Analysis: out of 902 ICOs listed on Tokendata.io last year, 531 projects that raised a total of $233M in 2017 have either already failed or are dormant online
It has always been assumed that a large number of ICOs will fail, be it at the fundraising stage or when it comes to delivering the actual project. Tweets: @emollick Tweets: Ethan Mollick / @emollick : The failure rate for organizations funded by initial coin offerings is 59%! In a single year ! By comparison total failure rates for reward crowdfunding around around 9%. Shows that without the addition of crowd vetting and platforms, scams & low quality win. http://twitter.com/...
Context & Ripple Effects
The $522M ICO fundraising wave of mid-2017 that Smith + Crown tracked with a warning about unregulated abuse has now produced its bill: Tokendata.io counts 531 of 902 listed projects dead or dormant, having absorbed $233M of investor money. Ethan Mollick's framing is the sharpest takeaway — a 59% single-year failure rate against roughly 9% for reward crowdfunding, which he attributes to the absence of platform vetting in token sales.
What makes this analysis durable rather than a one-off stat is how consistently it has been re-confirmed: a later study found about 56% of ICO-funded startups die within four months of their token sales closing, one-third of 2017-18 tokens never reached any exchange at all, and years on, CoinGecko still reports over half of tokens launched since 2021 are inactive. The failure profile isn't a 2017 anomaly — it's the base rate of unvetted token issuance.
First-order effects
- Investors in the 531 failed or dormant projects are sitting on losses from the $233M they committed in 2017, with no regulatory recourse given the unregulated structure flagged when the boom began.
- Ethan Mollick's 59%-vs-9% comparison hands critics of token sales a concrete benchmark: ICOs fail at several times the rate of reward crowdfunding, undermining the pitch that open issuance democratizes early-stage investing.
Second-order effects
- Exchange listing becomes the de facto quality filter the ICO process lacked — with one-third of 2017-18 tokens never listed anywhere, trading venues gain gatekeeping power over which projects get liquidity and survival odds.
- Surviving projects and future fundraisers face a credibility tax: each batch of failures pushes capital toward vetted structures (platforms, curated sales) and away from open token issuance.
Third-order effects
- If the pattern holds across cycles — 59% in 2017, 56% dying within four months, 53%+ of post-2021 tokens inactive — mass token mortality is structural to permissionless issuance, not a phase, sustaining a persistent legitimacy gap between crypto's fundraising model and conventional investor protections.
The trend: Token issuance keeps reproducing the same failure economics across every cycle because nothing in the ICO structure adds the vetting layer that keeps traditional crowdfunding failure rates low.