards the abilities and potential of blockchain — but it also kickstarted the rapid development of dApps, and also new coins and tokens.
In the last several years, the majority of Initial Coin Offerings (ICOs) have seen their coins launched on Ethereum's platform. These tokens are built on the ERC-20 token model. The reason for this is that it is easier to create a token on an existing platform that is relatively easy to use, and then finance the development of the MainNet, than to start with the MainNet and then launch the coins on top of it.
During their token sales, these projects would accept different cryptocurrencies (including Ethereum (ETH)) in exchange for their tokens. These funds would then be used for projects' costs.
Projects that launched their coins on Ethereum's platform would then easily go through a token migration, burn the ETH-based tokens, and launch their own in their own ecosystem.
However, according to recent research, it would appear that the Ethereum holdings of many of these projects have been on a sharp decline. Researchers have analyzed up to 57 Initial Coin Offerings, as well as projects that grew from them. It would appear that, on average, each of the projects has moved or liquidated around 2,500 ETH coins per month during the last 12 months. This is equivalent to around $530,000 per project per month.
According to the research, the projects raised approximately 8.2 million ETH coins in total. At this point, around 72% has been either liquidated or moved since the projects' ICOs to this day. The more precise figure is at around 5.9 million Ethereum coins.
According to the report, the two largest movers were the blockchain platform Tezos, as well as the decentralized CPU power developer, Golem Network. Golem is the largest mover by far, with around 138,000 ETH transferred so far. The coins were sent to the Golem Foundation.
As for Tezos, it moved 60,700 ETH according to the report, although it only distributed them across four separate wallets. Researchers believe that the funds are still sitting in these wallets, waiting to be used or liquidated.
There are multiple reasons why projects might want to dip into their Ethereum treasury after their ICOs. Many were in a hurry to hold an ICO back in 2017 when the prices were soaring, so they had a lot of development costs to cover after the token sale. The same is likely true now, as the prices have seen another rapid surge in the first half of 2019. Others had to draw from their ETH balances to pay for operating expenses.
Even so, it is likely that these projects still have some reserves that could keep them afloat. However, they still choose to pay for their costs in ETH, which makes these findings very interesting.
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