The pace of new token launches has picked up, with blockchain ecosystems introducing fresh assets at an unprecedented rate. For many, the trend recalls the initial coin offering (ICO) frenzy nearly a decade ago, when speculation overshadowed fundamentals. Yet industry leaders argue that today’s environment rests on stronger ground.
Stephen Hess, Founder and Director of Metaplex, is among them. In an exclusive interview with BeInCrypto, he explained that modern launch frameworks aren’t simply fueled by hype — they are the product of years of infrastructure development, making them more responsible and scalable. Hess believes the shift is so significant that token-based fundraising is set to become the default path for startups.
The Rise and Fall of Initial Coin Offerings (ICOs)
For context, an ICO is a fundraising mechanism used by blockchain and cryptocurrency projects. It’s somewhat similar to an Initial Public Offering (IPO) in traditional finance, but instead of selling shares of a company, projects sell digital tokens.
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In exchange for their investment, investors receive the new tokens, which they can use within the project or potentially sell later for profit.
In 2017, ICOs exploded in popularity and investors poured billions into crypto startups. According to data from Goat Finance, that year alone saw more than 800 ICOs launched, raising over $5.6 billion in total funding.
“In 2015, Ethereum’s introduction of a standard for implementing tokens (ERC20) further streamlined the ICO process. From just 9 ICOs in 2015 and 74 in 2016, the market surged to over 1,000 ICOs in 2018,” ICO Bench noted.
ICO Bench further revealed that coin offerings delivered 3.5 times more capital to blockchain startups than traditional venture capital (VC) rounds between 2017 and 2020. However, the ICO boom was marred by challenges.
A study of 3,392 ICOs from 2016 to 2018 revealed a sharp decline in success rates, from nearly 90% in early 2017 to 30% by Q4 2018. Plummeting cryptocurrency prices, regulatory scrutiny, and high-profile scams eroded investor confidence. A Statis Group study found that over 80% of ICOs were identified as scams.
“The consequences of the ICO bust were severe: By 2019, over 80% of ICOs were considered ‘dead’ or ‘scams.’ Many investors lost significant sums. The term ‘ICO’ became associated with high risk and potential fraud,” Goat Finance wrote.
But with so many new tokens hitting the market today, the question remains: has the industry learned its lessons, or is history destined to repeat itself?
Why Token Launches Look Different in 2025
Reflecting on the ICO era, Hess stressed that the process had serious flaws.
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“In the ICO era, capital raises were plagued by opacity, unfair access, and technical limitations, like no robust smart contract frameworks for equitable distribution, leading to regular front-running, sniping, and insider advantages that eroded trust and fueled speculation,” he said.
Nonetheless, the executive emphasized that today’s token launches are far more sustainable than the 2017 ICO frenzy, supported by stronger products for founders and more advanced tools for developers. Hess noted that modern token issuers now leverage sophisticated on-chain mechanisms to overcome the shortcomings of the past.
Fully on-chain auctions and launch pools, for example, enable real-time price discovery. They also ensure that all participants receive tokens at the same fair price, eliminating opportunities for manipulation.
Beyond distribution, issuers are operating within a more mature ecosystem powered by proof-of-stake networks like Solana (SOL). It supports scalable, web-level applications and real revenue-generating businesses.
This marks a fundamental shift from hype-driven speculation toward utility and adoption, avoiding the pitfalls of launching projects without proven traction or genuine community alignment.
“Platforms like Genesis demonstrate this sustainability. Its fully onchain auctions and launch pools ensure everyone gets the same price with real-time price discovery, eliminating front-running and sniping that fueled 2017’s excesses. This fosters genuine community participation and long-term value, rather than pump-and-dump schemes. We also have thousands of crypto businesses with revenue-generating projects and protocols, grounding launches in real economics instead of pure speculation,” Hess mentioned to BeInCrypto.
Why More Crypto-Native Companies Are Choosing Tokens to Raise Funds
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Backed by strong infrastructure, crypto-native companies are now increasingly opting for token launches to raise capital over traditional VC funding. According to Hess, this trend is driven by the speed, flexibility, and community alignment offered by on-chain fundraising.
“Raising capital through a token launch on-chain allows companies to move faster, bypassing the rigid timelines of traditional funding rounds. Projects can raise capital directly from a global, liquid market, giving them more control over their expansion. This strategy also aligns incentives with their customers and community from day one, as early participants become token holders. A strong, engaged community creates a healthier, more durable capital base, which is ultimately beneficial for all investors, including VCs,” he remarked.
The Metaplex founder elaborated that token launches expand access to capital beyond traditional institutional investors by opening participation to a global online market. Retail participants, as token holders, contribute liquidity and alignment, serving not only as backers but also as stakeholders who provide capital, feedback, and network effects.
This dynamic democratizes fundraising and fosters startups that are more closely aligned with their communities. Despite this, Hess added that token launches still carry risks, including regulatory uncertainty, market volatility, and potential manipulation.
Onchain Fundraising Pushes Venture Capital to Adapt, Not Disappear
So, does the rise of token-backed fundraising mean the end of traditional VC funding? Not quite. Hess told BeInCrypto that this shift doesn’t eliminate venture capitalists — it brings them on-chain.
“This creates a more level playing field where everyone, including VCs, participates directly,” he stated.
Hess highlighted that the rise of on-chain fundraising is pushing venture capital firms to adapt. The funding space is becoming increasingly democratized, allowing startups to raise capital on-chain much earlier in their development.
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In addition, Hess said that token-based fundraising doesn’t operate in isolation — it coexists with traditional financing. Networks and protocols can issue utility tokens that generate value through adoption, governance, and utility, while still driving returns for equity holders who helped build them.
“Onchain equity issuance also enhances traditional financing by enabling tokenized shares to be traded or used as collateral in DeFi lending programs. These security tokens offer greater liquidity and accessibility than traditional equity. For instance, a company could tokenize equity for global trading and use it to secure loans. This integration creates new opportunities for capital efficiency and investor engagement,” he commented.
The Future of Startup Fundraising
Finally, Hess predicted that the model pioneered by crypto-native companies will expand to a broader range of startups. It signals a future where direct, community-driven capital becomes the standard.
“Token-based fundraising will become the default path for startups, as companies launch onchain early to access the internet capital markets,” Hess revealed to BeInCrypto.
He added that in parallel, much of the economy will shift toward decentralization, powered by tokenized protocols and peer-to-peer networks.
“Platforms like Metaplex will drive this by offering advanced, fair token creation and launch tools on Solana, lowering barriers for founders and builders,” the executive said.
Thus, the resurgence of token launches reflects a maturing industry that has learned from the excesses of 2017. By prioritizing transparency, utility, and community alignment, today’s token launches aim to avoid the pitfalls of the ICO era.
While risks remain, the evolution of on-chain infrastructure and the integration of traditional and decentralized financing models signal a promising future for startup capital raising—one that balances innovation with responsibility.
Source: https://beincrypto.com/crypto-token-launches-vs-ico-fundraising-future/