The ICO boom and the evolution of Ethereum
In this article, we'll cover one of the most volatile periods in crypto history known as the Initial Coin Offering (ICO) boom.
ICOs swept the crypto scene in early 2017, allowing thousands of new blockchain-based projects to raise large amounts of capital by selling pre-released tokens directly to investors. Projects issue their tokens to fund the launch of new networks and decentralized applications (DApps).
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What is an ICO?
An ICO is a token sale that combines the initial public offering (IPO) model commonly used in the world of traditional finance with crowdfunding, selling tokens to raise funds for a blockchain-based project.
Considering the ICO boom was a time when projects and investors made some seriously measly returns, it's important to note that withdrawal scams and carpet dragging were rampant. concerned financial authorities.
The biggest ICOs of the boom
Although the ICO boom has been plagued by various regulatory and financial confusions, it has laid the groundwork for launching some of the biggest projects in crypto today, including Ethereum, EOS Network (EOS) Chainlink (LINK), Filecoin (FIL), Tezos (XTZ). ), and Telegram (ton).
The largest ICO was executed by a private company called Block.one, the creator of the EOS network. EOS hit $4 billion in 2018.
The second largest ICO was held by Telegram, which raised $1.7 billion. However, unlike other ICOs – which were offered directly to retail investors – Telegram's ICO was primarily closed to private investors with large amounts of capital.
Decentralized storage network Filecoin is the third largest ICO in 2017, raising over $257 million.
The role of Ethereum in the development of ICO
Ethereum itself was originally funded through an ICO, raising a total of $18 million from July 22 to September 2, 2014. Investors in the Ethereum ICO received Ether (ETH) in exchange for Bitcoin (BTC), with over $2.2 million worth of ICOs going live in 24 hours. Ether is being sold within hours.
Between 2017 and 2018, the majority of ICOs took place on the Ethereum network, where smart contracts allow developers to launch new tokens and protocols more easily than any other blockchain network available.
The Ethereum network allowed developers to create new ERC-20 tokens and automatically distribute them to investors after funding is met. The projects are then managed by DAOs going forward.
The functionality offered by Ethereum saw the value of the network's native token, Ether, rise rapidly, rising from $10 in January 2017 to a peak of nearly $1,400 in January of the following year.
Similarly, the rise of Ethereum's use during the ICO boom laid much of the groundwork for ERC-20 tokens to become the industry standard and for Ethereum's continued popularity in the crypto ecosystem today.
ICO growth and legal woes
Although thousands of projects that have raised money from ICOs have used their new capital for legitimate causes, relying on sketchy marketing strategies with no real roadmap or legitimate growth plan, thousands of projects have been poorly planned or downright fraudulent.
The United States Securities and Exchange Commission (SEC) has drawn attention to the gradual increase in the number of these projects being declared illegal.
For the first time, the regulator has been involved in issues related to ICOs in 2017, following an investigation into the 2016 ICO from an organization called “The DAO”.
This precedent has seen the SEC take legal action against Block.one – the parent company of the EOS network – ordering it to pay a $24 million fine. The agency also ordered Telegram to pay $18.5 million in fines and return $1.2 billion to its Echo investors.
Telegram was forced to abandon the project due to the perceived security of the TON token. Because the project's codebase was open source, Ton Network was later maintained by the developer community.
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Despite being on the receiving end of regulatory scrutiny, ICOs have played an important role in raising funds for some of the most important blockchain projects today.
In particular, the ICO boom laid the groundwork for Ethereum to dominate the crypto ecosystem today, establishing ERC-20 tokens as the industry standard and dramatically increasing the use of Ethereum by developers.
Explore the history of CRYPTO
Stay tuned for our next Story of Crypto series, where we'll enter the 2018 crypto winter and at the same time look at the most important things in Ethereum's evolution. Follow Cointelegraph for insightful updates on developments in crypto history.
