ICOs Are Back: Why Startups Are Reviving This Controversial Fundraising Tool

In 2017-2018, ICOs were a breakthrough in the cryptocurrency world. But the boom was followed by a downturn due to regulatory restrictions

ICOs (Initial Coin Offerings) were a defining moment in the cryptocurrency landscape of 2017-2018. During those years, investors practically competed to be the first in line to join new projects. However, this boom was followed by a downturn due to regulatory crackdowns, widespread fraud, and numerous project failures.

Surprisingly, towards the end of 2024, ICOs are once again becoming a topic of conversation. While this presents an opportunity to potentially return to the days of making huge profits, ICOs also raise concerns regarding transparency and risks. So, what exactly is driving startups to reconsider this controversial fundraising method?

ICOs provide a way for projects to quickly raise funds from a large pool of investors. This can be especially useful for startups or new ventures that may not have access to traditional financing options. Moreover, ICOs offer a level of decentralization, as they are not controlled by any central authority or financial institution.

However, ICOs are also known for their high risks and lack of regulation. This can make them susceptible to fraud, scams, and project failures. As a result, investors are advised to thoroughly research and evaluate any ICO before investing.

An ICO is a fundraising model that allows projects to issue their tokens and sell them to investors to raise funds and support further development.

Here's how it works: a startup creates a new token with certain functions or useful properties within the planned ecosystem. This coin can provide access to the platform, the right to vote on important decisions regarding the project, or represent a share of ownership.

The success of an ICO is usually measured by the amount of money raised during the token sale, regardless of its final price. Some investors measure the success of an ICO by the return on investment (ROI) of the token purchased during the sale, considering the change in its price.

In 2017-208, ICOs were very popular, raising billions of dollars for crypto projects. This model promised decentralization, fair distribution for small investors, and the absence of intermediaries.

The most successful ICOs

Some of the most successful ICOs include:

Binance Coin (BNB)

Crypto.com Coin (CRO)

FTX Token (FTT)

Huobi Token (HT)

OKB Token (OKB)

These tokens went on to achieve high market valuations and played a significant role in their respective ecosystems. For instance, BNB, the native token of the Binance exchange, became one of the most valuable cryptocurrencies in the world.

ICOs became popular due to several key factors:

1. Fast fundraising: ICOs can quickly raise large sums of money compared to traditional methods. This makes them attractive for startups and new projects that need資金 to get off the ground quickly.

2. Direct access to investors: ICOs provide startups with direct access to a large pool of potential investors from around the world. This can be especially beneficial for projects targeting a global audience.

3. Decentralization: ICOs are not controlled or regulated by any central authority or financial institution. This aligns with the decentralized nature of cryptocurrencies and Web3.

4. New possibilities: ICOs open up new possibilities for startups and investors alike. They can be used to create and distribute tokens with unique functions and use cases within various ecosystems.

However, ICOs also faced criticism and challenges, including:

1. High risks: ICOs are inherently risky investments, and there is no guarantee of success or return on investment. This is largely due to the lack of regulation and the potential for scams or fraudulent projects.

2. Lack of regulation: ICOs are not subject to the same level of regulatory oversight as other financial instruments. This creates a Wild West-like environment that can be difficult to navigate for both investors and startups.

3. Widespread fraud: Due to the lack of regulation and the anonymity afforded by cryptocurrencies, ICOs became a breeding ground for scams and fraudulent activities. Many projects raised millions of dollars and then disappeared without a trace.

4. Numerous project failures: The vast majority of ICOs failed to deliver on their promises or achieve long-term success. This resulted in billions of dollars in investor losses and contributed to the crypto bear market of 2018-2019.

Following the ICO boom and bust cycle, interest in these fundraising initiatives waned significantly. However, towards the end of 2024, there are signs of a potential revival in ICOs.

Several new platforms, such as BuidlPad and Legion (which aims to become one of the first MiCA-compliant crypto asset managers in the EU), are emerging to support ICOs. These platforms aim to introduce mechanisms for verifying and evaluating projects to increase investor confidence.

For example, BuidlPad, a launchpad platform, is designed to help users discover and participate in promising Web3 projects. It provides a tiered system for project evaluation and user access, with higher tiers