2017 was the year crypto made its first mainstream appearance thanks to Initial Coin Offerings (ICOs).
An Initial Coin Offering (ICO) is a fundraising method based on Blockchain technology to raise capital. In an ICO, a project issues and sells its own cryptocurrency tokens at a set price in exchange for existing cryptocurrencies, such as Ethereum or stablecoins.
This effectively created a decentralized venture capital system and lowered the barrier to entry for new crypto projects. Never before had it been so easy for people to invest in something they believe in.
After a few months, it became clear that ICOs were super profitable. When a new token would hit a popular exchange it could easily triple in price in just a few hours. But, due to the hype and the easy money, many grifters came into the space.
Thousands of new projects were launched, each promising to revolutionize different industries with the help of blockchain technology. Many of these projects raised millions of dollars within minutes or even seconds of launching their ICOs. In total more than $6 billion was raised in 2017.
Although a lot of projects had good intentions, many turned out to be scams and others failed to deliver on their promises. This led to a loss of confidence in the crypto market and a subsequent correction in the value of many ICO tokens.
The 1% that survived the bubble popping has seen amazing price growth for their token. Many of the great projects that are still around today launched with an ICO in 2017–2018. Some may be familiar: Polkadot, AAVE, ChainLink, Bancor, Enjin, Tezos…
ICOs have had a significant impact on the crypto space. However, they are not as popular as before, mainly because of stricter regulations. Crypto projects also have easier access to VC funding nowadays.
Some new projects still have token sales, but these are increasingly launched through exchanges, which act as intermediaries between startups and investors. These token sales were dubbed Initial Exchange Offerings (IEO) and were made popular by Binance.
In an IEO, the cryptocurrency exchange performs several important functions, such as:
Conducting due diligence on the project: The exchange evaluates the project’s whitepaper, team, and track record to ensure that it is legitimate and has a high chance of success.
Hosting the token sale: The exchange provides a platform for the project to sell its tokens to investors. The exchange may also set the price of the token and determine the maximum amount that can be raised.
Listing the tokens: After the token sale is finished, the exchange lists the tokens on its trading platform, allowing investors to easily buy and sell them.
Binance Launchpad is the ideal place for projects to launch their token sale. They get access to a large and engaged user base and a streamlined token sale process on the Binance platform. Selected projects also benefit from Binance’s marketing and promotional resources, which can help to generate awareness and interest in their token sale.
Overall, Binance Launchpad has become a popular platform for blockchain startups looking to raise funds and for investors looking to invest in promising new projects in the cryptocurrency space. Popular projects like Polygon, Axie Infinity and The Sandbox were launched on Binance Launchpad.
Another way projects choose to launch their token sale is by using dedicated ICO platforms like Consensys CodeFi or CoinList. CoinList has hosted some of the largest project launches in the space; Solana, NEAR, Casper, Flow, Filecoin and many more.
The ICO boom of 2017 was a remarkable event that captured the attention of investors and entrepreneurs worldwide. While it provided a new way for startups to raise funds and innovate, it also showed the risks and challenges associated with this emerging technology.
Nowadays ICOs aren’t as abundant. They are often launched through intermediaries like exchanges or dedicated platforms. These offer enhanced security, wider access to investors, and improved liquidity.
Token sales still hold profit potential, but investors need to conduct their own research and due diligence before investing, as the risks are still present. Just like in traditional venture capital most of these projects will go nowhere, but the few that make it will grow to become the behemoths of the crypto space.