At the ETHWaterloo hackathon held in Canada and judged by representatives from companies including Coinbase, Consensys, Slock.It and Augur, Ethereum co-founder Vitalik Buterin stated that 90 percent of initial coin offering (ICO) projects or ERC20 tokens launched on top of the Ethereum protocol will likely fail in the long-term.In 2017 alone, companies have already raised over $2 billion from ICOS. Many have raised up to $200 million by appealing to mainstream investors who’ve not previously invested in cryptocurrencies.
Like the vast majority of early-stage tech startups that have failed over the last decade, the majority of companies raising money via ICOS will struggle to sustain their business models and fail to commercialize their blockchain platforms. As the ICO market matures and the Ethereum blockchain technology evolves into a more scalable, flexible, and robust blockchain network, Buterin believes that more viable, efficient, and practical decentralized applications will emerge on the long-term.
“This, basically, is tokens 1.0. There are some good ideas, there are a lot of very bad ideas, and there’s a lot of very, very bad ideas, and quite a few scams as well. I expect that tokens 2.0 and the kinds of things that people will start building in 2018 and 2019 will generally be of substantially higher quality. Especially once we start seeing what the consequences of the first wave of tokens are in the medium-to-longer term … What is a good role for them and what is a role that doesn’t really make sense?,” Buterin added.