Crypto's revolution began with a radical promise: to level the playing field by allowing public participants to anonymously invest in the next generation of blockchain projects on the ground floor, sidestepping centralized gatekeepers. Yet in a few years, token launches morphed from grassroots movements to corporate pageantry. In just a few years, a fast-growing market of deep-pocketed crypto venture firms replaced public buyers and centralized exchange listings became the new IPOs. Retail investors have had enough, foregoing participation entirely and the pendulum is swinging back. It’s time for crypto to rediscover its decentralized soul. Back to Our Roots Back to Our Roots Rewind to 2014: Ethereum's ICO sold approximately 50% of the initial ETH supply to 8,800 accounts for $16 million. Back then, the crypto VC did not exist, and there were no "pre-sales" to institutional investors or insiders, and no special exchange agreements. The public sale was transparent, equitable and fair, and participants were united by optimism for the long-term success of the protocol. approximately 50% was transparent This pattern held for many ICOs that immediately followed. These weren't just token sales, they were community formation events. Then everything changed. Twenty-nine ICOs raised $90 million in 2016. In 2017? Nine hundred raised over $6 billion. As they scaled, token launches became increasingly centralized before being (temporarily) brought to their knees by regulators enforcing violated securities law. raised $90 million The Centralization Creep The Centralization Creep Why did token launches become increasingly centralized in 2017? Two reasons. First, crypto entrepreneurs began adopting the traditional startup playbook: raise from "expert" funds and accredited investors at a discount, then sell to the public later at higher prices after ostensibly "de-risking” the project. These funds offered larger ticket sizes and simplified the token sale process – instead of tens of thousands of participants, the number of investors and workload shrank.  Projects and their founders were trading convenience for centralization, usurping the ethos of decentralization. Second, regulatory pressure mounted. The SEC's enforcement actions against projects like Kik and EOS (the latter of which was outright fraud) sent shockwaves through the industry. Founders, fearing similar treatment, retreated to safer ground: limiting token sales to accredited investors and institutional capital. Kik EOS What followed was predictable. Projects raised tens of millions in private rounds, leaving only scraps for public sales—if they happened at all. The community-building aspect of token launches diminished, replaced by financial engineering and exchange listing strategies. And the public relationship with the tokens that do launch without taking VC dollars has become almost entirely speculative. Today, as an example, pump.fun users continue to launch thousands of new (purely speculative) memecoins every day. launch thousands The Changing Role of Centralized Capital in Crypto VCs serve an indispensable role in capital markets by providing funding, guidance, and connections. But seemingly overnight, a thousand “VCs” appeared, many operating with just one or two individuals, ready to capitalize on the speculative fervor that followed the crypto bull market.  But in crypto’s early days, these funds prioritized quickly flipping tokens over sustainable value creation. Today many VCs continue to employ the same strategy, contributing substantial sell pressure once projects list their tokens on public exchanges. The economics are straightforward: buy tokens at steep discounts during private rounds, then begin liquidating once tokens hit exchanges and before most projects achieve product-market fit. As a result, founders are becoming more selective, indexing towards value-add VCs who bring more than just capital. Institutional investors are increasingly expected to support tokenomics design, facilitate introductions to potential partners and users, lead and participate in follow-on rounds, and help provide deep insight and strategy. The industry is also migrating to an equity or equity + token mix for venture funding. Equity can create stronger long-term alignment and all but eliminates those who are looking for a quick payday. It also frees up tokens for public distribution, opening the door for a return to crypto’s early decentralized fundraising model. Centralized exchanges have seemingly followed the same playbook.  In the early days, many would list tokens with zero fees, instead, aligning with founders on the bet that their tokens would grow and succeed.  Today, projects now pay substantial listing fees—ranging from tens of thousands to millions of dollars—for the privilege of accessing their trader bases.  Exchanges invariably collect a large portion of these fees in the project’s tokens, requiring these tokens to be fully unlocked and sellable at launch.  And sell they do, with most exchanges liquidating the entirety of their token payment in the first 48 hours of launch.  This behavior nearly guarantees a project is consigned to defeat, even before their time has started.  Meanwhile, these exchanges have paid hundreds of millions in sponsorship fees to have their name emblazed on the top sports teams. hundreds of millions Yet beyond liquidity (which decentralized exchanges increasingly provide), what value do these centralized entities add? Many have transformed into toll collectors, extracting value rather than creating it for the projects they list. The Case for Decentralization The Case for Decentralization Returning to decentralized token launches offers several advantages. First, public participants are more likely to become actual users rather than pump and dumpers. In the best case, individuals who connect with a project’s vision, and participate in a public sale are invested not just financially but as an active user of the platform. These participants hold tokens longer and contribute more meaningfully to ecosystem growth. Second, public launches create broader awareness. Rather than concentrating tokens among a small group of investors, they distribute them widely—bootstrapping the very network effects that make these projects valuable. Third, decentralized launches avoid the misaligned incentives that plague the current model. When tokens are distributed fairly, without preferential terms for insiders, everyone succeeds or fails together. Addressing the Challenges Addressing the Challenges Of course, decentralized launches aren't without challenges. They require significant marketing expenditure to reach broad audiences—something that taking VC money can help fund. They also demand careful legal navigation in an uncertain regulatory environment. However, these challenges are surmountable. Community funding models, grants from existing crypto networks, and new legal structures under a more crypto-friendly US administration promise to facilitate compliant public participation. crypto-friendly The Path Forward The Path Forward As we look to the future, the most successful token projects will likely be those that embrace decentralization from day one—not just in their technology but in their token distribution. They'll recognize that a thousand committed community members are more valuable than five VC logos. a thousand The future of token launches isn't just decentralized because it's ideologically aligned with crypto's ethos (though it is). A truly decentralized token launch—where tokens are distributed broadly to actual users without privileged insider discounts or private pre-sales—creates aligned incentives, genuine community, and sustainable network effects. The most successful projects of the next wave will be those that remember what made Ethereum's launch special: not the money raised, but the community formed. In returning to these roots, we won't just be honoring crypto's past—we'll be securing its future.

The Case for Increased Decentralization in Token Sales

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