Layer One: Can ICOs make a comeback in 2026?

Welcome to Layer One: the newsletter and podcast on the intersection of crypto and the real world. Hosted by Steven Gates and Kelvin Sparks, Layer One brings you inside the conversations driving blockchain forward.

This week in the Layer One newsletter, we’re taking stock of the challenges facing retail fundraising in crypto. We’ll take a look at some key performance metrics of project launches in 2025, and ask what needs to happen to recover from a comparatively stagnant year for token sales.

Is there hope for an ICO resurgence in 2026?

This Monday saw the launch of the Monad mainnet and the trading debut of its native token, $MON. Last week, Monad featured as the first token sale on Coinbase’s new ICO platform, aiming to raise $187 million at a $2.5 billion valuation. Overcoming a major lull in contributions following the first few hours, the sale closed oversubscribed with $269 million contributed across 85,000 participants.

Despite the strong finish to the sale, analysts predicting this event would signal a clear revival for Web3 token sales will be left feeling ambivalent. This sentiment was compounded by a slow start to trading earlier this week, which saw $MON suffer a brief drop below the public token sale price of $0.025, before rebounding to $0.048 at time of writing.

While still a success, it’s unlikely that Coinbase’s first foray into regulatory-compliant ICOs will inspire overwhelming confidence for a return to token sale mania. In contrast to prior cycles, the numbers suggest that a similar wave of high-performing launches has largely failed to materialize this time around.

According to data from CryptoRank, only three of the token sale platforms it tracks have achieved a positive ROI over the past year. Centralized exchange-backed launches enjoyed an advantage, with heavyweight Binance leading the pack at +1,515%. Onchain IDO launchpads have fared worse, with just a single tracked platform showing a positive YTD ROI, and half showing a performance of -75% or lower.

This suggests that a majority of new token launches are simply not set up for sustained success. So what exactly is going wrong?

One core issue is a relative drought in altcoin market liquidity. Bitcoin dominance has remained stubborn above 55%, indicating the rotation of capital has not followed the same patterns as in previous cycles. In other words, there’s simply less liquidity to sustain the launch valuations of new tokens. And as Layer One co-host and Hypha founder Steven Gates wrote on X, those valuations themselves are another core problem:

The trend of ‘low float, high FDV’ token launches has left some retail participants frustrated, seeing the value of their allocations collapse while a majority is still locked in vesting. This fuels the narrative that only insiders and institutions profit, while retail gets the short end of the stick. As Gates continued, this trend “deters real builders [...] and instead incentivizes the worst kind of founder.”

Perhaps the main beneficiary of the decline in token sale performance is the ‘degen-friendly’ token launch space, where much of the speculative activity has migrated to. Pump.fun continues to churn out new Solana memecoins at an astounding rate, generating $1 million in daily revenue and looking set to surpass $1 billion lifetime revenue in 2026. Platforms like this have thrived while traditional fundraising has faltered; high-volume, quick-flip speculation has come to define the current crypto crowdfunding zeitgeist.

A realignment of incentives between founders and retail is overdue.

Coinbase’s policies – including priority for small-time investors, allocation penalties for users who dump their tokens, and restrictions on project teams selling tokens OTC – seem designed to directly address these problems. So despite a somewhat slow start, its US-friendly ICOs may yet signal the beginning of a positive paradigm shift.

This comes within the context of a broader easing of hostilities towards crypto under the current US administration, with SEC Chair Paul Atkins leading efforts to establish greater clarity on token designations in the coming years. This will likely give more small- and mid-sized projects the confidence to launch US-based token sales, opening up new wells of retail liquidity for innovators.

The regulatory conditions for new token sales are looking more hospitable than ever. So while recent metrics may paint a bleak picture, zooming out we can see what looks like the beginnings of a move towards a healthier token launch landscape.

Podcast Recap: Is DeFi ready for mass adoption?

In the first episode of Layer One, we invited on VC investors Haseeb Qureshi (Dragonfly) and Sean Lippel (FinTech Collective) to talk high-stakes poker, the challenges facing DeFi adoption, high-profile hacks and more.

Subscribe to Layer One on Youtube, Apple, Spotify or wherever you get your podcasts. 

In the Headlines: The stories driving the conversation this week

• The SEC issued a no-action relief letter to green energy DePIN Fuse in relation to its $ENERGY token. This essentially gives the firm the green light to sell the token, with confidence that it will not be designated as a security by regulators. This is the second such letter issued in recent months, with network infrastructure DePIN DoubleZero receiving a similar assurance this September.
• Infinex outlined its Sonar token sale, a new raise that will let community members buy INX ahead of the January 2026 token generation event. The sale targets $15 million by distributing 5% of supply at a $300 million FDV. Founder Kain Warwick said the round gives broader exposure to what he sees as crypto’s next dominant format, the superapp. The move follows last year’s $67.7 million Patron NFT sale.
• Record Financial is set to launch its next-gen music royalties platform on Avalanche. Record is building a transparent onchain platform for payouts to artists and rights-owners. The company’s CEO Travis Garrett defined their mission as “solving issues that have constrained the industry for generations like delayed payments, missing checks and the lack of ownership clarity”.

Top of the Charts: Mixed fortunes for new L1 coins in 2025

Keep up with the latest in tokenization, DeFi, and institutional adoption by subscribing to Layer One's weekly market insights.

Layer One is brought to you in collaboration with Avalanche.