Evolution of Encryption Asset Issuance: Analysis of Financing Models in 2025

Since the creation of the Bitcoin genesis block in 2009, the cryptocurrency financing ecosystem has undergone rapid evolution. As blockchain projects explore new ways of raising capital, various token issuance mechanisms have emerged, each influenced by market conditions, technological advancements, and regulatory adaptations.

Development History of Token Issuance Mechanism

initial coin issuance (ICO)

ICOs experienced explosive growth from 2016 to 2018. Ethereum was one of the early success stories, raising about $18 million in 2014 through a public sale at a price of $0.35 per ETH. ICOs peaked in 2018, raising a total of over $6 billion. However, investor protection was inadequate, with a fraud rate exceeding 80%, and only about 44% of ICO projects remained active three months after issuance.

Initial Exchange Issuance (IEO)

To address the chaos of ICOs, IEOs emerged around 2019, introducing a more regulated structure through centralized exchanges. These platforms conduct token reviews and compliance checks, resulting in a project survival rate of about 70-80% and a significant reduction in the fraud rate to around 5-10%. However, the listing fees, KYC requirements, and centralized control bring limitations.

Security Token Offering (STO)

STOs introduce a regulated representation of traditional financial instruments on the blockchain. STOs have the highest survival rate (85-95%), but remain niche due to complex legal structures, longer activity durations, and limited secondary market infrastructure.

The Rise of IDO and the New Era of Permissionless Issuance

The Initial Decentralized Exchange Offering (IDO) marks a significant shift towards fully decentralized financing. Some platforms support instant token issuance and liquidity acquisition without the high listing fees. However, this convenience comes with higher volatility and scam rates (estimated at around 10-20%).

promoting the IDO platform

• A certain DEX: adopts a Dutch auction mechanism for token listing. The project applies to deploy the native HIP-1 token, participating in a 31-hour Dutch auction, with the token deployment fee linearly decreasing from the initial price to 10,000 USDC.

• Another platform: Simplifies the issuance and trading of meme coins on the Solana blockchain. Users can easily and cost-effectively issue tokens, attracting investors looking to capitalize on the viral token trend. However, the ease of token creation has led to a surge in low-quality projects.

Comparison between IEO and IDO

IEOs and IDOs provide projects with distinctly different financing avenues, each with its unique advantages and challenges. IEOs offer a structured environment under the supervision of exchanges, enhancing investor confidence, but come with higher costs and limited participation. The due diligence by exchanges can lead to more effective pricing and reduced investment risks. In contrast, IDOs lack formal regulation and are numerous, resulting in lower market efficiency and increased volatility.

Future Outlook: Hybrid Issuance Model and Regulatory Changes

The issuance mechanism is not only a technical tool but also shapes capital allocation, investor participation, and narrative formation. The future lies in a hybrid model that combines on-chain liquidity with off-chain regulatory compliance.

Emerging platforms use a Dutch auction mechanism to achieve price discovery while maintaining structure. Simplified meme coin issuance platforms are riding the wave of viral spread, but there is a risk of market saturation. These two models reflect the market's desire for experimentation.

At the same time, the policies of the United States and the European Union are creating a clearer framework for token issuance. In the United States, the upcoming stablecoin framework and broader regulatory clarity may affect the compliance of IDO platforms. In the European Union, MiCA (Markets in Crypto-Assets Regulation) sets a precedent for the licensing of crypto assets, which could push projects towards a regulatory-friendly structure.

Conclusion: Efficiency, Compliance and Community

By 2025, IDOs may still be the preferred choice for small, community-driven issuances, while IEOs and STOs will cater to more institutionally-oriented projects. What we are witnessing is not a competition of financing forms, but an evolution towards issuance strategies that balance accessibility, compliance, and investor protection. As platforms mature and regulations solidify, hybrid issuance frameworks will define the next era of encryption capital formation.