Over the years, the level of activity for Initial Coin Offerings (ICOs) has been mostly downhill, with their popularity and frequency dropping significantly compared to their heyday in 2017-2018.
ICOs were a way for new crypto ventures to raise funds. Imagine a company looking to launch a new service or product. They sell crypto tokens to the public rather than relying on banks or traditional lenders.
Similar to crowdfunding, but using cryptocurrencies instead of regular cash, buyers are betting that these tokens will appreciate if the project takes off.
Between 2017 and 2018, the ICO market reached its peak, with thousands of projects collectively raising billions of dollars. This surge was driven by high investor interest and lax regulations. However, as regulatory scrutiny tightened, ICOs began to become less frequent.
New funding mechanisms such as IDOs, IEOs, and STOs began to emerge, reducing the reliance on traditional ICOs. By 2021, the ICO landscape had cooled significantly, making room for fewer but more carefully selected and compliant ICOs to enter the market.
This shift comes as the U.S. Securities and Exchange Commission and other regulators take action against players in the crypto space around the world, including those who raised money during the ICO boom. Tushar Jainco-founder and managing partner multicoin capitalteeth make a call Regarding ICO return.
Jain believes the current method of token issuance is unfair. At the moment, a few groups benefit the most to the exclusion of many others. Speaking at Breakpoint, the co-founders said a fairer system will allow more people to benefit and strengthen the cryptocurrency community.
He explains that in today's system, there are only a limited number of tokens available for purchase (low float), which can drive up the value of the tokens. This scarcity creates a misleading perception of value. Tushar argues that ICOs should allow more people to buy tokens immediately and allow the market to determine the true value of the tokens.
Rather than freely distributing tokens through airdrops, which can be wasteful and misleading, Jain proposes an ICO with certain conditions. These could include longer lock-up periods and incentives to hold onto your tokens. Such measures will ensure a fairer process for everyone.
No need for ICO
Wang Qiaocustomer support, Alliance DAOagreed that ICOs were important in the past, but said that some of today's most successful projects, such as Solana, do not use ICOs. These were funded by venture capital (VC). He says some VC-backed projects perform better than ICO-funded projects because VCs don't just provide money, they also provide valuable connections and advice that help projects grow. It is said that it is contained.
However, he believes that ICO and VC funding can work together. VC is not just about cash, but individual investors can also participate through ICOs.
Wang added that ICOs are still being done in other countries, but Jain believes they could become popular again with clearer regulation.
ICOs need equality
What would you do if ICOs returned as a way for projects to raise funds?This question was asked by: Kevin Foronnierhost of, Podcast when the shift happensto Jane and Wang during their conversation.
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Jain responded that she would participate in the ICO, but only on a level playing field with other participants. He noted that VCs currently benefit from special access to deals due to their experience and reputation. However, even ICOs adapt to whatever rules the market establishes.
Jain added that venture investors and public market investors think differently. VCs prefer long lockup periods to demonstrate their commitment to the project. However, this approach may result in fewer tokens being available for trading, resulting in a lower float. This scarcity can make the token appear more valuable than it really is.
On the other hand, retail investors generally prefer high float stocks, which means they have more tokens on the market to better assess their true value. For example, the unlocking of Solana’s key tokens in 2021 allowed the market to reveal the actual value of the tokens.
Wang believes ICOs should make a comeback, citing Ethereum's 2014 ICO as a prime example of potential success. Ethereum raised $18 million and its value has since skyrocketed, showing how ICOs can benefit a wide range of investors.
Jain agrees, but emphasizes the importance of transparency. ICOs should include clear disclosures so people understand who is behind the project and what they are promising. In the past, some ICOs were scams that did not deliver on their promises. The market should demand this transparency, Jain added, and where there is a lack of transparency, people should refrain from participating.
