What do printed manifestos, football leagues and bathroom marketing have in common?

All three showcased that interest in initial coin offerings (ICOs) was alive and well at CoinDesk’s Consensus: Invest conference on Tuesday. But while attendees on the floor may have seen all the usual evidence of a frothy market, attitudes from investors and entrepreneurs surveyed appeared more dour.

For example, while investors expressed no doubt about the promise of decentralization, they did voice broad skepticism about the majority of new coins on offer.

“I definitely feel like the mood around the ICOs has come down from being ultra, ultra hot,” Chase Lochmiller of Polychain Capital told CoinDesk.

Backed by Andreessen Horowitz and Union Square Ventures, Lochmiller said Polychain now has $400 million invested exclusively into the crypto market.

Yet, one of the big themes from Consensus: Invest was the increasing sophistication of the larger crypto market, as it has added capacity in derivatives, exchanges and custody infrastructure. In contrast, most of the best tools are only available to traders in larger cryptocurrencies such as bitcoin and ether.

In other words, while retail investors may want into the ICO market, financial service providers haven’t been in a rush. That said, the ICO market is catching up to the dominant coins, as new cryptocurrency hedge funds begin allocating capital.

“I think having more investors in the space is helpful,” Lochmiller said, adding that it increases competition and the pressure on projects to produce, as well as giving the market legitimacy.

Lochmiller expects a lot of the financial instruments being built for bitcoin and ethereum now to eventually filter down to smaller tokens, and he sees opportunity in facilitating shorts.

“I think a very interesting space to tackle is the token lending market,” he said.

If someone wants a short, they need a way to find someone willing to lend the tokens they want to bet against. That scenario doesn’t exist yet. Still, it fits into a larger theme that came up throughout the day: how to bring more liquidity into smaller tokens.

“You have got to get trading volume,” Ian McAfee of Shift Forex said during his presentation.

One area of promise he sees is building exchanges with non-English user interfaces and in markets not denominated in the dollar or the euro.

Chicken and egg

But such an exchange will only get built if there’s demand for trades.

“It’s hard to know how much demand there is and how much noise,” a spokesperson for ShapeShift told CoinDesk. That’s why trading volume is one of the main data points the exchange, which facilitates trading solely between cryptocurrencies, looks at before adding a new asset.

“There’s certainly a lot on our radar we’d like to add,” the spokesperson added.

But adding a new token is not a negligible investment in terms of developer hours, and even as they do so, it’s still the big trading pairs that dominate, such as bitcoin to bitcoin cash.

For tokens built around solving a specific problem, trading volume is likely to stay light until their products are ready to go into operation, and then there’s the problem of whether or not the underlying protocols can actually handle demand.

“There’s not one of these blockchains that are even close to nearly fast enough to let any of these companies successfully run their businesses on,” Michael Novogratz, CEO of Galaxy Investment Partners said from the main stage.

‘Rubbish’ tokens

Moving higher up the investor food chain to institutional investors, it’s hard to picture any of them taking new ICOs seriously until a more robust custodial ecosystem is in place.

But “after ether, there’s nothing for any of these other assets out there,” Daniel Matuszewski, Circle’s head of trading, said during one of the event’s main stage panels.

And the market for tokens probably isn’t ready for those kinds of investors yet anyway.

In equities markets, it’s not unusual to invest in index funds that buy up huge swathes of the stock market, but cryptocurrencies aren’t ready for that kind of investing.

Crypto trader Willy Woo showed a graph of a thousand coins on one chart, explaining that if someone had bought all of them, they wouldn’t have made any money.

“There’s a lot of rubbish on the market,” Woo said.

“You really need to compare these to just investing into bitcoin over time,” Tetras Capital’s Alex Sunnarborg cautioned.

Bubble trouble?

Elsewhere, there was a sense that the market is seeking to reign in some of its excesses, or at least becoming more aware of their presence.

Linda Xie of Scalar Capital, for example, made something of an indictment of entrepreneurs rushing into the market with half-baked plans and no hard cap on the amount they want to raise.

“I’m concerned that there’s a project that will raise a hundred million dollars and they’ll get lazy and won’t do the work and they’ll run away with the money … I’m worried this will happen, people will realize it’s a bubble, and the thing will collapse,” she said.

But that doesn’t mean everyone viewed the froth as inherently bad in the long run.

“There’s certainly some bubblicious aspects to all this,” Mat Cybula, CEO of Cryptiv, said in breakout presentation, but “bubbles aren’t always the worst thing” he added.

Novogratz concurred, concluding:

“Bubbles happen around ideas that actually are right and change the world.”

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Circle and ShapeShift.

Manifesto photo via Brady Dale for CoinDesk.