Prologue: Reflections Through Cycles
In the sixteenth year since the birth of cryptocurrency, standing at this special time point and looking back, each iteration of the value distribution mechanism acts like a mirror, reflecting the game between human nature and technology, the collision between ideals and reality. This is a story of evolution, and also a story of awakening.
Chapter One: The Revelation of Bitcoin
The Revolution in the Garage
In the winter of 2009, when Bitcoin was quietly born, the world was shrouded in the shadow of the financial crisis. The phrase in the genesis block: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks", is not only a complaint against the old order but also a call for a new world.
In the early days, the mining mechanism of Bitcoin was so pure and elegant. A regular home computer and a simple software program could participate in this revolutionary experiment. Every 10 minutes, the entire network witnessed the birth of a block, witnessing a completely decentralized value distribution. At that time, the Bitcoin community was full of idealism, and people believed they were creating a more fair and free financial world.
The Logic of Capital
However, the market never divides boundaries by ideology. With the soaring value of Bitcoin, an evolution destined to change the industry landscape quietly unfolded. The emergence of GPU mining led the computational power competition into its first professional stage. Former individual miners began to form mining pools, using collective strength to counter the growing network difficulty.
But this is just the beginning. The advent of ASIC miners completely changed the rules of the game. Bitcoin mining has since embarked on an industrialized path. The mining farms located in remote mountain areas, the cooling fans running 24/7, and the meticulously designed power supply facilities all tell a cruel reality: in the face of efficiency, idealism will ultimately yield to economic laws.
SYNBO: The Evolutionary Path of Crypto Asset Distribution - From ICO to CCO
SYNBO: The Evolutionary Path of Crypto Asset Distribution - From ICO to CCO
Prologue: Reflections Through Cycles
In the sixteenth year since the birth of cryptocurrency, standing at this special time point and looking back, each iteration of the value distribution mechanism acts like a mirror, reflecting the game between human nature and technology, the collision between ideals and reality. This is a story of evolution, and also a story of awakening.
Chapter One: The Revelation of Bitcoin
The Revolution in the Garage
In the winter of 2009, when Bitcoin was quietly born, the world was shrouded in the shadow of the financial crisis. The phrase in the genesis block: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks", is not only a complaint against the old order but also a call for a new world.
In the early days, the mining mechanism of Bitcoin was so pure and elegant. A regular home computer and a simple software program could participate in this revolutionary experiment. Every 10 minutes, the entire network witnessed the birth of a block, witnessing a completely decentralized value distribution. At that time, the Bitcoin community was full of idealism, and people believed they were creating a more fair and free financial world.
The Logic of Capital
However, the market never divides boundaries by ideology. With the soaring value of Bitcoin, an evolution destined to change the industry landscape quietly unfolded. The emergence of GPU mining led the computational power competition into its first professional stage. Former individual miners began to form mining pools, using collective strength to counter the growing network difficulty.
But this is just the beginning. The advent of ASIC miners completely changed the rules of the game. Bitcoin mining has since embarked on an industrialized path. The mining farms located in remote mountain areas, the cooling fans running 24/7, and the meticulously designed power supply facilities all tell a cruel reality: in the face of efficiency, idealism will ultimately yield to economic laws.
Cambrian Explosion
Between 2016 and 2017, cryptocurrency mining experienced an unprecedented industrial revolution. Large mining enterprises rose, professional divisions formed, and a complete industrial chain from chip design to mining operation was established. Those geeks who once ran mining machines in dormitories or garages either transitioned into practitioners of this emerging industry or quietly retreated to the background, becoming witnesses of history.
The Shackles Finally Show
As the scale of the industry expands, the issue of energy consumption has become increasingly prominent. Some studies show that the annual electricity consumption of the Bitcoin network has exceeded that of some medium-sized countries. Environmental pressure and regulatory pressure followed closely. Bitcoin miners in 2024 had to search globally for clean energy bases, leading to a new migration.
Chapter Two: The Curtain Falls on the ICO Carnival
The Dawn of a New Era
In the summer of 2017, the crypto world witnessed an unprecedented transformation. Ethereum made token issuance so simple through the widespread application of the ERC20 standard. A clever developer only needed a few lines of code to create their own 'digital currency'. This extreme convenience opened a Pandora's box.
It was a dazzling era. Dozens of new projects were born every day, with white papers filled with exciting visions: some aimed to reconstruct social networks using blockchain, some sought to innovate the sharing economy, and even projects claimed to transform the entire healthcare system with tokens. These grand blueprints attracted the attention of global investors.
The Carnival of Wealth Effect
Digital records show that during the peak period of 2017, the monthly ICO financing amount exceeded $3 billion. Some popular project tokens could achieve dozens or even hundreds of times increase on the first day of listing. This crazy wealth effect attracted countless people. The number of new user registrations on cryptocurrency exchanges soared exponentially, with some exchanges having to pause new user registrations to maintain system stability.
Project teams also tasted the sweetness in this carnival. A typical ICO project can take only two weeks from writing the white paper to deploying the smart contract and issuing tokens. The financing amount ranges from millions to over a hundred million dollars, and all is cash or cryptocurrency that does not require collateral. This unprecedented financing convenience makes the traditional VC model seem cumbersome.
Innovator's Paradise
Under the bubble, a number of genuine innovations did emerge. Uniswap's automated market maker mechanism, Compound's lending protocol, and Aave's flash loans are all innovations that have become standard in DeFi today, all traceable back to the embryonic stage of the ICO era. Token economics evolved from a vague concept into a rigorous discipline, attracting researchers from traditional finance and economics.
It is particularly worth mentioning the practice of the concept of DAO (Decentralized Autonomous Organization). Although the first project, The DAO, ended in tragedy, it pioneeringly showcased a whole new form of organization. In this form, rules are defined by code, decisions are made collectively by token holders, and the entire ecosystem achieves true autonomy. This concept profoundly influenced the design of subsequent crypto projects.
Chaos and Collapse
However, beneath the glamorous surface, a crisis was brewing. Statistics show that over 80% of ICO projects issued in 2017 fell silent within a year. Some projects even vanished after completing fundraising, causing heavy losses to investors. Some projects, under the guise of blockchain, engaged in Ponzi schemes, ultimately leading to large-scale financial fraud.
This chaos alerted regulatory authorities. In September 2017, China took the lead in halting ICO activities. Following closely, the U.S. SEC began investigating multiple ICO projects, with some being deemed unregistered securities. The regulatory hammer fell, plunging the entire industry into a winter.
IDO and IEO: Self-Rescue and Predicament
Finding a Way Out: New Attempts by Exchanges
In 2019, the crypto market was in a state of confusion after the ICO bubble burst. Binance took the lead in launching the IEO model, providing financing channels for selected projects through the Launchpad platform. This model was quickly imitated by other mainstream exchanges: Huobi Prime, OKEx Jumpstart, and FTX Pad followed suit. Exchanges began to play the role of traditional investment banks, endorsing projects while also taking on the responsibility of due diligence.
The IEO model did achieve significant results in the short term. The average return rate of the first batch of IEO projects exceeded 10 times, and the success of projects like BitTorrent and Matic Network (now Polygon) further endorsed this model. Project teams also benefited from it: not only did they obtain financing, but they also quickly established market recognition with the influence of exchanges.
New Decentralized Attempts
At the same time, with the rise of decentralized exchanges like Uniswap, IDO emerged as a more decentralized financing method. This model attempts to achieve fully automated token issuance through smart contracts and liquidity pools. Platforms like PancakeSwap and SushiSwap have launched their own IDO launchpads, becoming a major financing channel for small projects.
The Emergence of New Problems
However, these two models quickly exposed their respective limitations.
The problem with IEO is:
* Listing fees often exceed hundreds of thousands of dollars, far exceeding the budgets of most early projects.
* The project screening by exchanges is often too conservative, making it hard for innovative projects to find opportunities.
* 'Star exchanges' monopolize quality projects, exacerbating the Matthew effect.
* Project valuations are often controlled by exchanges, lacking a market-oriented pricing mechanism.
* KYC requirements have raised the participation threshold for retail investors.
IDO faces another set of dilemmas:
* 'Bots' run rampant, and ordinary users have almost no fair chance to participate.
* The phenomenon of sharp rises and falls on the first day is common, with a strong speculative atmosphere.
* There is a lack of effective project screening mechanisms, leading to an influx of inferior projects.
* The liquidity issue has never been effectively resolved.
* The pricing mechanism is too simplistic and easily manipulated by capital.
Deep-seated Dilemmas
By 2023, the limitations of these two models have further emerged. Data shows that the average fundraising amount of IEO projects has dropped from several million dollars in 2019 to less than $500,000, while the 30-day survival rate for IDO projects is as low as 40%. This reflects the deep contradictions in the industry between efficiency, fairness, and regulation.
A typical case is the IDO project of a well-known public chain in 2023. On the first day of issuance, over 80% of the tokens were snatched up by a few addresses within milliseconds, leaving ordinary users with no chance to participate. In another highly anticipated IEO project, the fees charged by the exchange accounted for 35% of the total fundraising amount, and this high 'listing cost' nearly stifled the project's development potential.
Industry Reflections
These issues have prompted the industry to start deep reflections: between decentralization and efficiency, is it really a choice of only one or the other? When we try to solve complex valuation and distribution issues with centralized exchanges or simple smart contracts, do we overlook more fundamental innovation possibilities?
What the market evidently needs is not simply to oscillate between centralization and decentralization, but a new paradigm that can truly address the triple dilemma of efficiency, fairness, and innovation. This thinking laid the groundwork for the emergence of the CCO mechanism.
Reflections on an Era
The rise and fall of the ICO era left profound lessons for the crypto industry. It proved that blockchain technology can indeed greatly enhance financing efficiency but also exposed the deep contradictions between decentralization and regulation. When an innovation breaks through existing regulatory frameworks, finding a balance between freedom and order becomes a subject that the entire industry must face.
The end of this carnival also heralded the beginning of maturity in the crypto industry. People realized that true innovation cannot rely solely on conceptual packaging, but must be built on solid technological accumulation and real application scenarios. This awakening laid the groundwork for the later arrival of the VC era.
