For all the media and regulator attention on ICO scams it can be easy to forget that people are also making money in the industry.
According to a recent report by the Boston College Carroll School of Management, the average ICO investor makes returns of 82 percent. While these results “could be an indication of bubbles”, the report suggests that they are also “consistent with high compensation for risk for investing in unproven pre-revenue platforms through unregulated offerings.”
Indeed, the risks might be a little too well compensated. Even accounting for this risk, the market is generating “abnormal positive average returns” with those who kept their tokens for more than six months seeing the greatest return on investment, averaging between 150% and 430%.
These results indicate “significant ICO underpricing” of tokens, caused by “a lack of expertise in determining market demand for the token/platform,” the uncertainty about valuing any startup at this stage in the business cycle, and the “urgency in distributing tokens to allow the platform to function.”
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