The pace of launches of new tokens has been featured, and the blockchain ecosystem has introduced fresh assets at unprecedented rates. For many, this trend reminds us of the first coin product (ICO) frenzy nearly a decade before speculation veiled the basics. However, industry leaders argue that today’s environment depends on stronger lands.
It is Stephen Hess, founder and director of Metaplex. In an exclusive interview with Beincrypto, he explained that the latest launch framework is not only fueled by the hype, but is a product of years of infrastructure development, making it more responsible and scalable. Hess believes that this shift is so important that token-based fundraising is set to be the default path for startups.
Rise and Descend (ICO) of the First Coin Product
For context, ICOs are the funding mechanisms used in blockchain and cryptocurrency projects. It’s somewhat similar to traditional financial early public offerings (IPOs), but instead of selling company stocks, the project sells digital tokens.
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In exchange for the investor, the investor receives a new token. New tokens may be used within the project or sold later for profit.
In 2017, ICOs exploded in popularity, with investors pouring billions of dollars into crypto startups. Over 800 ICOs were launched that year alone, raising over $5.6 billion in funding, according to data from Goat Finance.
“In 2015, the ICO process was further streamlined with the introduction of Ethereum’s implementation criteria for tokens (ERC20). The market surged to over 1,000 ICOs in 2018, from just 9 ICOs in 2015 to 74 in 2016.
ICO Bench further revealed that Coin’s offering provided more than 3.5 times more capital to blockchain startups between 2017 and 2020 than traditional venture capital (VC) rounds. However, the ICO boom has been undermined by challenges.
A survey of 3,392 ICOs from 2016 to 2018 saw a sharp decline in success rates from nearly 90% in early 2017 to the fourth quarter of 2018. A STATIS Group survey found that over 80% of ICOs were identified as fraud.
“The consequences of ICO busts were serious. By 2019, over 80% of ICOs were considered “dead” or “scam.” Many investors have linked the term “ICO” to high risk and potential fraud,” writes Goat Finance.
However, there are so many new tokens on the market today, so questions remain. Has the industry learned that lesson or is history destined to repeat itself?
Why Token Launch looks different in 2025
Looking back at the ICO era, Hess emphasized that the process is severely flawed.
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“In the ICO era, pay raises in capital have been plagued by opacity, unfair access and technical restrictions, like a robust smart contract framework for fair distribution, eroding the benefits of regular front-running, sniping, and insiders, and fostering speculation,” he said.
Nevertheless, the executive emphasized that today’s token launch is much more sustainable than the 2017 ICO Frenzy, supported by a powerful product for founders and more advanced tools for developers. Hess noted that modern token issuers now use sophisticated on-chain mechanisms to overcome past shortcomings.
For example, a fully on-chain auction and launch pool allows real-time price discovery. It also ensures that all participants receive the token at the same fair price, eliminating opportunities for manipulation.
Beyond distribution, publishers operate within more mature ecosystems with stake networks of proofs like Solana (SOL). It supports scalable web-level applications and businesses that generate real revenue.
This illustrates a fundamental shift from hype-driven speculation to practical and adoption, avoiding the pitfalls of starting a project without proven traction or authentic community alignment.
“Platforms like Genesis show this sustainability. Its full on-chain auction and launch pool ensures that everyone wins the same price with real-time price discovery and eliminates the over-fueled frontrunning and snipers of 2017. Pure speculation,” Hess mentioned beincrypto.
Why are more crypto companies choosing tokens to raise funds?
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Bolstered by strong infrastructure, crypto-native companies are now opting to launch tokens to raise capital over traditional VC funding. According to Hess, this trend is driven by the speed, flexibility and community integrity provided by on-chain funding.
“By raising capital through on-chain token launches, businesses can bypass the strict timeline of traditional funding rounds and move faster. Projects raise capital directly from global liquid markets and have greater control over expansion. VCS,” he said.
The founders of Metaplex strongly stated that by opening up participation in the global online marketplace, tokens will expand access to capital beyond traditional institutional investors. Retail participants as token holders provide liquidity and integrity, serving not only as supporters but also as stakeholders who provide capital, feedback and network effects.
This dynamic democratization democratizes fundraising and nurtures startups that work more closely with the community. Nevertheless, Hess added that token launches still have risks including regulatory uncertainty, market volatility and potential manipulation.
Onchain’s fundraising will help venture capital adapt and keep it from disappearing
So does the rise of token support funding mean the end of traditional VC funding? There is not at all. Hess told Beincrypto that the shift would not eliminate venture capitalists.
“This creates a more equal arena where everyone, including VCS, is directly involved,” he said.
Hess emphasized that the rise of on-chain funding is driving venture capital companies to adapt. Fundraising space is increasingly democratizing, allowing startups to raise capital on-chains much earlier than they were developed.
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Furthermore, Hess said token-based fundraising would not work on its own. Networks and protocols can issue utility tokens that create value through recruitment, governance, and utilities, but drive returns from stockholders who helped build them.
“The issuance of Onchain Equity enhances traditional financing by allowing tokenized stocks to be used as trades or collateral in the Defi Lending program. These security tokens provide greater liquidity and accessibility than traditional equity. For example, companies can tokenize global trading equity and use it to secure loans.”
The future of startup fundraising
Finally, Hess predicted that the model pioneered by companies from crypto origins would expand to a wider range of startups. It shows a future in which direct community-driven capital becomes the norm.
“Token-based funding will be the default path for startups as companies launch Onchain early to access the internet’s capital city center,” Hess revealed to Beincrypto.
He added that in parallel, much of the economy will shift towards decentralization with tokenization protocols and peer-to-peer networks.
“Platforms like Metaplex will promote this by providing sophisticated and fair token creation and launching tools in Solana, lowering the barriers for founders and builders,” the executive said.
Thus, the revival of token launches reflects the mature industry that has learned from the 2017 overload. By prioritizing transparency, utility and community integrity, today’s token launches aim to avoid the pitfalls of the ICO era.
While risk remains, the evolution of on-chain infrastructure and the integration of traditional decentralized finance models illustrate a promising future for startup capital raising.
