© Reuters. Why DeFi Needs An Equal-Access Funding Mechanism
By Diane Dai
Crowdpooling has become a people-powered engine for expanding the size, scope, ambition, and functionality of the DeFi ecosystem.
Since day one, the ethos of Web3 technology has been all about two things: decentralization and democratization. In its earliest days, crypto offered people a new way to store and send value on their own terms. More recently, decentralized finance (DeFi) has given people opportunities to access a range of financial services offered by autonomous organizations. That said, I believe that one mechanism has contributed more to innovation in cryptocurrency history than any other, and that is token-based crowdfunding.
Token-based fundraising has appeared in many different forms over the years, each promising to democratize the connection between investors and early stage projects. The first of these, Initial Coin Offerings (ICOs), became popular in 2017 and connected unprecedented numbers of investors – and their unprecedented amounts of cash – to new investment opportunities around the world. This form of token-based fundraising had a major effect on the industry, catapulting crypto into the mainstream.
From ICOs to IDOs
After regulatory uncertainty and many instances of abuse tainted the ICO industry, token-based fundraising returned under a few new names and forms. Some of these included Security Token Offerings (STOs), which promised to appease regulators, and Initial Exchange offerings (IEOs), which offered investors some extra layers of due diligence and ease-of-use. Later, Initial DEX Offerings (IDOs) allowed people to launch tokens on decentralized exchanges.
However, as the field of token-based fundraising has continued to evolve, the values of decentralization and democratization that used to be a hallmark of the industry have faded into the background. ICOs, STOs, IEOs, and other forms of token-based fundraising have become increasingly…
