Certification by a crowd of independent online analysts can generate information cascades among potential token investors, leading to successful initial coin offerings (“ICOs”). We test the general notion of “wisdom of crowds” using novel data on over 1,500 ICOs, including sequential investor subscriptions during token sales. We find that favorable analyst opinions on the underlying project generate aggressive first-day token subscriptions by large investors, triggering an information cascade that drives subsequent token sales. Analyst ratings also predict long-run token performance in the secondary market. Overall, our results suggest that the wisdom of crowds could effectively substitute the intermediary role played by traditional underwriters in financing decentralized blockchain-based startups. 

Keywords: ICO, FinTech, Wisdom of crowds, Information cascade, Fundrasing success, Underpricing, Long-run performance​