What is ICO? Get to know a new fundraising possibility for your project

Maciej Zieliński

17 Nov 2021
What is ICO? Get to know a new fundraising possibility for your project

Raising capital by your tokens issue - blockchain technology may disrupt fundraising as you know it. Thousands of projects have already raised billions of dollars through ICO. Why might yours be next?

What will you find in the article?

  • What is the intial coin offering?
  • Advatages of ICO
  • How do ICOs work?
  • Launching ICO step by step
  • Different structure models of ICO
  • ICO vs IPO
  • STO vs ICO

Most technology startups have limited options when it comes to fundraising. They can either raise a seed round from private investors, pitch a VC fund, or start a crowdfunding campaign. 

But if your project is blockchain-based, entirely new possibilities emerge, among them, you can find an initial coin offering (ICO). With ICO, you can issue your own utility tokens to be used in the network you want to create. As it grows, the demand for tokens increases, the same as their price, bringing profits to early investors. 

An initial coin offering - ICO is a blockchain industry equivalent of IPO (Initial Public Offering). Find why issuing tokens may be the best way to raise funds for your project.

What is ICO?
What is ICO?

What is the initial coin offering?

Among STO and IDO, initial coin offering is one of the fundraising methods brought to life thanks to Blockchain technology. Essentially, an initial coin offering regards raising funds for a project by issuing new cryptocurrency where new blockchain-based projects mint and sell new tokens in exchange for other digital assets or fiat money. 

Eventually, those token will have a specific utility on the platform built for funds raised during the ICO. For example, they may be exchanged for products or services of the company. In other cases, they become governance tokens that allow investors to vote to shape the project’s future.  

How did it start?

Everything started in 2013 with Mastercoin’s initial coin offering that raised approximately 5 million dollars. The Mastercoin launch was quickly followed by Ethereum. Yes, that’s right - one of the most influential technology projects of this decade was funded via an initial coin offering. During Ethereum's ICO, creators raised 18 million dollars. To this day, Ethereum remains one of the most successful ICOs. 

Yet, those 18 million sounds like nothing, compared to the 4 billion raised by EOS in several rounds during 2018-2019. It was the largest ICO to date. 

Democratization of fundraising 

But initial coin offering (ICO) isn’t all about big projects with enormous capital for fundraising campaigns. Their main advantage over IPO is allowing also smaller startups to arrange a successful funding round. 

Advantages of initial coin offerings 

Advantages of ICO
Advantages of ICO

Speed

Quick access to funding at a seed stage. Conducting an ICO campaign can be a matter of just a few weeks.

Fewer legal requirements

ICOs are far less regulated than any other fundraising method. Hence they require minimal bureaucracy. 

Your project, your equity 

During ICO, you can raise funds without loss of equity.

Community 

Your ICO investors will create a strong community, willing to test and even promote the project.

Liquidity

Global markets, where your tokens will be sold, operate 24/7.

Fundraising without borders

Contrary to a public offering, your tokens will be sold on a global market, which means that the campaign doesn’t have to be restricted to one jurisdiction. Anyone with a crypto wallet can buy them.

How do ICOs work?

Essentially, launching initial coin offerings means issuing your own tokens that will have a specific utility in your project. That’s why they are named Utility Tokens. You can read more about different token types in this article. Contrary to a securities offering, ICO doesn’t grant investors shares of the company. Instead, they distribute tokens with a specific utility in the project that will be built for raised funds.  

To raise money through initial coin offering, startups usually start with creating a white paper. This is a document that describes the project and its goals, providing investors with information that may help them decide whether they want to participate. 

During the ICO process, investors buy tokens with other cryptocurrencies or fiat money. If the funding requirements are met, raised capital will support the creation of the project. If they aren’t, they may be returned to investors. It depends on chosen structure model. 

Different structure models of ICO

Initial coin offerings may be structured in various ways. In some examples, tokens sold during ICO have a fixed price and specified limited supply. In contrast, others limit the supply but leave the token price dynamic, which means that fundraising will depend on the amount of raised funds.

There are also initial coin offerings that set a static price of token and dynamic token supply that depends on the amount of funding received. 

ICO and federal securities laws  

It’s important to note that currently, in the majority of jurisdictions, ICOs remain largely unregulated. This means that they are far less restricted than IPOs or even STOs. 

Essentially, most tokens issued during ICO aren’t treated as securities because they don’t represent any equity in the project. Instead, they have a certain utility in their network. 

How to raise capital via ICO?

In the whole initial coin offering process, the following stages can be distinguished:

Make sure your project needs ICO

A brief disclaimer: not every company qualifies for ICO. And even if it does, there may be better alternatives. 

ICO isn’t a universal solution that will suit every project. Many factors should be taken into consideration before choosing it. 

First of all, initial coin offerings work best for blockchain-based projects. There are many good ICOs out right now; hence the competition for the attention of investors is high. If your project uses unnecessary tokens and doesn’t back them with attractive utility, investors probably won’t be interested in putting their funds into it. 

Yet, the crypto industry offers more solutions that support fundraising. Some of them, as STO, are also suitable for non-blockchain projects.

Get to know the local law

ICOs are a relatively new fundraising solution. Hence many countries still haven’t developed a clear legal framework for them. 

So far, only China and South Korea have banned ICOs. Yet, you have to be aware that in some jurisdictions launching your private ICO will be much easier than in others. You can find more information regarding this issue in our article: The 5 most popular jurisdictions for your company’s tokenization.

Create a distribution plan 

The plan will depend on your primary requirements and assumptions. For instance, there may be different stages of the token sale before you get to the actual initial coin offering. For example, Telegram managed to raise $850 million during the pre-sale only. 

At this stage, you have to decide which of the previously mentioned models you will choose? Is the price going to be stable or rather dynamic? What about the supply? Moreover, you should determine how many of them will be sold at each stage of the token sale. 

Choose the right technology 

This may sound trivial, but the right technology solutions are the backbone of your ICO’s success. There are several universally required technologies, among them blockchain, smart contracts, tokens, and solid back-end and security infrastructure.

When it comes to blockchain, the majority of the companies decide to use established, well-known protocols. In most cases, it’s Ethereum. Launching an ICO on your own blockchain is possible and can sometimes be observed in the industry. Yet, it’s time and cost-consuming. Additionally, for the majority of projects, there is no need to do so. 

White paper

A white paper is a document that describes the project and explains its goals in almost every possible detail. It’s aimed to provide potential investors with the information needed to decide whether they want to participate. This includes:

  • Vision
  • Market analysis
  • Goals
  • Available resources
  • Development strategy
  • Legal frames
  • Details regarding token and its distribution
  • Description of the team 

Not sure how to write a proper white paper? Our consultants will gladly guide you through the whole process. 

Website creation

You need to face that your project will be judged mainly by the content and appearance of its website. It has to contain clear information about your team, aims, and measures to protect investors’ interests. 

Before ICO launch, the website should also feature a token sale landing page. Remember about approachable UX here. 

ICO vs. IPO

The main difference between IPO and ICO lies in equity. During ICO, owners don’t have to give up a part of their equity in exchange for funds, as they do with shares in the case of IPO. Instead, they issue tokens that will have a utility in their project. Therefore, ICO is mainly used for blockchain-based projects.

Because during the ICO no equities are sold, there are fewer restrictions regarding ICOs than IPOs. For example, most ICOs don't fall under securities law. Thus, they require less bureaucracy and are more suitable for seed-stage startups. Furthermore, investing in ICO tokens isn't restricted to accredited investors, as it happens with IPO. 

ICO vs. STO: main differences

There are different types of token offerings out there. One of the most important is the slightly younger STO - security token offering. Here instead of utility tokens, security tokens are issued. This means that their value is backed by real assets - for example, shares in the company or real estate. You can read more about security tokens in this article.

The main advantage of STO is that they are suitable for various projects, not only blockchain-based ones. In this way, you can even tokenize alternative assets, such as cars or precious metals

On the other hand, because tokens represent specific equity, they are treated as securities. And this means far more legal restrictions.

What is ICO? - Conclusion 

Initial coin offerings are an excellent opportunity for seed-stage startups to raise capital for further development. During the past 6 years, billions of dollars have been raised using ICO, funding such projects as Telegram or Ethereum.  At the same time investing in ICO gained tremendous popularity, even outside the crypto community.

Yet as with every solution, they aren’t free from limitations. While from a technology perspective process is getting easier every year, more and more legal restrictions emerge. Furthermore, because of several ICO projects, reaching investors now requires a well-planned marketing strategy. 

Are you interested in launching your own ICO, but you are not sure if your team will manage to fulfill all the requirements? After conducting one of the first tokenizations globally and many other ICOs, we may say that we know the ropes of successful tokenization. Hence, if you have any questions, don’t hesitate to ask.

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AI-Driven Frontend Automation: Elevating Developer Productivity to New Heights

Gracjan Prusik

11 Mar 2025
AI-Driven Frontend Automation: Elevating Developer Productivity to New Heights

AI Revolution in the Frontend Developer's Workshop

In today's world, programming without AI support means giving up a powerful tool that radically increases a developer's productivity and efficiency. For the modern developer, AI in frontend automation is not just a curiosity, but a key tool that enhances productivity. From automatically generating components, to refactoring, and testing – AI tools are fundamentally changing our daily work, allowing us to focus on the creative aspects of programming instead of the tedious task of writing repetitive code. In this article, I will show how these tools are most commonly used to work faster, smarter, and with greater satisfaction.

This post kicks off a series dedicated to the use of AI in frontend automation, where we will analyze and discuss specific tools, techniques, and practical use cases of AI that help developers in their everyday tasks.

AI in Frontend Automation – How It Helps with Code Refactoring

One of the most common uses of AI is improving code quality and finding errors. These tools can analyze code and suggest optimizations. As a result, we will be able to write code much faster and significantly reduce the risk of human error.

How AI Saves Us from Frustrating Bugs

Imagine this situation: you spend hours debugging an application, not understanding why data isn't being fetched. Everything seems correct, the syntax is fine, yet something isn't working. Often, the problem lies in small details that are hard to catch when reviewing the code.

Let’s take a look at an example:

function fetchData() {
    fetch("htts://jsonplaceholder.typicode.com/posts")
      .then((response) => response.json())
      .then((data) => console.log(data))
      .catch((error) => console.error(error));
}

At first glance, the code looks correct. However, upon running it, no data is retrieved. Why? There’s a typo in the URL – "htts" instead of "https." This is a classic example of an error that could cost a developer hours of frustrating debugging.

When we ask AI to refactor this code, not only will we receive a more readable version using newer patterns (async/await), but also – and most importantly – AI will automatically detect and fix the typo in the URL:

async function fetchPosts() {
    try {
      const response = await fetch(
        "https://jsonplaceholder.typicode.com/posts"
      );
      const data = await response.json();
      console.log(data);
    } catch (error) {
      console.error(error);
    }
}

How AI in Frontend Automation Speeds Up UI Creation

One of the most obvious applications of AI in frontend development is generating UI components. Tools like GitHub Copilot, ChatGPT, or Claude can generate component code based on a short description or an image provided to them.

With these tools, we can create complex user interfaces in just a few seconds. Generating a complete, functional UI component often takes less than a minute. Furthermore, the generated code is typically error-free, includes appropriate animations, and is fully responsive, adapting to different screen sizes. It is important to describe exactly what we expect.

Here’s a view generated by Claude after entering the request: “Based on the loaded data, display posts. The page should be responsive. The main colors are: #CCFF89, #151515, and #E4E4E4.”

Generated posts view

AI in Code Analysis and Understanding

AI can analyze existing code and help understand it, which is particularly useful in large, complex projects or code written by someone else.

Example: Generating a summary of a function's behavior

Let’s assume we have a function for processing user data, the workings of which we don’t understand at first glance. AI can analyze the code and generate a readable explanation:

function processUserData(users) {
  return users
    .filter(user => user.isActive) // Checks the `isActive` value for each user and keeps only the objects where `isActive` is true
    .map(user => ({ 
      id: user.id, // Retrieves the `id` value from each user object
      name: `${user.firstName} ${user.lastName}`, // Creates a new string by combining `firstName` and `lastName`
      email: user.email.toLowerCase(), // Converts the email address to lowercase
    }));
}

In this case, AI not only summarizes the code's functionality but also breaks down individual operations into easier-to-understand segments.

AI in Frontend Automation – Translations and Error Detection

Every frontend developer knows that programming isn’t just about creatively building interfaces—it also involves many repetitive, tedious tasks. One of these is implementing translations for multilingual applications (i18n). Adding translations for each key in JSON files and then verifying them can be time-consuming and error-prone.

However, AI can significantly speed up this process. Using ChatGPT, DeepSeek, or Claude allows for automatic generation of translations for the user interface, as well as detecting linguistic and stylistic errors.

Example:

We have a translation file in JSON format:

{
  "welcome_message": "Welcome to our application!",
  "logout_button": "Log out",
  "error_message": "Something went wrong. Please try again later."
}

AI can automatically generate its Polish version:

{
  "welcome_message": "Witaj w naszej aplikacji!",
  "logout_button": "Wyloguj się",
  "error_message": "Coś poszło nie tak. Spróbuj ponownie później."
}

Moreover, AI can detect spelling errors or inconsistencies in translations. For example, if one part of the application uses "Log out" and another says "Exit," AI can suggest unifying the terminology.

This type of automation not only saves time but also minimizes the risk of human errors. And this is just one example – AI also assists in generating documentation, writing tests, and optimizing performance, which we will discuss in upcoming articles.

Summary

Artificial intelligence is transforming the way frontend developers work daily. From generating components and refactoring code to detecting errors, automating testing, and documentation—AI significantly accelerates and streamlines the development process. Without these tools, we would lose a lot of valuable time, which we certainly want to avoid.

In the next parts of this series, we will cover topics such as:

Stay tuned to keep up with the latest insights!

The Ultimate Web3 Backend Guide: Supercharge dApps with APIs

Tomasz Dybowski

04 Mar 2025
The Ultimate Web3 Backend Guide: Supercharge dApps with APIs

Introduction

Web3 backend development is essential for building scalable, efficient and decentralized applications (dApps) on EVM-compatible blockchains like Ethereum, Polygon, and Base. A robust Web3 backend enables off-chain computations, efficient data management and better security, ensuring seamless interaction between smart contracts, databases and frontend applications.

Unlike traditional Web2 applications that rely entirely on centralized servers, Web3 applications aim to minimize reliance on centralized entities. However, full decentralization isn't always possible or practical, especially when it comes to high-performance requirements, user authentication or storing large datasets. A well-structured backend in Web3 ensures that these limitations are addressed, allowing for a seamless user experience while maintaining decentralization where it matters most.

Furthermore, dApps require efficient backend solutions to handle real-time data processing, reduce latency, and provide smooth user interactions. Without a well-integrated backend, users may experience delays in transactions, inconsistencies in data retrieval, and inefficiencies in accessing decentralized services. Consequently, Web3 backend development is a crucial component in ensuring a balance between decentralization, security, and functionality.

This article explores:

  • When and why Web3 dApps need a backend
  • Why not all applications should be fully on-chain
  • Architecture examples of hybrid dApps
  • A comparison between APIs and blockchain-based logic

This post kicks off a Web3 backend development series, where we focus on the technical aspects of implementing Web3 backend solutions for decentralized applications.

Why Do Some Web3 Projects Need a Backend?

Web3 applications seek to achieve decentralization, but real-world constraints often necessitate hybrid architectures that include both on-chain and off-chain components. While decentralized smart contracts provide trustless execution, they come with significant limitations, such as high gas fees, slow transaction finality, and the inability to store large amounts of data. A backend helps address these challenges by handling logic and data management more efficiently while still ensuring that core transactions remain secure and verifiable on-chain.

Moreover, Web3 applications must consider user experience. Fully decentralized applications often struggle with slow transaction speeds, which can negatively impact usability. A hybrid backend allows for pre-processing operations off-chain while committing final results to the blockchain. This ensures that users experience fast and responsive interactions without compromising security and transparency.

While decentralization is a core principle of blockchain technology, many dApps still rely on a Web2-style backend for practical reasons:

1. Performance & Scalability in Web3 Backend Development

  • Smart contracts are expensive to execute and require gas fees for every interaction.
  • Offloading non-essential computations to a backend reduces costs and improves performance.
  • Caching and load balancing mechanisms in traditional backends ensure smooth dApp performance and improve response times for dApp users.
  • Event-driven architectures using tools like Redis or Kafka can help manage asynchronous data processing efficiently.

2. Web3 APIs for Data Storage and Off-Chain Access

  • Storing large amounts of data on-chain is impractical due to high costs.
  • APIs allow dApps to store & fetch off-chain data (e.g. user profiles, transaction history).
  • Decentralized storage solutions like IPFS, Arweave and Filecoin can be used for storing immutable data (e.g. NFT metadata), but a Web2 backend helps with indexing and querying structured data efficiently.

3. Advanced Logic & Data Aggregation in Web3 Backend

  • Some dApps need complex business logic that is inefficient or impossible to implement in a smart contract.
  • Backend APIs allow for data aggregation from multiple sources, including oracles (e.g. Chainlink) and off-chain databases.
  • Middleware solutions like The Graph help in indexing blockchain data efficiently, reducing the need for on-chain computation.

4. User Authentication & Role Management in Web3 dApps

  • Many applications require user logins, permissions or KYC compliance.
  • Blockchain does not natively support session-based authentication, requiring a backend for handling this logic.
  • Tools like Firebase Auth, Auth0 or Web3Auth can be used to integrate seamless authentication for Web3 applications.

5. Cost Optimization with Web3 APIs

  • Every change in a smart contract requires a new audit, costing tens of thousands of dollars.
  • By handling logic off-chain where possible, projects can minimize expensive redeployments.
  • Using layer 2 solutions like Optimism, Arbitrum and zkSync can significantly reduce gas costs.

Web3 Backend Development: Tools and Technologies

A modern Web3 backend integrates multiple tools to handle smart contract interactions, data storage, and security. Understanding these tools is crucial to developing a scalable and efficient backend for dApps. Without the right stack, developers may face inefficiencies, security risks, and scaling challenges that limit the adoption of their Web3 applications.

Unlike traditional backend development, Web3 requires additional considerations, such as decentralized authentication, smart contract integration, and secure data management across both on-chain and off-chain environments.

Here’s an overview of the essential Web3 backend tech stack:

1. API Development for Web3 Backend Services

  • Node.js is the go-to backend runtime good for Web3 applications due to its asynchronous event-driven architecture.
  • NestJS is a framework built on top of Node.js, providing modular architecture and TypeScript support for structured backend development.

2. Smart Contract Interaction Libraries for Web3 Backend

  • Ethers.js and Web3.js are TypeScript/JavaScript libraries used for interacting with Ethereum-compatible blockchains.

3. Database Solutions for Web3 Backend

  • PostgreSQL: Structured database used for storing off-chain transactional data.
  • MongoDB: NoSQL database for flexible schema data storage.
  • Firebase: A set of tools used, among other things, for user authentication.
  • The Graph: Decentralized indexing protocol used to query blockchain data efficiently.

4. Cloud Services and Hosting for Web3 APIs

When It Doesn't Make Sense to Go Fully On-Chain

Decentralization is valuable, but it comes at a cost. Fully on-chain applications suffer from performance limitations, high costs and slow execution speeds. For many use cases, a hybrid Web3 architecture that utilizes a mix of blockchain-based and off-chain components provides a more scalable and cost-effective solution.

In some cases, forcing full decentralization is unnecessary and inefficient. A hybrid Web3 architecture balances decentralization and practicality by allowing non-essential logic and data storage to be handled off-chain while maintaining trustless and verifiable interactions on-chain.

The key challenge when designing a hybrid Web3 backend is ensuring that off-chain computations remain auditable and transparent. This can be achieved through cryptographic proofs, hash commitments and off-chain data attestations that anchor trust into the blockchain while improving efficiency.

For example, Optimistic Rollups and ZK-Rollups allow computations to happen off-chain while only submitting finalized data to Ethereum, reducing fees and increasing throughput. Similarly, state channels enable fast, low-cost transactions that only require occasional settlement on-chain.

A well-balanced Web3 backend architecture ensures that critical dApp functionalities remain decentralized while offloading resource-intensive tasks to off-chain systems. This makes applications cheaper, faster and more user-friendly while still adhering to blockchain's principles of transparency and security.

Example: NFT-based Game with Off-Chain Logic

Imagine a Web3 game where users buy, trade and battle NFT-based characters. While asset ownership should be on-chain, other elements like:

  • Game logic (e.g., matchmaking, leaderboard calculations)
  • User profiles & stats
  • Off-chain notifications

can be handled off-chain to improve speed and cost-effectiveness.

Architecture Diagram

Below is an example diagram showing how a hybrid Web3 application splits responsibilities between backend and blockchain components.

Hybrid Web3 Architecture

Comparing Web3 Backend APIs vs. Blockchain-Based Logic

FeatureWeb3 Backend (API)Blockchain (Smart Contracts)
Change ManagementCan be updated easilyEvery change requires a new contract deployment
CostTraditional hosting feesHigh gas fees + costly audits
Data StorageCan store large datasetsLimited and expensive storage
SecuritySecure but relies on centralized infrastructureFully decentralized & trustless
PerformanceFast response timesLimited by blockchain throughput

Reducing Web3 Costs with AI Smart Contract Audit

One of the biggest pain points in Web3 development is the cost of smart contract audits. Each change to the contract code requires a new audit, often costing tens of thousands of dollars.

To address this issue, Nextrope is developing an AI-powered smart contract auditing tool, which:

  • Reduces audit costs by automating code analysis.
  • Speeds up development cycles by catching vulnerabilities early.
  • Improves security by providing quick feedback.

This AI-powered solution will be a game-changer for the industry, making smart contract development more cost-effective and accessible.

Conclusion

Web3 backend development plays a crucial role in scalable and efficient dApps. While full decentralization is ideal in some cases, many projects benefit from a hybrid architecture, where off-chain components optimize performance, reduce costs and improve user experience.

In future posts in this Web3 backend series, we’ll explore specific implementation details, including:

  • How to design a Web3 API for dApps
  • Best practices for integrating backend services
  • Security challenges and solutions

Stay tuned for the next article in this series!