Community sales are the future of crypto fundraising

Community Sales: A New Fundraising Model for Web3 Projects

The world of crypto fundraising is evolving, and a new model called “Community Sales” is emerging as a promising alternative to traditional methods. This approach aims to democratize investment opportunities and align with the core values of the crypto space, such as transparency and inclusivity. As reported by Darius Moukhtarzadeh, Research Strategist at 21Shares, Community Sales could be the key to sustainable success for Web3 projects.

The Evolution from ICOs

Remember the ICO (Initial Coin Offering) boom of 2016-2017? While ICOs initially promised broad retail participation, the lack of regulation led to fraud and market manipulation. This ultimately pushed projects towards private funding rounds, accessible only to angel investors and venture capitalists.

The Problems with Private Funding

Private funding, while bringing stability, introduced its own set of issues. Many tokens launched with excessively high valuations and low circulating supply, leaving retail investors vulnerable to devaluation and damaged trust. This discouraged investment in new projects and weakened community building.

Airdrops: An Unsustainable Alternative

Airdrops, designed to distribute tokens widely, often failed to create meaningful engagement. They became targets for Sybil attacks and “airdrop mercenaries” who quickly dumped tokens, depressing prices and undermining project credibility. Without genuine financial commitment, recipients had little incentive to hold tokens or actively participate in the community.

Community Sales: A Promising Solution

Community sales offer a structured way to engage retail investors meaningfully and transparently. Platforms like Legion and Echo feature robust regulatory frameworks, including KYC (Know Your Customer) and AML (Anti-Money Laundering) processes. These sales require participants to make real capital commitments, fostering genuine stakeholder interest and reducing short-term speculation.

Democratizing Access to Investment

One of the biggest advantages of community sales is that they democratize access to investment. Investors can participate under equitable terms, sometimes even better than those offered to venture capitalists. With minimum investments often as low as $100, community sales encourage broad participation and build a committed investor base. Investors who financially commit are more likely to become long-term holders and active community members.

Benefits for Projects and the Crypto Market

For Web3 projects, community sales offer benefits beyond immediate capital raising. Early community involvement leads to a more distributed investor base, reducing concentration risk. Projects with broadly distributed tokens tend to exhibit more stable prices and higher community activity.

Community sales also enhance a project’s market reputation, signaling a commitment to collaboration and community involvement. This transparency builds grassroots support, drives organic growth, and creates a loyal community base. The broader crypto market benefits from this shift, as transparent and inclusive fundraising attracts more stable investor bases, reduces volatility, and restores investor confidence. This is especially relevant as discussions around crypto regulation continue to evolve.

Conclusion

Community sales represent a mature approach to crypto fundraising, combining early crypto ideals with today’s regulatory clarity and technological possibilities. Projects committed to community sales position themselves for initial fundraising success, market resilience, and community loyalty. The crypto ecosystem, founded on principles of decentralization and inclusivity, should embrace this model to fulfill its potential. This new model may be a game changer for projects looking to launch new coins like Bitcoin or Ethereum forks.

Source: Cointelegraph