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The 2017 ICO Boom and the ERC-20 Token Standard

How EIP-20 made tokens interoperable and fueled billions in crowdsales.

A standard interface

ERC-20 defined six functions, including transfer, approve and transferFrom, plus balanceOf and totalSupply. Because every token exposed the same interface, wallets and exchanges could support new assets without custom code, which made token issuance almost free.

The scale of 2017

Trackers estimated ICOs raised between $5 billion and $6 billion in 2017 and more than $7 billion in the first half of 2018. Filecoin raised about $257 million, Tezos about $232 million, and EOS ran a year-long sale that ended in June 2018 with roughly $4 billion.

Network congestion

Token sales and CryptoKitties pushed Ethereum to its capacity in December 2017. Gas prices spiked above 100 gwei and pending transaction counts passed 30,000, an early demonstration that a single popular application could congest a monolithic chain.

The regulatory response

The SEC's DAO Report of July 2017 concluded that DAO tokens were securities, and China banned ICOs on September 4, 2017. Through 2018 and 2019 the SEC settled with several issuers, and research found a large share of 2017 projects had failed or abandoned development.

Valuation lessons

Many ICOs sold a small float while retaining large team and foundation allocations. Comparing circulating cap with fully diluted value, and reading vesting schedules, became standard due diligence because low-float tokens fell hardest once unlocks began.

By the numbers

For The 2017 ICO Boom and the ERC-20 Token Standard, the reference figures are standard proposed of November 2015 (EIP-20), ico funds raised in 2017 of ~$6 billion+, notable sales of EOS, Tezos, Filecoin, Bancor, core functions of transfer, approve, transferFrom, balanceOf. The comparison table below lines up project, raise (approx.), year — EOS: $4.1B / 2017-18; Telegram TON (private): $1.7B / 2018; Filecoin: $257M / 2017; Tezos: $232M / 2017.

Modeling The 2017 ICO Boom and the ERC-20 Token Standard with the FDV Dilution Calculator

The FDV Dilution Calculator takes three inputs — Circulating supply (M), Max supply (M), Price ($). Dilution = 1 − circulating ÷ max supply; FDV = price × max supply. With its default inputs (Circulating supply (M) = 400; Max supply (M) = 1000; Price ($) = 2) it returns 60 %; swap in the figures from The 2017 ICO Boom and the ERC-20 Token Standard above to reproduce the scenario yourself.

Modeling The 2017 ICO Boom and the ERC-20 Token Standard with the Token Unlock Sell Pressure Calculator

The Token Unlock Sell Pressure Calculator takes three inputs — Tokens unlocking (M), Price ($), Expected sell share (%). Sell pressure = unlocked tokens × price × sell share. With its default inputs (Tokens unlocking (M) = 50; Price ($) = 1.5; Expected sell share (%) = 40) it returns 30,000,000 $; swap in the figures from The 2017 ICO Boom and the ERC-20 Token Standard above to reproduce the scenario yourself.

Data Table

For educational and informational purposes only. Not financial, investment, tax or legal advice. Figures are approximate and historical; crypto assets are volatile and you may lose capital. Do your own research.