# kaal:claim:3067615-025

**Claim.** ICOs provide the highest possible liquidity for investors at the very beginning of a platform's lifecycle, before the reporting, accounting, and legal infrastructure that gives the investing public assurance of underlying business success, so investors trade on very limited information and volatility of the tokens and the whole cryptocurrency market increases.

**Type.** failure  **Support.** argued

**Holds when.**

- ICOs occurring at the beginning of a crypto business lifecycle

**Source quote.**

> Because ICOs typically take place at the beginning of the lifecycle of a crypto business/platform, ICO investors typically invest - and the token exchange - on very limited information which increases volatility of the tokens and the entire cryptocurrency market.

**From.** Wulf A. Kaal, Marco Dell'Erba, *Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags* (2017), IV.2 Early Liquidity Despite Little Information Creates High Volatility, page 17

**Cite as.** Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615

**Verify.** sha256 of source PDF `164ce15b9eb1e8847ebcb073f5b23a96b4974ad0308d77469a9455d4a1ebeb38` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20and%20Dell%27Erba%20-%202017%20-%20Initial%20Coin%20Offerings%20Emerging%20Practices%2C%20Risk%20Factors%2C%20and%20Red%20Flags.pdf

**Failure mode.** Early liquidity without information  (family: information-asymmetry)

**Topics.** defi, disclosure, risk-and-incentives

**Keywords.** liquidity, information-asymmetry, volatility, disclosure, investor-risk

**Related claims.**

- restated_by: https://wulfkaal.github.io/claims/3117224-011

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