Token Sales Are Not Dead

October 29, 2020

By Daniel Kuhn

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Top shelf

Companies are now offering tokenized ways to trade fractions of stocks. Coinbase predicts its consumer-directed debit card to hit shelves next year. Caitlin Long’s Avanti bank is in line to become the second “crypto bank.”

Fractional offering
You can now trade high-demand stocks like Tesla, Apple and Amazon, represented by tokens, on the FTX derivatives exchange. Through its fractional stocks offering, 12 equity and cryptocurrency pairs will be offered, allowing users to trade tokenized fractions of stocks (seemingly up to half a stock at a time) against bitcoin and stablecoins, CoinDesk’s Sebastian Sinclair reports. The product is conducted in partnership with capital markets solutions provider Digital Assets AG and investment firm CM Equity. FTX calls it a “first of its kind” product.

Coinbase card
Coinbase’s debit card is coming to U.S. consumers sometime next year. Active for nearly a year in the U.K. and European Union, the card will become available in all U.S. states except Hawaii. Any cryptocurrencies that Coinbase supports in the U.S. (and that a user holds in their account) can be spent through the debit card – with rewards paid in stellar or bitcoin. The card is issued by South Dakota-based MetaBank and powered by payments platform Marqeta, though users will manage it directly through their Coinbase accounts, according to CoinDesk banking whisperer Nathan DiCamillo.

Avast ye? No, avanti!
Speaking of banks: Blockchain pioneer Caitlin Long is now the CEO of her own special purpose depository institution (SPDI) in Wyoming. Avanti Financial’s banking charter was approved unanimously by the Wyoming State Banking Board on Wednesday, becoming the second newly chartered bank in the state in 2020. Kraken Financial earned approval last month, beating Long – who helped design the state’s rules – to the draw. Avanti is now in the process of raising fresh capital, adding to a $5 million angel round, before it can be granted a certificate of authority to operate, DiCamillo said.

Token sale
The Graph, a data-indexing protocol used by many popular decentralized finance (DeFi) applications, has raised $12 million in a public sale of its native GRT token, CoinDesk’s Zack Seward reports. With approximately 4,500 buyers, the sale used in-house technology to distribute some 400 million GRT tokens. “What we’re excited about with the sale is getting GRT tokens in the hands of indexers, curators and delegators that are going to be participating in the decentralized network,” The Graph co-founder Yaniv Tal said. The firm previously raised $5 million in a private token sale involving Coinbase Ventures and a $2.5 million seed round led by Multicoin Capital.

Four-digit growth
Publicly traded digital-asset brokerage Voyager Digital saw revenues increase 1,159% (from $87,318 to $1.1 million) in the fiscal year ended June 30, 2020. CoinDesk’s Omkar Godbole also reports, customer assets jumped by 1,959% to $35 million. Stephen Ehrlich, Voyager CEO, said increasing adoption of digital assets has helped the company extend its growth momentum. Up next? Revenue is expected to have risen to $2 million in the July-September period while the firm looks to obtain a virtual currency license, or “BitLicense,” this year.

Quick bites

The chief of Canada’s central bank has said its national “digital dollar” initiative is progressing past the experimental phase. (CoinDesk)

Investors are rattled by the latest COVID-19 prognostications, with bitcoin’s price rally possibly on pause. (First Mover/CoinDesk)

New York’s top financial regulator wants firms, including crypto miners, to look closer at climate change risks. “DFS is developing a strategy for integrating climate-related risks into its supervisory mandate,” a new note reads. (CoinDesk)

An Algorand-based micro equity exchange has launched a token tracking top tech stocks including Microsoft, Apple, Tesla, Twitter, Amazon, Netflix and Google. (Modern Consensus)

A group used a flash loan attack to ensure its proposed governance vote on the Maker protocol went through. Maker is now asking for MKR governance token holders not to put them on trading platforms to mitigate the possibility of a similar attack. (Decrypt)

Market intel

Bloody chance.

Traders are betting bitcoin won’t cross its 2017 high-water mark of $20,000 by year’s end. According to data source Skew, there’s a 6% probability of bitcoin trading above the historical 2017 all-time high. “Bitcoin’s price has rallied from $3,867 to $13,800 over the past 7½ months. However, while prices have risen by over 250%, the chances of bitcoin reaching record highs by the end of the year have seen what appears to be a marginal rise from 4% to 6%. The probability peaked at 8% in July,” CoinDesk’s Omkar Godbole reports.

At stake

Tokens rising (Happy Halloween)

Following the pop of initial coin offering bubble that began in 2017 and tapered off in 2018, many looked at token offerings skeptically. Although a more democratic way to raise funds, this novel blockchain-based fundraising mechanism ran into a host of problems: many were potentially unregistered securities sales for projects not-yet built and unlikely to gain traction.

In 2018, Satis Group released a report detailing that approximately 78% of ICOs were Identified Scams, or projects that “did not have/had no intention of fulfilling project development duties with the funds, and/or was deemed by the community (message boards, website or other online information) to be a scam.”

A similar overview from Boston College, largely backed up these claims.

That’s why in 2020 it’s surprising to see token sales are on the up and up, although with a few notable changes. This past summer, Leigh Cuen reported that “token sales are back.”

“Unlike 2017, today the norm is for token sales to be conducted through an exchange, whether it’s CoinList, Gate.io or Binance,” she wrote. Additionally, projects now lean into controlled distribution. Unlike the original ETH sale in 2015, and the 2017 copycats that followed, many token founders now prefer ongoing sales with controlled distribution – meaning geofencing regions (like the U.S.) where investments may prove to be an issue.

Halfway through the past year Ava Labs’s Avalanche blockchain raised roughly $42 million in a public token sale. Polkadot, one of the largest blockchains, raised $43 million in a private sale days later. And NEAR, another layer 1, brought in $30 million. Then there’s Dapper Labs, which closed an $18 million token sale in early October.

Notably, all these projects had already raised significant venture funding, often conducting a private sale, before turning around to publicly list their tokens on a gated platform that manages know-your-customer information and compliance.

The Graph is the latest project to join the trend of high-value public token sales to close this year. Following a similar set of stringent rules and capital caps, The Graph is different in choosing to use in-house technologies – rather than the suite of hosting platforms.

The verdicts out on what, if anything, will buck the trend. But for now, it’s safe to say, token sales are back.

Who won #CryptoTwitter?

2020 has not been a good year by most metrics. There is no way to avoid this in a year-end retrospective.

Every year, CoinDesk recognizes the “Most Influential” people working to expand cryptocurrency and blockchain’s reach. It’s a list of the 10 outsized individuals who have gone the furthest and done the most.

In this most unusual year, we need your help determining who should be named as Most Influential. Check out the list of the top contenders and cast your vote by Oct. 31.

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