Author: Ryan Zurrer, CoinDesk; Compiler: Deng Tong, Golden Finance

In 2025, regulatory reform in the United States and the easing of global cryptocurrency confrontation will usher in a new generation of decentralized capital formation. This type of capital was formed in 2017 and first became popular in the form of “ICO” (Initial Coin Offering).

In the 2010s, cryptocurrencies had yet to identify valid use cases for Bitcoin and altcoins until Ethereum smart contracts enabled early teams to raise funds from supporters scattered around the world. We saw Ethereum bootstrap a global decentralized computer, spawning DeFi, NFTs, and various crypto primitives with less than $20 million raised by the global community.

Many other projects soon followed suit, and we observed a new dynamic in which raising early-stage funding from decentralized communities almost always brings projects and entrepreneurs more than the best and brightest. More value added than well-intentioned venture capitalists can provide. Through a decentralized investor group, entrepreneurs gain access to free evangelists, beta testers, and code contributors who contribute to the project at hand. Additionally, shorter liquidity timeframes provide early investors with better risk-reward returns.

Unfortunately, ICOs are slowly being curbed and deemed "non-compliant" with regulations that are never clearly spelled out. By 2020, they had slowed, with 88% of ICO tokens trading below their launch price.

Fast forward to 2025, and we can see a confluence of important inputs that enable the re-emergence of compelling investment opportunities, but with very different characteristics than ICO 1.0.

I predict that value accumulation will be the fundamental reason for investing in tokens this time around. Entrepreneurs and investors in the space have matured and are ready to collectively acknowledge that most coins have profit expectations. In fact, one could argue that confusion over how token holders were compensated, as a manual attempt to sidestep the Howey test, was the primary problem that arose the first time around.

KYC/AML will focus on entry and exit such as exchanges and L2 bridges, and reasonably focus on converting proceeds back into fiat currency, which is an appropriate attempt that should satisfy reasonable regulators.

We are seeing the rapid decline of certain mid-market companies that can reinvent their business models through community leadership and decentralization. For example, mid-sized media companies, including newspapers and magazines, are an obvious business model that can be greatly improved through the use of token economies to drive journalists towards higher levels of professionalism.

In 2017, we conducted an ICO click contest on a very rough UI/UX interface, and the pre-launch SThe AFT (Agreement for Future Tokens Simple) round will involve a handful of venture capital firms and wait several years before it goes live on the network. The nature of any emerging technology is this: most will die, but the few that survive will continue to create tremendous value (spoiler alert: >90% of AI projects will also die).

Cryptocurrencies now have a decent barrier to entry and good user-facing applications, and most importantly, the community has shown an uncanny ability to publicly call out bullshit and root out bad actors Actors, the effect is far better than supervision. The light of an open decentralized ledger is a particularly powerful force.

So what does this all mean for the crypto community?

We will see capital formation totaling hundreds of billions of dollars in DeFi, NFTs, RWAs, and numerous other crypto primitives over the next few years.

M&A activities will become an important part of on-chain capital formation activities. Whether it's traditional businesses taking crypto seriously and regaining lost ground, like the Stripe-Bridge deal, or EVM L2 joining forces in recognition that only a few businesses will survive, we're going to see billions of dollars worth of M&A activity.

Additionally, mid-market Web2 and traditional companies will look to reinvent their business models as they can use token incentives in a less hostile environment. We see companies in energy, media, arts, and mobile communications taking token incentives seriously, transforming their value chains into open markets, and acquiring customers quickly and using cheaper labor.

I am also optimistic that regenerative finance, which blends a capitalist mission with a philanthropic mission, will find its place. I'm very excited about how cryptocurrencies can change the paradigm in a more dramatic way than we've seen so far, tying reasonable returns on capital to social goals.

I predict that we will see a range of new ways to select ICO participants, whether as rewards for LPs, relying on reputation based on on-chain activity or through the use of certain proofs. A by-product of this is that we will see a better balance between retail and institutional/venture investors.

Finally, as in the cryptocurrency space, we will continue to see constant innovation and new ideas, leading to more early-stage funding opportunities. Many exciting new teams clearly see that AI’s natural medium of exchange will be through cryptocurrencies and are preparing accordingly. The AI ​​agents will bootstrap themselves through a token-backed fundraising mechanism that blends debt and equity principles.

Overall, I am optimistic that the cryptocurrency community has internalized the lessons learned along the stoic evolutionary path to this point. As a range of opportunities for capital allocation emerge over the next year, I encourage everyone in the cryptocurrency space to speak out, publicly highlight due diligence red flags, and move the industry towards open access, projects that are launched fairly and directly create value for society.

Fair Start is a better path forward, and we should all be working toward more equitable and transparent fundraising. There are still a lot of problems to be solved, and there will be some spectacular failures as we move forward, but decentralized capital formation is the original killer app for cryptocurrencies, and it deserves to continue to develop.