Transformation of Web3 Enterprise Financing Strategy: Evolution from Token to IPO

Recently, a noteworthy trend has emerged in the Web3 industry: an increasing number of companies are considering raising funds through an Initial Public Offering ( IPO ). This shift signifies that the industry is moving towards a more mature and regulated direction.

From Token Financing to IPO: The Driving Forces of Strategic Transformation

Web3 companies initially tended to adopt token financing models, such as ICOs and IDOs. These methods played an important role in the early development of the industry. However, the drastic fluctuations in token prices and the uncertainty in regulation have made it difficult for institutional investors to effectively participate and achieve investment returns.

In this case, an IPO has become a highly attractive option. Through an IPO, Web3 companies can gain more stable and long-term funding support, actively comply to reduce legal risks, establish a standardized corporate valuation framework, and reach a broader group of investors.

The Strategic Value of IPOs

1. Establish regulatory trust

For Web3 enterprises, an IPO is not only a means of financing but also an important way to showcase compliance efforts. This strategy is particularly important in business areas such as stablecoin issuance and custody services, where trust is highly required.

Taking a well-known stablecoin issuer as an example, the company continuously enhances its credibility by advancing the IPO process, obtaining relevant licenses, and regularly publishing reserve reports. The IPO will enable it to formally establish its credibility through a standardized disclosure framework, laying the foundation for entering a broader traditional market.

2. Breakthrough the limitations of Token financing

The token financing model has some structural issues, such as severe price fluctuations and liquidity management pressure. Large-scale token unlock events often trigger significant market volatility, making it difficult for institutional investors to achieve stable returns. In addition, companies also face the challenge of effectively integrating the token economic model with actual operations.

In contrast, IPOs follow a more standardized process and a clear regulatory framework, which can provide companies with a more stable financing environment.

3. Expand investor coverage

IPO opens the channel for Web3 companies to reach traditional large institutional capital. Many traditional financial institutions, pension funds, and mutual funds are unable to directly invest in cryptocurrencies due to internal compliance policy restrictions, but they can invest in the stocks of companies listed on regulated securities markets. This greatly expands the potential investor base.

4. Flexible Financing Tools

Through an IPO, Web3 companies can not only acquire large-scale capital but also use stocks as a means of payment for mergers and acquisitions, enabling more flexible strategic expansion. After going public, companies can utilize a variety of capital market tools such as new stock issuance, convertible bonds, and rights issues to achieve continuous financing capability.

Outlook of the IPO Market in the Web3 Industry

In the coming years, IPO activity in the Web3 space is expected to increase significantly. The following types of companies may become the main force behind IPOs:

1. Centralized Exchanges and Custodial Service Providers
2. Stablecoin Issuer
3. Web3 solution providers

These companies can not only obtain funding support through an IPO but also enhance institutional credibility, expand into global markets, and provide resources for technological upgrades and talent acquisition.

Conclusion

The transition of the Web3 industry towards the IPO model marks the industry's alignment with mainstream capital markets. This shift provides new development opportunities for companies, but also brings higher compliance requirements and operational costs.

It is worth noting that IPOs are not suitable for all Web3 companies, and many may adopt a strategy that combines IPOs and Token financing. Companies need to carefully choose the most suitable financing method based on their own business model, development stage, and market strategy.

Overall, this trend reflects that the Web3 industry is moving towards a more mature and standardized development path, which will lay a solid foundation for the long-term healthy development of the industry.