Initial Coin Offering (ICO) Explained

Crypto Basics

Initial Coin Offering (ICO) Explained - A Complete Guide

Learn everything about Initial Coin Offering (ICO) in this guide. This guide will help beginners to understand the fundraising process using cryptocurrencies.

Sumit Meghani

9 Minutes

MIN

Index

Overview of Solana Blockchain

In the world of cryptocurrency, Initial Coin Offerings (ICOs) have emerged as a popular method of fundraising for startups and projects. But what exactly are ICOs, and how do they work?

In this definitive guide, we will explore the concept of ICOs, their history and evolution, the benefits and risks of participating in ICOs, and the factors to consider before investing in an ICO.

What is an ICO?

ICOs, also known as Initial Coin Offerings, are a form of crowdfunding where companies issue digital tokens or coins to raise funds for their projects.

These tokens are usually built on existing blockchain platforms, such as Ethereum, and can represent various assets or utilities within a project's ecosystem.

Unlike traditional fundraising methods like Initial Public Offerings (IPOs), ICOs allow companies to bypass the lengthy and costly process of going public.

Instead, they can directly sell their tokens to the public, offering early investors the opportunity to buy tokens at a discounted price before they are listed on cryptocurrency exchanges.

History and evolution of ICOs

The concept of ICOs originated with the launch of Mastercoin in 2013, which raised over 5000 Bitcoin (BTC) in its crowdfunding campaign. This success paved the way for other projects to adopt the ICO model, leading to a surge in popularity in the following years.

In 2017, ICOs reached their peak, with numerous projects raising millions, and sometimes even billions, of dollars in a matter of days.

However, this period was also marked by a lack of regulation and oversight, resulting in many fraudulent projects and scams that left investors high and dry.

How do ICOs work?

Project Development

Before an ICO, the project team develops a whitepaper. This document outlines the project's purpose, technical aspects, the amount of capital required, how many tokens the project team will hold, the type of money accepted, and the timeline of the ICO campaign.

Token Sale

Once the whitepaper is ready, the project team will announce the ICO date and begin the token sale. Early project enthusiasts, also known as the 'early bird investors,' will buy tokens in this phase.

If the money raised does not meet the project's requirements, the ICO is deemed unsuccessful, and the money is returned to the investors.

Token Distribution

If the ICO campaign reaches its funding goal, the tokens are distributed to investors, and the project team uses the funds to further the project development.

In return for their investment, participants receive a certain number of tokens, which can later be traded on cryptocurrency exchanges or used within the project's ecosystem.

The value of these tokens can fluctuate, offering investors the potential for significant returns if the project succeeds.

Benefits and risks of participating in ICOs

Participating in ICOs can offer several benefits for investors but it also comes with few risks. Let’s understand the key benefits and risks of ICO investments.

Benefits

1. Investment Opportunity: ICOs present an opportunity to invest in promising projects at the ground level. If the project succeeds, the token value can rise substantially, leading to significant returns.

2. Democratized Funding: ICOs allow anyone in the public to contribute to the project. This is unlike traditional investment methods, often limited to accredited investors.

3. Fostering Innovation: ICOs provide a platform for innovative projects to get the funding they need to develop their ideas.

Risks

1. Lack of Regulation: While some regulation exists, the ICO space still remains somewhat unregulated, which can expose investors to fraudulent projects.

2. Market Volatility: Cryptocurrencies are known for their volatility. The value of tokens bought during an ICO can decrease significantly.

3. Project Failure: As with any investment in a new project, there's always the risk that the project will not succeed, leading to a loss of investment.

Factors to consider before investing in an ICO

Before investing in an ICO, there are several factors that you should consider to make an informed decision.

Firstly, evaluate the project's whitepaper and roadmap to understand its goals, vision, and feasibility. Look for a strong team with relevant experience and a clear plan for execution.

Additionally, consider the market potential of the project and its competitive advantage. Does the project solve a real-world problem or offer a unique solution? Assess the project's token economics and distribution model to ensure fairness and long-term sustainability.

Lastly, pay attention to the project's community and investor relations. A strong and supportive community can contribute to the project's success, while poor communication or lack of transparency can be red flags.

Where to find initial coin offerings?

Keeping track of new coin launches in the dynamic world of cryptocurrencies can be a challenging task, but with the right tools and resources, you can stay up-to-date.

Various cryptocurrency exchanges like Coinbase, Gemini, and Kraken often list new tokens and provide updates about upcoming launches on their platforms.

Crypto market data aggregators such as CoinGecko and CoinMarketCap serve as comprehensive resources for information about new coin listings.

Remember, investing in ICOs involves risk. The suggestions are not investment advice, but merely resources to monitor. Always conduct thorough research and due diligence before investing in any ICOs.

Tips for successful participation in ICOs

Participating in an ICO can be an exciting and potentially lucrative opportunity, but it's important to approach it with caution and follow some best practices. Here are some tips for successful participation in ICOs:

Conduct thorough research: Read the project's whitepaper, evaluate its team and advisors, and assess its market potential before making any investment decisions.
Diversify your investments: Spread your investments across multiple ICOs to mitigate risk. Avoid putting all your eggs in one basket.
Stay informed: Keep up-to-date with the latest news and developments in the cryptocurrency industry. Follow reputable sources and join communities to stay informed about upcoming ICOs and market trends.
Set a budget: Determine how much you are willing to invest in ICOs and stick to your budget. Avoid investing more than you can afford to lose.
Use secure wallets: Store your tokens in secure wallets to protect them from hacks and theft. Consider using hardware wallets for added security.

ICO regulations and legal considerations

With the rise of ICO scams and fraudulent projects, regulatory bodies around the world have started taking action to protect investors and promote transparency in the ICO market.

Countries like the United States, Switzerland, and Singapore have issued guidelines and regulations for ICOs, imposing stricter requirements on projects and enhancing investor protection.

Before participating in an ICO, it's crucial to familiarize yourself with the regulatory landscape in your jurisdiction.

Understand the legal considerations and requirements for both the project and the investors. This will help you make informed decisions and avoid potential legal pitfalls.

Future of ICOs in 2023 and beyond

As we look ahead to 2023 and beyond, the future of ICOs remains uncertain. While ICOs have revolutionized fundraising in the cryptocurrency space, they have also faced criticism and regulatory scrutiny due to the prevalence of scams and fraudulent projects.

In response to these challenges, we can expect to see increased regulation and oversight in the ICO market.

Regulatory bodies around the world are working to establish guidelines and frameworks to protect investors and weed out fraudulent projects.

This regulatory clarity could help to restore confidence in the ICO market and attract more traditional investors.

Furthermore, we may witness the emergence of new fundraising models that address the shortcomings of ICOs.

Security Token Offerings (STOs) and Initial Exchange Offerings (IEOs) are already gaining traction as alternative fundraising methods that offer increased investor protection and compliance with existing regulations.

Frequently Asked Questions

Q1. How are ICOs different from STOs and IEOs?

While ICOs (Initial Coin Offerings), STOs (Security Token Offerings), and IEOs (Initial Exchange Offerings) are all fundraising methods in the crypto space, they differ in their regulatory frameworks and the rights they offer to investors.

Q2. Are all ICOs legal?

The legality of ICOs depends on the regulatory framework of each country. Some countries have banned ICOs, while others have regulated them. It's essential to check the legal status of ICOs in your country before participating.

Q3. What happens to the funds if the ICO doesn't reach its target?

Typically, if an ICO does not reach its funding target, the raised funds are returned to the investors. This process, known as a "refund," is usually outlined in the project's whitepaper.

Q4. How can I participate in an ICO?

To participate in an ICO, you typically need to create an account on the ICO's official website, go through a Know Your Customer (KYC) process, and then send your investment (often in the form of Bitcoin or Ethereum) to a designated address.

Q5. Are ICOs a good investment?

Investing in ICOs can be high-risk, high-reward. While some ICOs have delivered impressive returns, others have led to significant losses. It's crucial to conduct thorough research and consider your risk tolerance before investing in an ICO.

Q6. Can ICOs make you rich?

While it's true that some investors have made substantial profits from successful ICOs, it's essential to understand that investing in ICOs is not a guaranteed way to get rich. Many ICOs fail or are scams. Due diligence and a solid understanding of the project are crucial before investing.

Q7. What's the role of a token in an ICO?

The token issued in an ICO often serves as the utility token for the project's ecosystem. They can represent access rights to a service provided by the project or can be used for transactions within the project's platform.

Q8. How can I spot an ICO scam?

Signs of a potential ICO scam can include unrealistic promises of returns, lack of transparency, an anonymous or inexperienced team, lack of a comprehensive whitepaper, and lack of third-party audits or involvement of recognized crypto exchanges.

Conclusion

ICOs have played a vital role in the growth of the cryptocurrency industry by providing an innovative way to fund new projects.

However, like any investment, they come with their risks. With proper due diligence and cautious judgment, participating in an ICO can be an exciting way to engage with the crypto world.

Keep in mind that this guide is only the start of your ICO journey. Always strive to deepen your understanding, stay informed about industry changes, and make decisions that align with your risk tolerance and investment goals.

Happy investing!

Disclaimer

The information provided on this website does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat any of the website's content as such.

Token Metrics does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.

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Moonshot Tokens in 2025: High-Risk, High-Reward Plays in the Crypto Market

Token Metrics Team

6 min

MIN

Introduction

The crypto market has always been fertile ground for high-risk, high-reward opportunities. While blue-chip assets like Bitcoin and Ethereum dominate headlines, the real thrill — and sometimes the highest returns — often comes from what the industry calls “moonshots.”

These are small-cap tokens, often under $50 million in market cap, with explosive potential and equally high volatility. In 2025, moonshots remain a core part of speculative trading strategies. But what exactly are they? How do you find them? And most importantly, how can you manage the outsized risks they carry?

Let’s dive into the world of moonshots, drawing insights from recent market trends and real-world data.

What Are Moonshot Tokens?

Moonshot tokens are early-stage, low-cap cryptocurrencies that carry massive upside potential. They often represent experimental ideas or emerging narratives — think AI integration, meme culture, or social tokens — that haven’t yet been fully recognized by the broader market.

Because they trade at relatively low valuations, even small inflows of capital can cause outsized price swings. It’s not uncommon for a moonshot to deliver 10x or even 50x gains within a short time. But the flip side is brutal: these same tokens can plummet to zero just as quickly.

Key characteristics of moonshots:

Market cap: Typically under $50 million.
Narrative-driven: Often tied to strong trends like AI, gaming, or DeFi experiments.
Volatility: Sharp, frequent price swings.
Liquidity: Thin order books, making large trades difficult without impacting price.

Why Are Moonshots Gaining Traction in 2025?

The current market environment — with crypto market capitalization hovering around $4 trillion — has created room for risk-taking. Investors who missed early gains on Bitcoin or Ethereum are now searching for the next big thing, leading to renewed interest in small-cap tokens.

Emerging narratives also fuel the fire:

AI-Crypto Fusion: Projects like Sahara AI and Mobi AI are proving that the AI narrative isn’t slowing down.
Social Tokens & Web3 Platforms: Zora’s creator-focused token model demonstrates how social media and crypto can intersect.
Community-First DeFi: Protocols like Blackhole DEX show the power of grassroots tokenomics.

These narratives often spill over into the moonshot arena, as smaller projects attempt to replicate the success of these headline-grabbing platforms.

How to Identify Promising Moonshots

Identifying moonshots is part research, part intuition, and part risk tolerance. Here’s what to look for:

1. Strong Narrative Alignment

The most successful moonshots ride on current narratives. In this cycle, AI agents, decentralized social platforms, and community-owned DeFi projects are leading themes. Projects in these categories often experience rapid hype-driven adoption.

2. On-Chain Data

Tools like Dune Analytics and on-chain scanners can reveal whale accumulation, new liquidity pools, or spikes in active addresses — all early indicators of growing interest.

3. Tokenomics

Evaluate supply schedules:

How many tokens are in circulation?
Are there large unlocks coming soon?
Does the project have mechanisms like buybacks or burns to support price stability?

4. Developer & Investor Backing

While many moonshots are grassroots projects, strong teams or backing from reputable funds (e.g., Polychain, Binance Labs) can boost credibility.

Case Studies: Recent Moonshots to Watch

1. Vine (Meme Token):
A meme coin leveraging the Vine brand, this token has gained traction despite limited documentation. Its appeal lies largely in nostalgia and speculative hype.

2. Moby AI: What started as an AI-driven whale-tracking agent has evolved into Mobi Screener, a Dexscreener competitor with integrated social features. The token model ties platform usage to token value — a promising experiment in utility-driven moonshots.

3. Graphite Protocol:
Developers behind Bonk Fun (a leading meme token platform), Graphite has created a buyback and burn model linked to Bonk’s success, aligning token value directly with ecosystem growth.

4. CookieDAO:
Initially positioned as an AI agent platform, CookieDAO is now expanding into proof-of-belief systems, adding new utilities and campaign features for Web3 projects.

The Risk Side: Why Moonshots Can Go to Zero

Moonshots are inherently speculative. Common pitfalls include:

Team Abandonment or Rug Pulls: Some projects vanish overnight.
Unsustainable Hype: Many moonshots rely on short-term narratives that fade.
Low Liquidity: Thin markets make it difficult to enter or exit without significant slippage.

A recent example is SpaceMesh, once hyped as a “next Bitcoin.” Despite strong tech, internal disputes and poor execution led to a near-total collapse — a stark reminder that good code doesn’t always equal good investment.

Managing Risk: A Practical Approach

If you’re trading moonshots, risk management is everything.

1. Position Sizing:
Never allocate more than 1% of your portfolio to any single moonshot. Spreading capital across multiple small positions reduces the impact of one token collapsing.

2. Diversification:
Balance moonshots with higher-cap tokens to stabilize overall portfolio performance.

3. Predefined Exits:
Set clear take-profit and stop-loss levels before entering a trade. Emotional decisions often lead to losses.

4. Time Your Entries:
Consider entering after initial hype cools but before major announcements or roadmap milestones.

The Future of Moonshots: Are They Worth It?

While moonshots can be risky, they remain an integral part of crypto’s DNA. For many traders, they serve as lottery tickets in a market where early discovery can lead to life-changing gains.

In 2025, moonshots are evolving. They’re no longer just meme-driven gambles. Increasingly, they represent experimental innovation — blending DeFi models, AI integrations, and community governance in ways that push the boundaries of blockchain technology.

Conclusion

Moonshots are not for the faint-hearted. They require research, timing, and above all, discipline. In 2025, with themes like AI-driven platforms, decentralized social networks, and community-focused DeFi reshaping the market, the next breakout token could be hiding in plain sight.

Whether you’re a seasoned trader or a curious newcomer, understanding the dynamics of moonshots — and respecting their risks — is essential for navigating this volatile but potentially rewarding segment of crypto.

Research

DeFi and AI Tokens Dominate as Crypto Market Nears $4 Trillion

Token Metrics Team

6 min

MIN

The cryptocurrency market continues to show resilience, with total market capitalization maintaining a strong foothold near $4 trillion. While Bitcoin remains the cornerstone of this cycle, the spotlight is shifting toward altcoins — especially those at the forefront of decentralized finance (DeFi) and artificial intelligence (AI) integration.

In this blog, we’ll explore the top narratives shaping today’s market, focusing on DeFi protocols like Blackhole DEX and PancakeSwap, alongside emerging AI projects such as Sahara AI and Moby AI.

Why DeFi Is Surging Again

DeFi has staged an impressive comeback in 2025. After a period of stagnation, several protocols have redefined their models to prioritize community engagement and sustainable growth.

Black Hole DEX:
Launched on Avalanche, Blackhole DEX has quickly become the network’s largest decentralized exchange, overtaking Trader Joe. The platform uses a community-first approach: no team allocation, weekly token emissions to liquidity providers, and a bribe-based voting mechanism for rewards distribution.

Impact:
This design has created a powerful flywheel effect. As token prices rise, APYs increase, attracting more liquidity, which in turn boosts trading volume and revenue. Within days, Blackhole DEX grew its TVL from $7 million to $193 million — a staggering feat.

PancakeSwap: A Sleeping Giant?

PancakeSwap, the dominant DEX on Binance Smart Chain (BSC), has been quietly outperforming its competitors in trading volumes and fee generation. Recent data shows PancakeSwap generating more than 4x the daily fees of Uniswap, yet its fully diluted valuation remains significantly lower.

Growth Catalysts:

Integration with the Binance Wallet ecosystem.
Expansion into other ecosystems like Solana.
All-time-high trading volumes despite broader market corrections.

For investors seeking a large-cap DeFi protocol with strong fundamentals and potential upside, PancakeSwap’s metrics warrant attention.

AI Meets Crypto: The Next Frontier

Artificial intelligence continues to transform multiple industries, and crypto is no exception.

Sahara AI:
Sahara AI is building a full-stack AI infrastructure for decentralized applications. Backed by heavyweights like Binance and Polychain, its mission is to bridge Web3 and AI — a theme that’s likely to dominate innovation cycles in the coming years.

Moby AI:
Initially launched as an AI trading agent, Moby AI has expanded into building tools like Moby Screener, a competitor to Dexscreener. Its unique tokenomics link user engagement directly to the platform’s utility, making it an experiment worth watching.

The Broader Altcoin Landscape

Beyond DeFi and AI, other notable projects are also gaining ground:

Graphite Protocol: The developer behind LetsBonk.Fun, sharing revenue with its ecosystem tokens through buyback strategies.

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Zora: A social media-meets-crypto platform allowing creators to monetize their content directly on-chain.

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Project X: A cross-chain DEX on Hyperliquid, amassing $28 million in TVL within 24 hours of launch.

These projects underscore the diversity of innovation happening outside Bitcoin’s shadow.

Risk Management in a Volatile Market

The excitement around DeFi and AI tokens comes with elevated risk. Here are some best practices:

Allocate wisely: Keep high-risk allocations (like low-cap “moonshots”) small — no more than 1% per trade.
Monitor narratives: Rapid shifts in market sentiment can create both opportunities and pitfalls.
Stay updated: Protocol changes, tokenomics adjustments, and ecosystem partnerships can significantly impact valuations.

Conclusion

As the crypto market edges closer to $4 trillion, the narratives driving growth are evolving. DeFi is proving its staying power with innovative models like Black Hole DEX, while AI-focused projects like Sahara AI are pushing the boundaries of what blockchain can achieve.

For market participants, the challenge lies in identifying which of these trends have lasting potential — and positioning themselves accordingly.

Research

Altcoins on the Rise: How Bitcoin’s Stability Is Fueling the Next Market Wave

Token Metrics Team

6 min

MIN

As Bitcoin stabilizes near its recent highs, the crypto market is witnessing a familiar pattern — altcoins are beginning to surge. While Bitcoin often leads during the early phases of a bullish cycle, history shows that capital tends to flow into altcoins as confidence builds. In the past two weeks, this transition has become increasingly evident, with several promising projects capturing significant market attention.

Bitcoin’s Stabilization and What It Means

Since early July, Bitcoin has managed to hold above key resistance levels, cementing its role as the market’s anchor. At the time of writing, total crypto market capitalization hovers near $4 trillion — a level that hasn’t been seen since the previous cycle’s peaks. Historically, when Bitcoin consolidates above its former highs, capital begins rotating into altcoins. This shift often marks the start of a broader rally across the market.

Key takeaway: The current market appears to be in the early stages of this altcoin rotation.

Altcoins Leading the Charge

Several altcoins have emerged as strong contenders in recent weeks.

1. Zora: The Social Token Platform
Zora, an on-chain social platform that allows creators to tokenize posts and earn from their content, has seen exponential growth following its integration into the Base App (Coinbase’s rebranded wallet). Creator activity and transaction volumes have surged, driving up demand for the Zora token. With each creator post paired to the Zora token, this integration has created a direct link between platform usage and token utility.

Why it matters: The combination of Web3 social media and creator monetization is a powerful narrative, and Zora appears well-positioned to capitalize on this trend.

2. Spark: A MakerDAO-Connected Lending Platform
Spark, a DeFi lending protocol linked to Sky Protocol, has also been a standout performer. It recently experienced a sharp increase in liquidity and price action, fueled by its integration with CookieDAO’s campaign and ongoing airdrop programs.

Why it matters: With DeFi gaining renewed interest, protocols offering sustainable yields through established ecosystems like Sky Protocol (formerly MakerDAO) are likely to remain attractive to both retail and institutional participants.

3. Sahara AI: Building the AI-Crypto Intersection
Sahara AI has positioned itself at the intersection of AI and blockchain. Backed by Binance, Polychain, and Foresight Ventures, this project offers a full-stack AI solution tailored for decentralized applications. Its long-term vision of creating AI-enabled Web3 services is attracting both developers and investors.

Why it matters: AI and crypto remain two of the most dominant narratives in tech, and projects combining these sectors could drive the next wave of innovation.

4. PancakeSwap: Undervalued Giant?
Despite being one of the largest DEXs by trading volume and daily fee generation, PancakeSwap appears significantly undervalued compared to peers like Uniswap. The platform recently expanded its operations to other chains, including Solana, and benefits from strong integration with the Binance Wallet ecosystem.

Why it matters: Fundamentals suggest PancakeSwap has room for growth if the market re-rates its value relative to competitors.

Market Themes to Watch

Bitcoin vs. Altcoin Season:
Our analysis shows we are still in a Bitcoin-dominant phase. Historically, altcoins outperform when Bitcoin consolidates or cools off. This implies that the current rotation into altcoins could continue as capital flows down the risk curve.

DeFi Revival:
Protocols like Blackhole DEX on Avalanche — which has grown its TVL from $7 million to $193 million in less than 2 weeks — highlight a renewed interest in decentralized finance. Unlike VC-backed models, Blackhole’s community-first tokenomics have resonated with users seeking fairer distribution.

Social Tokens & AI Integration:
Platforms like Zora and Sahara AI are tapping into major growth narratives: decentralized social media and artificial intelligence. Both sectors are likely to see continued experimentation and adoption.

Managing Risk in Altcoin Investing

While the upside potential in altcoins is high, so is the volatility. For high-risk trades, such as “moonshots” (low-cap tokens under $50 million market cap), we recommend:

Position sizing: Limit exposure to 1% per trade.
Diversification: Spread investments across multiple projects to reduce single-token risk.
Exit planning: Pre-define take-profit and stop-loss levels.

Conclusion

The crypto market is entering an exciting phase. Bitcoin’s consolidation above key levels suggests a healthy backdrop for risk assets, and altcoins are beginning to benefit. From creator monetization platforms like Zora to cross-chain DeFi protocols like Spark and Black Hole, this new wave of projects represents the diversity and innovation driving the next cycle.

As always, measured participation and disciplined risk management remain essential.

Token Metrics Media LLC is a regular publication of information, analysis, and commentary focused especially on blockchain technology and business, cryptocurrency, blockchain-based tokens, market trends, and trading strategies.

Token Metrics Media LLC does not provide individually tailored investment advice and does not take a subscriber’s or anyone’s personal circumstances into consideration when discussing investments; nor is Token Metrics Advisers LLC registered as an investment adviser or broker-dealer in any jurisdiction.

Information contained herein is not an offer or solicitation to buy, hold, or sell any security. The Token Metrics team has advised and invested in many blockchain companies. A complete list of their advisory roles and current holdings can be viewed here: https://tokenmetrics.com/disclosures.html/

Token Metrics Media LLC relies on information from various sources believed to be reliable, including clients and third parties, but cannot guarantee the accuracy and completeness of that information. Additionally, Token Metrics Media LLC does not provide tax advice, and investors are encouraged to consult with their personal tax advisors.

All investing involves risk, including the possible loss of money you invest, and past performance does not guarantee future performance. Ratings and price predictions are provided for informational and illustrative purposes, and may not reflect actual future performance.

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