The Evolution of the Crypto Assets Financing Ecosystem: From ICO to Future Hybrid Models

Since the birth of the Bitcoin genesis block in 2009, the Crypto Assets financing ecosystem has undergone rapid transformation. As blockchain projects explore new ways to raise capital, various token issuance mechanisms have emerged, each influenced by market conditions, technological advancements, and regulatory changes.

Evolution of Token Issuance Mechanisms

Initial Coin Offering (ICO)

ICOs experienced explosive growth from 2016 to 2018. Ethereum is one of the earliest and most successful cases, raising about $18 million through public sales at a price of $0.35 per ETH in 2014. ICOs peaked in 2018, raising a total of over $6 billion. However, due to insufficient investor protection, the fraud rate exceeded 80%, with only about 44% of ICO projects remaining active three months after issuance.

Initial Exchange Offering (IEO)

In response to the chaos of ICOs, IEOs emerged around 2019, introducing a more regulated structure through certain centralized exchanges. These platforms conduct token reviews and compliance checks, increasing project survival rates to about 70-80% and significantly reducing fraud rates to around 5-10%. However, listing fees, KYC requirements, and centralized control present certain limitations.

Security Token Offering (STO)

STOs introduce representations of traditional financial instruments (such as equity or debt) on a regulated blockchain. STOs have the highest survival rate (85-95%), but remain a niche area due to complex legal structures, longer activity durations, and limited secondary market infrastructure.

The Rise of IDOs and the New Era of Permissionless Issuance

The Initial Decentralized Exchange Offering (IDO) marks a significant shift towards fully decentralized financing. Certain decentralized exchange platforms support instant token issuance and liquidity acquisition without the high listing fees. However, this convenience comes with higher volatility and a fraud rate estimated at around 10-20%.

Platform for promoting IDO

• Some DEX: Adopts a Dutch auction mechanism for token listing. Projects apply to deploy native tokens and participate in a 31-hour Dutch auction, where the token deployment fee linearly decreases from the initial price to 10,000 USDC.

• A certain Solana platform: Simplifies the issuance and trading of meme coins on the Solana blockchain. Users can easily issue tokens at low costs, attracting investors looking to capitalize on viral token trends. However, the convenience of token creation has led to a surge in low-quality projects.

Comparison between IEO and IDO

IEOs and IDOs provide distinctly different financing avenues for projects, each with its unique advantages and challenges. IEOs offer a structured environment under the supervision of exchanges, enhancing investor confidence, but they come with higher costs and limited participation. The due diligence performed by exchanges can lead to more effective pricing and reduced investment risks. In contrast, IDOs lack formal regulation and are numerous, resulting in lower market efficiency and increased volatility.

Future Outlook: Hybrid Issuance Model and Regulatory Changes

The issuance mechanism is not only a technical tool but also shapes capital allocation, investor participation, and narrative formation. The future lies in a hybrid model that combines on-chain liquidity with off-chain regulatory compliance.

Emerging platforms adopt a Dutch auction mechanism to achieve price discovery while maintaining structure. Some platforms simplify the issuance of meme coins, riding the wave of viral spread, but there are risks of market saturation. These models reflect the market's desire for innovation.

At the same time, the policies of the United States and the European Union are creating a clearer framework for token issuance. The upcoming stablecoin framework in the U.S. and broader regulatory clarity may affect the compliance of IDO platforms. The EU's MiCA (Markets in Crypto Assets regulation) sets a precedent for the licensing of Crypto Assets, which may drive projects towards a more regulation-friendly structure.

Conclusion: Balancing Efficiency, Compliance, and Community

Looking ahead to 2025, IDOs may still be the preferred choice for small, community-driven offerings, while IEOs and STOs will cater to more institutionally oriented projects. What we are witnessing is not a competition of financing forms, but an evolution towards issuance strategies that balance accessibility, compliance, and investor protection. As platforms mature and regulations solidify, hybrid issuance frameworks will define the next era of Crypto Assets formation.