Cryptocurrency consortium Panxora is rolling out a new solution aimed at helping organizations preserve the funds they have raised through Initial Coin Offerings (ICOs). Reports in Blockchain News this week said Panxora has introduced a treasury management service to help the company and project founders who turn to ICOs to secure the capital they have raised, and mitigate the risk of cryptocurrency volatility.
The publication pointed to the severe decline in token values last year, which resulted in a significant drop in the value of ICO funds raised in 2017. Combined with some instances of financial mismanagement, reports said, a significant number of projects that launched an ICO have failed, leaving investors high and dry.
“Too many exciting ICO projects have fallen by the wayside due to poor financial management,” said Panxora Group CEO Gavin Smith in a statement. “With the [treasury management service], ICO founders no longer need to worry about being able to keep the lights on, and can instead focus on their ideas.”
He added that a focus on hedging strategy can mitigate crypto volatility, and preserve the value of financing secured via ICO. The solution deploys artificial intelligence trading algorithms and passive hedge balancing to provide capital preservation solutions, and promote capital growth for users.
“Having a plan in place for responsible management of a token’s assets is not just good for the company itself,” Smith continued. “It’s a signal to investors that says, ‘We’re serious about making this business work, taking responsibility for the capital you’ve entrusted to us.’ We think this is an important step forward in the maturation of the token industry.”
Boston College research, released last year, found that more than 4,000 ICOs raised a combined $12 billion to date. However, 83 percent of the 694 ICOs that did not list on an exchange or report capital were found to be inactive after only four months.
“For the 420 ICOs that raise some capital, but don’t list, this figure falls to 52 percent. And for the 440 ICOs that list on an exchange, only 16 percent are inactive in the fifth month,” researchers found at the time.
Overall, only 44 percent of ICOs live to see their fifth month.