Metaplex Founder Explains Why Crypto Firms Are Choosing Token Launches Over VC in 2025
The tempo of latest token launches has picked up, with blockchain ecosystems introducing recent property at an unprecedented charge. For many, the development recollects the preliminary coin providing (ICO) frenzy almost a decade in the past, when hypothesis overshadowed fundamentals. Yet trade leaders argue that immediately’s setting rests on stronger floor.
Stephen Hess, Founder and Director of Metaplex, is amongst them. In an unique interview with BeInCrypto, he defined that fashionable launch frameworks aren’t merely fueled by hype — they’re the product of years of infrastructure growth, making them extra accountable and scalable. Hess believes the shift is so vital that token-based fundraising is ready to turn into the default path for startups.
The Rise and Fall of Initial Coin Offerings (ICOs)
For context, an ICO is a fundraising mechanism used by blockchain and cryptocurrency initiatives. It’s considerably just like an Initial Public Offering (IPO) in conventional finance, however as an alternative of promoting shares of an organization, initiatives promote digital tokens.
In change for his or her funding, traders obtain the brand new tokens, which they’ll use throughout the undertaking or doubtlessly promote later for revenue.
In 2017, ICOs exploded in popularity and traders poured billions into crypto startups. According to data from Goat Finance, that 12 months alone noticed greater than 800 ICOs launched, elevating over $5.6 billion in whole funding.
“In 2015, Ethereum’s introduction of a typical for implementing tokens (ERC20) additional streamlined the ICO course of. From simply 9 ICOs in 2015 and 74 in 2016, the market surged to over 1,000 ICOs in 2018,” ICO Bench famous.
ICO Bench additional revealed that coin choices delivered 3.5 instances extra capital to blockchain startups than conventional enterprise capital (VC) rounds between 2017 and 2020. However, the ICO increase was marred by challenges.
A examine of three,392 ICOs from 2016 to 2018 revealed a pointy decline in success charges, from almost 90% in early 2017 to 30% by This fall 2018. Plummeting cryptocurrency costs, regulatory scrutiny, and high-profile scams eroded investor confidence. A Statis Group study discovered that over 80% of ICOs have been identified as scams.
“The penalties of the ICO bust have been extreme: By 2019, over 80% of ICOs have been thought-about ‘useless’ or ‘scams.’ Many traders misplaced vital sums. The time period ‘ICO’ grew to become related to high threat and potential fraud,” Goat Finance wrote.
But with so many new tokens hitting the market immediately, the query stays: has the trade discovered its classes, or is historical past destined to repeat itself?
Why Token Launches Look Different in 2025
Reflecting on the ICO period, Hess pressured that the method had critical flaws.
“In the ICO period, capital raises have been tormented by opacity, unfair entry, and technical limitations, like no strong good contract frameworks for equitable distribution, resulting in common front-running, sniping, and insider benefits that eroded belief and fueled hypothesis,” he mentioned.
Nonetheless, the manager emphasised that immediately’s token launches are much more sustainable than the 2017 ICO frenzy, supported by stronger merchandise for founders and extra superior instruments for builders. Hess famous that fashionable token issuers now leverage subtle on-chain mechanisms to beat the shortcomings of the previous.
Fully on-chain auctions and launch swimming pools, for instance, allow real-time worth discovery. They additionally make sure that all individuals obtain tokens on the similar honest worth, eliminating alternatives for manipulation.
Beyond distribution, issuers are working inside a extra mature ecosystem powered by proof-of-stake networks like Solana (SOL). It helps scalable, web-level purposes and actual revenue-generating companies.
This marks a basic shift from hype-driven hypothesis towards utility and adoption, avoiding the pitfalls of launching initiatives with out confirmed traction or real group alignment.
“Platforms like Genesis exhibit this sustainability. Its absolutely onchain auctions and launch swimming pools guarantee everybody will get the identical worth with real-time worth discovery, eliminating front-running and sniping that fueled 2017’s excesses. This fosters real group participation and long-term worth, fairly than pump-and-dump schemes. We even have 1000’s of crypto companies with revenue-generating initiatives and protocols, grounding launches in actual economics as an alternative of pure hypothesis,” Hess talked about to BeInCrypto.
Why More Crypto-Native Companies Are Choosing Tokens to Raise Funds
Backed by sturdy infrastructure, crypto-native corporations are actually more and more choosing token launches to boost capital over conventional VC funding. According to Hess, this development is pushed by the velocity, flexibility, and group alignment supplied by on-chain fundraising.
“Raising capital by way of a token launch on-chain permits corporations to maneuver sooner, bypassing the inflexible timelines of conventional funding rounds. Projects can elevate capital instantly from a world, liquid market, giving them extra management over their growth. This technique additionally aligns incentives with their prospects and group from day one, as early individuals turn into token holders. A powerful, engaged group creates a more healthy, extra sturdy capital base, which is in the end helpful for all traders, together with VCs,” he remarked.
The Metaplex founder elaborated that token launches increase entry to capital past conventional institutional traders by opening participation to a world on-line market. Retail individuals, as token holders, contribute liquidity and alignment, serving not solely as backers but in addition as stakeholders who present capital, suggestions, and community results.
This dynamic democratizes fundraising and fosters startups which can be extra intently aligned with their communities. Despite this, Hess added that token launches nonetheless carry dangers, together with regulatory uncertainty, market volatility, and potential manipulation.
Onchain Fundraising Pushes Venture Capital to Adapt, Not Disappear
So, does the rise of token-backed fundraising imply the top of traditional VC funding? Not fairly. Hess instructed BeInCrypto that this shift doesn’t remove enterprise capitalists — it brings them on-chain.
“This creates a extra stage taking part in area the place everybody, together with VCs, participates instantly,” he said.
Hess highlighted that the rise of on-chain fundraising is pushing venture capital firms to adapt. The funding house is changing into more and more democratized, permitting startups to boost capital on-chain a lot earlier in their growth.
In addition, Hess mentioned that token-based fundraising doesn’t function in isolation — it coexists with conventional financing. Networks and protocols can subject utility tokens that generate worth by way of adoption, governance, and utility, whereas nonetheless driving returns for fairness holders who helped construct them.
“Onchain fairness issuance additionally enhances conventional financing by enabling tokenized shares to be traded or used as collateral in DeFi lending applications. These safety tokens supply higher liquidity and accessibility than conventional fairness. For occasion, an organization may tokenize fairness for international buying and selling and use it to safe loans. This integration creates new alternatives for capital effectivity and investor engagement,” he commented.
The Future of Startup Fundraising
Finally, Hess predicted that the mannequin pioneered by crypto-native corporations will increase to a broader vary of startups. It alerts a future the place direct, community-driven capital turns into the usual.
“Token-based fundraising will turn into the default path for startups, as corporations launch onchain early to entry the web capital markets,” Hess revealed to BeInCrypto.
He added that in parallel, a lot of the economic system will shift towards decentralization, powered by tokenized protocols and peer-to-peer networks.
“Platforms like Metaplex will drive this by providing superior, honest token creation and launch instruments on Solana, decreasing boundaries for founders and builders,” the manager mentioned.
Thus, the resurgence of token launches displays a maturing trade that has discovered from the excesses of 2017. By prioritizing transparency, utility, and group alignment, immediately’s token launches purpose to keep away from the pitfalls of the ICO period.
While dangers stay, the evolution of on-chain infrastructure and the mixing of conventional and decentralized financing fashions sign a promising future for startup capital elevating—one which balances innovation with accountability.
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