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Why does it seem that there are hardly any ICO for EOS projects? But there are many AirDrops on EOS?

Is this just a general trend of the entire blockchain industry? Or is it only peculiar for EOS blockchain? And why?

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Why does it seem that there are hardly any ICO for EOS projects? But there are many AirDrops on EOS?

I believe there are a few aspects that led to this phenomenon:

  • Regulatory risk. ICOs have seen quite a bit regulatory scrutiny lately, and selling/advertising securities to (non-accredited) investors can expose you to legal risks, unless you are willing to dedicate significant resources to mitigate this;
  • EOSIO feeless transfers. Unlike most of the other platform blockchains, the issuer does not have to pay a fee for transferring tokens to all airdrop participants. You do need CPU/NET/RAM for the process, but you don't consume EOS tokens besides the RAM fee.
  • Cultural context. Everyone else seems to do it on EOSIO, so going down the ICO path requires a justification that should persuade buyers about your decision. This may be particularly difficult when most of your competition airdrops.

Overall, there is no technological restriction that stops projects from executing an ICO, but airdrops appear to be (at the moment) a more cost-effective, convenient, and safer method of distributing your tokens, generate interest, create a community, and get your tokens on the market.

Is this just a general trend of the entire blockchain industry? Or is it only peculiar for EOS blockchain?

Besides the significantly lower number of ICOs lately, I haven't noticed a macro shift in the blockchain space outside of EOSIO.

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  • I would also point out that ICO's were done because of the reduced barrier to entry that system provided. Airdrops were not possible on ETH. My opinion on why they're more prevalent is that there is a lower barrier to entry for doing an airdrop than an ICO. If your airdrop is worth something, you could have price discovery and a multi-million dollar market cap over night (like eosDac). There is also an even lower barrier to entry with an air grab which is where the air dropper allows people to opt in by reserving their own RAM row.
    – Nat
    Aug 31, 2018 at 12:20
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EOS ecosystem is still very young. Mainnet has been out couple of months. People have not yet learnt how to use EOS and EOS itself has had teething problems.

There isn't simply enough wallets, exchanges, forums, etc. to make EOS token sales more attractive to compare e.g. Ethereum. There are no programming libraries, frameworks, blockchain explorers. Development tools are still very crude.

However do not expect the matters stay same in medium long term.

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Recently, ICO's have gotten a really bad name in the Crypto scene. The "Succesful" ICO's made huge gains for the EARLIEST Investors (Not the ones of the main sale) who made a Quick 2x - 5x on their Money when the token hit the Market. But for the most part, ICO's have been losing most of their value, at least 95% +- are in a heavy loss ranging from -50% to -98% both in USD and BTC Value.

So basically, the AIRDROP is a very attractive way to build a community and generate awareness of your project. Although you are left on your own to fund the operations at first.

So To Put it in simple words, an ICO is like saying to the Community:

  • "Listen, Give me your Money. I'll give you these tokens in return which currently have no value whatsoever. IF I deliver on my promises and IF the project succeeds, the Token will increase in value, we all win"

  • Notice the big IF's there ;-)

The Airdrop is more like Saying:

  • "Here, have these tokens I created, they have no value but they are free for you with no risk involved. IF I Manage to create value and these tokens grow in value as well, then we both win since I reserved a good portion of these tokens for myself"

  • The big IF is still there, the difference is there is no risk involved on the token holder's part.

SO as you see, the AIRDROP is Much more Attractive than an ICO for the "Investor's" Perspective, but the ICO gives you an initial runway capital whereas the Airdrop leaves you in the same financial spot but done right might earn you quite a few early adopters.

There, This was much longer than I Expected. I Hope it helps someone out there :-)

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