Why XDN DigitalNote ICCO Failed?
XDN DigitalNote ICCO officially started Initial Crowdfunding on 02 June 2017 to collect XDN coins (IC) stage to offer them for sale “Coin Offering” (CO) stage on 09 June 2017. The campaign has raised over 1.25 billion XDN coins in total, with 327 million XDN coins being funded in the first 36 hours of the IC stage.
The main objective of the campaign was to distribute the digital currency on a larger scale. Since there were around 127 million XDN being traded on HitBTC, the objective of the campaign sounds reasonable as the total coins on the exchange site was about 10% only of the CO wallet. Therefore, it makes sense to run the campaign, as the availability of XDN was limited. Hence, supplying that amount to investors for that purpose was a good idea especially those early adopters collaborated to fund the ICCO wallet and put that amount for sale.
The official announcement about XDN ICCO made by XDN developers on 31 May 2017, just two days before the campaign started on HitBTC. However, there were several attempts to launch the campaign before that date, but according to XDN developers, they had to postpone it to ensure that they prepare everything perfectly. A tweet from XDN developers on 28 March 2017:
Due to the high interest in $XDN ICCO, XDN developers decided to prorogue XDN ICCO for several weeks to have everything done perfectly.
The original ICCO price list at the announcement date was set in (320,000 XDN) per lot as follows:
- Week (2) 0.5 BTC per lot (156 satoshi per XDN)
- Week (3) 0.6 BTC per lot (187 satoshi per XDN)
- Week (4) 0.7 BTC per lot (218 satoshi per XDN)
XDN started the IC stage at ~70 and rose to 350 on the third day of the campaign achieving all time high, which is more than the ICCO final week price. The idea of voting for a new price was introduced to the community by then, which took place just two days before the IC stage ends (on 07 June 2017). The voting was open for 24 hours, and then the new price list was announced just a few hours before the CO stage begins.
- Week (2) 0.5 BTC per lot (600 satoshi per XDN)
- Week (3) 0.6 BTC per lot (700 satoshi per XDN)
- Week (4) 0.7 BTC per lot (800 satoshi per XDN)
Reasons Behind Failure
Lack of Preparation (Pre-ICCO)
Before getting into what went wrong with running the ICCO, we first explain before it was started.
The official ICCO announcement was published on 31 May 2017 that it will start on 02 June 2017 so just one day in between. The short amount of time between the announcement and the launch of the campaign does not allow the announcement to reach the target audience, which represents the lack of preparation. Although XDN developers released Android Wallet shortly after the launch of the campaign, the preparation was mostly one sided since there were no investors interested in the digital currency before the campaign launched, as well as the plan was not precise in terms of covering all aspects of the campaign such as what happened with the price.
Price Confusion and Misleading Information
Our observations clearly show that the level interest was high according to the increasing demand, which pushed the price from ~70 to ~350 in a matter of days. We were expecting this to continue until we found out that buyers decided to stop buying from the market and buy directly from XDNCO because it offers the coin much cheaper (according to the original price list starting at 156 satoshi). The ICCO official webpage stated clearly the original price list, and was left outdated since XDN developers decided to run the voting in order to determine the new price list, most of XDN buyers were now aware of that phenomena. At the same time, XDN developers were not aware of the fact that buyers are lining up to buy from ICCO according to the original price list, so they decided to run the voting less than 2 days before IC was about to end. The price was changed accordingly a few hours before the CO was about to begin, while the official ICCO page still showing the original price list.
Missing Value Proposition
XDN started to drop in value when the price confusion went viral as buyers were waiting for the CO to start in order to buy it cheaper, and then they became aware of the voting to determine the new price following it with the voting result. The price per XDN touched 207 satoshi on 07 June 2017 and when the new price was determined, it rose back to 320 satoshi right after the CO began. The confusion has put buyers off since it was supposed to sell at 156 satoshi, the price was set at 600 satoshi instead. Therefore, the value proposition was missing, as the digital currency at that time was available to buy at less than half ICCO price. It just did not make sense to buy 100,000 XDN for 0.5 BTC at a time anyone could get it for 0.2 BTC. This has deepen the struggle for XDN to prove its value. In addition to that, the ICCO failed to get a good number of sales to capture investors’ attention and therefore it was abandoned after 9 lots being sold in the first week only. The campaign, however, was offering 12,500 lots for sale and needed to sell at least 595 on CO stage to achieve its target.
In order for XDN to succeed in its future ICCO, there are several things need to be improved.
Launching a campaign with a short notice and without a real preparation has proven to be unsuccessful. What XDN needs is to prepare everything in advance, announce the campaign before the launch in a sufficient time, capture investors’ interests, and create reliable selling points to reassure those investors. Market research is also a key to differentiate XDN from its competitors with what the project has to offer.
Back it up with Value Proposition
With every single sale there is a value proposition for the buyer. XDN needs to determine its value proposition for its investors and get that right before assuming that buyers are going to buy once we put the offer on the table.
Empower the Community
Getting the community members involved in various tasks is a smart way of getting things done more effectively and efficiently. The community behind the project could take it to a higher level, achieving bigger goals in a cost-effective way. It is understandable that the developers want to remain anonymous, but empowering XDN community will not breach that. This will create a healthy community based project that everyone can contribute and help the project to succeed.
Improve XDN Ecosystem and Increase User-base
In order to increase the user-base there must be an operating ecosystem that allows users to benefit from using the digital currency. XDN can rely on its community to create various systems to improve the ecosystem so that more users become aware of it and interested in using it.