The Resurgence of ICOs

ICOs dominated headlines during crypto’s early boom in 2017, raising billions of dollars for startups and driving blockchain growth. However, after the 2018 crypto crash, regulatory scrutiny and high-profile failures caused the funding model to lose its appeal. Now, there is a renewed interest in ICOs, with some industry experts believing it may be time for their comeback.

Factors Driving Interest in ICOs

Fiskantes, a partner at Zee Prime Capital, believes that smart founders in the U.S. will feel less fear of SEC enforcement after Donald Trump’s presidency and the anticipated resignation of SEC chairman Gary Gensler in January 2025. Jack Platts, founder of Hypersphere Ventures, supports this view, stating that the Trump administration is more supportive of innovation compared to its predecessor, which aimed to restrict crypto funding.

Retail investors feel frustrated with the current landscape, as they often face higher prices compared to VC investors. Dean Eigenmann, co-founder of Dialectic, suggests that large funding rounds before mainnet launches are no longer sustainable. Jed Breed of Breed VC concurs, highlighting that retail investors now struggle to achieve significant returns due to inflated project valuations.

Additionally, Erick Zhang from Nomad Capital notes the ineffectiveness of token airdrops, which have led to poor user retention and heavy selling pressure.

Innovations and Community Engagement

Matt O’Connor, co-founder of the merit-based ICO platform Legion, emphasizes the critical role of community involvement in project success. He acknowledges challenges such as token dumping but insists that Legion employs a reputation-based score to create quality communities.

Moreover, Zhang’s emphasis on community involvement aligns with the belief that ICOs, when done right, enable better user engagement and project scaling. Projects like Pulse, which recently raised more than anticipated through Legion, aim to prioritize quality community onboarding.

Ensuring Quality and Security

While ICOs present opportunities, past statistics show that nearly 80% of 2017 ICOs were scams. O’Connor advocates for platforms that ensure only quality projects are considered for token sales. Legion aims to comply with European regulations, providing further safeguards for investors.

Beyond Memecoins

ICOs may redirect attention away from memecoins, potentially encouraging genuine community engagement over speculative hype. It’s acknowledged that VCs still play a vital role, as successful scaling often requires a combination of retail and VC support.

Industry leaders are beginning to notice these developments. For instance, a16z crypto recognizes that the political climate may enable projects to explore token distribution without fear of regulatory backlash.

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