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In a surprise move, tokenized project Cofound.it has elected to cease operations. The project, whose CFI token traded on Bitfinex, has decided to call it a day after reflecting on the changing market and the downturn that has turned once vibrant projects into barely going concerns. Onlookers will be watching to see whether Cofound.it’s decision will inspire other projects to follow suit, or go down in crypto history as an isolated case.
Also read: Bittrex to Launch Crypto Exchange in Malta Next Month
Cofound.it Bows Out of Crowdfunding
2018 hasn’t been kind to tokenized projects. Even those that have secured listing on major exchanges, Cofound.it included, have struggled to gain traction and secure adoption. In a frank and forthright blog post, the Cofound.it team explains, “The core idea of Cofound.it was to create an alternative VC ecosystem built around crowdfunding, democratisation and transparency. Instead, the larger ecosystem developed and transformed into something completely opposite.”
They continue: “Instead of waiting for the market to turn around, we have decided to opt for creative destruction, wind Cofound.it down and distribute the assets to the token holders.” As a result of this latter promise, the CFI token surged by 20% on exchanges today. Zooming out shows a familiar picture however: a token that is down from a peak of $0.43 in January to a little over 2 cents.
It’s Better to Burn Out Than Fade Away
While critics will seize upon Cofound.it’s decision as evidence of a dying ICO market, the team’s decision is arguably more honorable than that which most projects will pursue: to slowly fade into ignominy while maintaining the pretense that everything is fine. Circumstances change and business models evolve and Cofound.it’s dissolution does not herald the failure of the movement to “tokenize the world”. But it may give emerging projects pause for thought. Does their project really require a token, and if so, what can be done to ensure it has genuine utility and long-term appeal?
In addition to bearish market conditions, exacerbated by a surfeit of tokenized projects, there is a growing consensus that simple app tokens are not enough to capture value and drive network usage. To justify a native token, mechanisms must be incorporated that incentivize investors and platform users. ICO consultants Amazix have recently entered the field of token model design in response to the growing desire, among project teams, for tokens whose value is determined by more than mere speculation.
All Good Things Come to an End
Summing up, Cofound.it writes: “The state of technology today does not match the hopes raised by thousands of ICO projects. The blockchain space has been full of over-promises, and it’s largely the community that has had to take the blows so far.”
They finish: “But what happens when the market realizes what has been going on? The core market disappears, there is no liquidity and there are hundreds of interesting existing projects with prototypes waiting for the core layers and infrastructure to develop and mature. From this perspective, the recovery of the market will take time.”
Do you think other failing token projects should follow Cofound.it’s lead? Let us know in the comments section below.
Images courtesy of Shutterstock, and Coinmarketcap.
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