What is an ICO?
- Cryptalyses
- Mar 14
- 10 min read
An Initial Coin Offering or Token Sale
The Initial Coin Offering (ICO) is one of the most revolutionary fundraising mechanisms in the history of digital finance. It emerged as a blockchain-based alternative to traditional capital-raising methods like venture capital (VC) funding and Initial Public Offerings (IPOs).
ICOs enable startups and projects to secure funding directly from the global crypto community without intermediaries such as banks or investment firms. This democratized approach to fundraising has propelled the growth of numerous blockchain-based innovations, from decentralized finance (DeFi) platforms to new cryptocurrency networks.
ICOs gained massive popularity during the 2017 crypto boom, with numerous projects raising millions—sometimes billions—of dollars in a matter of days. At their peak, ICOs disrupted the traditional investment landscape, offering retail investors early access to potentially lucrative opportunities. However, they also became notorious for scams, fraud, and regulatory uncertainties, prompting governments worldwide to crack down on unregulated offerings.
Today, while the ICO model has declined in favor of more regulated alternatives like
Security Token Offerings (STOs) and Initial Exchange Offerings (IEOs), it remains a crucial part of cryptocurrency history. Understanding ICOs provides valuable insights into how blockchain projects raise capital and how investors can evaluate new opportunities in the ever-evolving digital asset space.
A Brief History of ICOs: Successes and Failures
ICOs have played a pivotal role in the evolution of the cryptocurrency and blockchain industry. Their history can be traced back to the early days of crypto crowdfunding, but they gained mainstream attention during the 2017 bull run, when blockchain startups raised billions in a short span of time. This section explores the rise, peak, and decline of ICOs, highlighting both major successes and infamous failures.
The Rise of ICOs (2013–2016): A New Fundraising Model
The concept of ICOs was first introduced in 2013 when Mastercoin (now Omni Layer) launched one of the earliest token sales, raising about $500,000 in Bitcoin. While this was a modest amount, it set the foundation for what would later become a booming industry.
However, the ICO model didn’t gain real traction until Ethereum’s ICO in 2014. The Ethereum Foundation sold ETH tokens to fund the development of its smart contract platform, raising approximately $18 million—one of the largest crowdfunding events at the time. This marked the beginning of ICOs being used as a primary method for blockchain projects to raise capital.
Key Early ICO Successes (2013–2016):
Ethereum (2014) – Raised $18M, now a cornerstone of DeFi, NFTs, and smart contracts.
Augur (2015) – A decentralized prediction market that raised $5.3M.
The DAO (2016) – Raised $150M but collapsed due to a major hack.
The ICO Boom (2017–2018): Exponential Growth & Frenzy
The year 2017 saw an explosion in ICOs, fueled by surging crypto prices and retail investor FOMO (fear of missing out). Startups with little more than a whitepaper and an idea were raising tens to hundreds of millions of dollars in mere minutes.
By the end of 2017, ICOs had raised over $6.2 billion, with some of the biggest token sales breaking records:
Biggest ICO Successes of 2017:
EOS ($4.2B) – Aimed to create a high-performance blockchain for decentralized applications (dApps).
Filecoin ($257M) – A decentralized storage network, now a key player in Web3 infrastructure.
Tezos ($232M) – A self-upgrading blockchain with on-chain governance.
These projects demonstrated the power of ICOs in democratizing fundraising, allowing retail investors to participate in early-stage blockchain innovation—something previously limited to venture capitalists and accredited investors.
The Dark Side: Scams, Frauds, and Regulatory Crackdowns
As ICOs gained popularity, they also attracted bad actors. With little to no regulation, many projects exploited the hype, raising millions and disappearing overnight. Some ICOs turned out to be outright scams, while others failed due to mismanagement or lack of development progress.
Infamous ICO Failures & Scandals:
Bitconnect (2017) – Marketed as a lending platform with guaranteed high returns, Bitconnect raised over $2.6 billion before collapsing in one of crypto’s biggest Ponzi schemes.
PlexCoin (2017) – The SEC shut down this fraudulent ICO, freezing $15M in investor funds.
SaveDroid (2018) – Raised millions, then “vanished” in what was later revealed as a publicity stunt to highlight ICO scams.
By 2018, regulators worldwide, including the U.S. SEC, China, and South Korea, had cracked down on ICOs, leading to a sharp decline in their popularity. Many countries classified ICOs as unregistered securities offerings, and lawsuits followed.
The Decline and Evolution of ICOs (2019–Present)
With increased regulatory scrutiny, ICOs largely faded by 2019. However, their concept evolved into more structured and regulated models:
Security Token Offerings (STOs) – Tokenized securities backed by real-world assets, adhering to regulatory frameworks.
Initial Exchange Offerings (IEOs) – Conducted on centralized exchanges like Binance, reducing investor risk.
Initial DEX Offerings (IDOs) – A decentralized version of IEOs, enabling token sales on platforms like Uniswap and PancakeSwap.
Despite their decline, ICOs played a crucial role in pioneering blockchain fundraising and kickstarting the Web3 revolution.
The Legacy of ICOs
ICOs transformed how startups raise money, giving anyone the opportunity to invest in early-stage crypto projects. While the era of unregulated ICOs is largely over, the concept continues to influence newer fundraising models in the blockchain space.
For investors, the lesson from ICO history is clear: due diligence is crucial. While some ICOs resulted in life-changing gains, others left investors with worthless tokens and shattered dreams. The future of crypto fundraising is now moving toward compliance, security, and transparency, but the innovative spirit of ICOs remains a foundational part of blockchain history.
The Role of ICOs in Shaping Modern DeFi and Web3 Projects
The ICO boom of 2017–2018 was not just a speculative frenzy; it laid the groundwork for the decentralized finance (DeFi) and Web3 ecosystems we see today. Many of the projects that raised funds through ICOs have since evolved into critical infrastructure powering blockchain innovation, decentralized applications (dApps), and the broader shift toward a user-owned internet. This section explores how ICOs helped shape modern DeFi and Web3.
1. Funding the Foundations of DeFi
Decentralized Finance (DeFi) aims to replace traditional financial services—such as lending, borrowing, and trading—with blockchain-based, permissionless alternatives. Many of today’s top DeFi platforms were initially funded through ICOs, allowing them to develop into multi-billion-dollar ecosystems.
ICO Projects That Paved the Way for DeFi:
Ethereum (2014) – The Backbone of DeFi
Ethereum’s ICO ($18M raised) enabled the creation of smart contracts, which became the foundation for DeFi applications. Today, most DeFi projects run on Ethereum.
MakerDAO (2017) – The First Decentralized Stablecoin
Raised $12M to develop DAI, a decentralized stablecoin that underpins many DeFi protocols.
0x (2017) – Decentralized Exchange (DEX) Infrastructure
Raised $24M to build an open protocol for decentralized trading.
Aave (2017, originally ETHLend) – Decentralized Lending & Borrowing
Raised $16M to create a decentralized peer-to-peer lending platform, now a DeFi giant.
Without the capital raised through ICOs, many of these projects may have struggled to achieve the scale they have today. The ICO model allowed developers to fund innovation outside of traditional banking and venture capital, making DeFi’s growth possible.
2. Driving the Development of Web3
Web3 is the vision of a decentralized internet where users have control over their data, identity, and digital assets. ICOs helped fund key projects that now power the Web3 movement.
Web3 Projects That Originated as ICOs:
Filecoin (2017) – Decentralized Storage
Raised $257M to build a blockchain-based, decentralized alternative to cloud storage giants like Google Drive and AWS.
Polkadot (2017) – Interoperability Between Blockchains
Raised $145M to create a network that allows multiple blockchains to communicate and share data.
The Graph (2018) – Indexing & Querying Blockchain Data
Raised $12M to provide a decentralized API system, making it easier for dApps to access blockchain data.
These projects illustrate how ICO funding accelerated the transition from centralized Web2 services to decentralized Web3 alternatives. Today, they provide critical infrastructure for the growing decentralized web.
3. Accelerating Innovation in Tokenization & DAOs
ICOs also demonstrated the power of tokenization, where assets, services, and governance rights could be represented as blockchain-based tokens.
Governance Tokens & DAOs (Decentralized Autonomous Organizations):
ICOs introduced the concept of utility and governance tokens, allowing token holders to vote on protocol upgrades and governance decisions.
Projects like MakerDAO (DAI), Uniswap (UNI), and Compound (COMP) evolved from ICO-era concepts into decentralized, community-driven ecosystems.
NFT & Metaverse Funding:
Many early NFT and metaverse projects also emerged from the ICO model.
Decentraland (2017) raised $26M via an ICO to build a blockchain-based virtual world where users own land as NFTs.
4. Lessons from ICOs: The Shift to Safer Fundraising Models
While ICOs fueled innovation, their unregulated nature led to issues such as scams and project failures. To address this, the industry shifted toward more secure fundraising models:
Security Token Offerings (STOs):
Tokenized securities that comply with financial regulations.
Initial Exchange Offerings (IEOs):
Conducted on centralized exchanges (e.g., Binance Launchpad) for added credibility.
Initial DEX Offerings (IDOs):
Token sales via decentralized exchanges (e.g., Uniswap, PancakeSwap), giving fairer access to investors.
These new models maintain the accessibility of ICOs while improving transparency and investor protection.
The ICO Legacy in DeFi & Web3
Despite their volatility and regulatory challenges, ICOs played a defining role in shaping the modern blockchain landscape. They provided early capital for projects that now serve as the backbone of DeFi, Web3, decentralized storage, NFT marketplaces, and beyond.
While ICOs in their original form have largely faded, their influence is undeniable. They proved that fundraising can be decentralized, global, and permissionless, paving the way for the next generation of blockchain innovation.
How to Find ICOs and Modern Crypto Fundraising Events Today
While the ICO boom of 2017-2018 has largely faded due to regulatory crackdowns, modern crypto fundraising methods—such as Initial Exchange Offerings (IEOs), Initial DEX Offerings (IDOs), and Security Token Offerings (STOs)—continue to thrive. If you're looking to discover and evaluate upcoming blockchain projects, here’s how to find them.
1. ICO/IDO/IEO Aggregator Websites
There are several websites that track upcoming and ongoing token sales across different fundraising models. These platforms provide details like tokenomics, launch dates, and project whitepapers.
Popular Aggregators for ICOs, IDOs, and IEOs:
🔹 ICO Drops – Lists active, upcoming, and past ICOs with risk ratings.
🔹 CoinGecko's ICO Section – Tracks token sales with launchpad info.
🔹 CryptoRank – Monitors ICOs, IDOs, IEOs, and private funding rounds.
🔹 ICObench – Offers expert ratings on token sales.
🔹 DAOmaker – Focuses on IDOs and venture capital fundraising.
🔹 Polkastarter – A top IDO launchpad for new crypto projects.
These platforms are a great starting point to explore new fundraising opportunities and track trends in blockchain development.
2. Crypto Launchpads: Where Tokens Are Introduced
Many new tokens are launched via centralized or decentralized platforms called crypto launchpads. These platforms vet projects before listing them, adding a layer of trust compared to the unregulated ICO era.
Top Centralized Launchpads (IEOs)
🔹 Binance Launchpad – One of the most reputable platforms, hosting high-profile IEOs.
🔹CoinList – Offers early access to new tokens, including compliance-focused projects.
🔹KuCoin Spotlight – Features upcoming IEOs with high potential.
Top Decentralized Launchpads (IDOs)
🔹 Polkastarter (Polkadot) – Hosts IDOs with fair access and interoperability.
🔹 TrustPad (Binance Smart Chain, Ethereum, Solana, etc.) – A multi-chain IDO platform.
🔹 BSCPad (Binance Smart Chain) – Focuses on projects launching on Binance Smart Chain (BSC).
🔹 Solstarter (Solana) – An IDO platform for projects launching on Solana.
These platforms require KYC (for IEOs) or staking tokens (for IDOs) to participate.
3. Crypto Research Platforms & Communities
Finding quality projects requires staying active in crypto communities and research hubs where experts and enthusiasts discuss upcoming token launches.
Top Research Platforms & Crypto Communities
🔹 Messari (messari.io) – In-depth analysis of new projects and trends.
🔹 Reddit (r/cryptocurrency & r/ico) – Discussions on upcoming token sales.
🔹 Discord & Telegram Groups – Most crypto projects have Telegram or Discord communities where they release updates.
🔹 GitHub – For more technical users, checking a project's open-source code can reveal its legitimacy.
4. Crypto Venture Capital & Private Sales
Some of the most promising blockchain projects raise funds privately before launching public sales. While access is often restricted to institutional investors, retail investors can track VC-backed projects to see what’s coming next.
How to Track VC-backed Projects:
🔹 Crunchbase & PitchBook – Track funding rounds in the blockchain sector.
🔹 The Block Research – Reports on blockchain venture capital trends.
🔹 Funded by Animoca, a16z, or Binance Labs? – If a project has funding from major firms like Andreessen Horowitz (a16z), Animoca Brands, or Binance Labs, it’s worth watching.
5. Early Airdrops & Community Incentives
Many projects give away free tokens (airdrops) to early supporters before launching an official sale. While airdrops don’t require investing, they can provide early exposure to promising projects.
Where to Find Airdrops:
🔹 CoinMarketCap Airdrops – Airdrop list here
🔹 Airdrops.io – Tracks legit token giveaways.
🔹 Discord/Telegram of projects – Many new projects reward early members.
Stay Cautious & Do Your Research
While finding new token launches is exciting, not all projects are legitimate or worth investing in. Scams, rug pulls, and vaporware projects still exist, even with IDOs and IEOs improving vetting processes.
Checklist Before Investing in a New Token:
✅ Read the Whitepaper – Does the project have a clear vision and technical roadmap?
✅ Research the Team – Are the developers and founders reputable?
✅ Check Smart Contract Audits – Have security firms (CertiK, SlowMist, etc.) reviewed the code?
✅ Tokenomics & Vesting Schedule – Are tokens distributed fairly, or will insiders dump them?
✅ Community & Hype vs. Substance – A strong community is great, but is the project actually delivering results?
By using the right platforms, conducting thorough research, and staying engaged with crypto communities, you can discover promising blockchain projects early while avoiding potential scams.
Closing Thoughts: The Evolution of ICOs and Finding the Next Big Opportunity
The world of cryptocurrency fundraising has come a long way since the wild ICO boom of 2017. While ICOs introduced the concept of decentralized, global crowdfunding, their lack of regulation led to both groundbreaking successes and notorious failures. Despite their decline, ICOs paved the way for modern fundraising methods like IEOs, IDOs, and STOs, each offering improved security, fairness, and accessibility.
Today, investors can find promising projects through crypto launchpads, research platforms, and community-driven initiatives while leveraging more structured fundraising models to minimize risks. However, as history has shown, due diligence is crucial—whether participating in a public sale, tracking VC-backed projects, or exploring early airdrops.
The crypto landscape continues to evolve, blending DeFi, Web3, and tokenization into an increasingly sophisticated ecosystem. For those willing to research, stay engaged, and think long-term, the next groundbreaking opportunity is always on the horizon. 🚀
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