Warren Buffett disclosed last week that his active buying of shares in the well-known internet company VeriSign, which holds the patent for linking domain names to blockchain addresses like Bitcoin, has drawn attention. After Bitcoin surpasses $100,000 at the end of 2024, a new wave of initial coin offerings (ICOs) may erupt in 2025, this time with more traditional corporate capital entering, expecting total capital to reach hundreds of billions of dollars.
Berkshire Hathaway, led by Buffett, disclosed in a Form 4 document submitted to the SEC on Thursday (December 26) that it spent a total of $28.55 million to purchase 143,424 shares of VeriSign Inc. (VRSN) within three trading days ending December 24.
Berkshire's holdings in VeriSign increased to 13,193,349 shares, accounting for 13.7% of the outstanding shares, which are currently valued at approximately $2.67 billion.
The company rose to prominence during the late 1990s internet boom as the preferred registrar for website domain names. Its domain names end with .com, .net, .cc, and .name. Today, as the internet enters the 3.0 era, VeriSign is also laying out new plans, having patented a way to link domain names to blockchain addresses like Bitcoin.
As 2025 approaches, Buffett enters the 'domain name' track; what trends in the ICO 2.0 era are worth following?
Ryan Zurrer, founder of Dialectic Group, recently wrote that in the 2010s, cryptocurrency had not yet established productive use cases for Bitcoin and altcoins until Ethereum smart contracts enabled early teams to raise funds from supporters scattered around the world. The market witnessed Ethereum launch a global decentralized computer, giving rise to decentralized finance (DeFi), non-fungible tokens (NFTs), and various crypto primitives, with funding raised from a global community totaling less than $20 million.
Many other projects quickly followed suit, and we observed a new dynamic where raising early capital from decentralized communities almost always brings more value to projects and entrepreneurs than the best and most well-meaning venture capitalists can provide. Through a decentralized group of investors, entrepreneurs can gain free promoters, beta testers, and code contributors—essentially free labor contributing to the project at hand. Additionally, the shorter liquidity time frame provides early investors with a better risk-return profile.
Unfortunately, ICOs gradually got stifled and were labeled as 'non-compliant' with regulations that were never explicitly defined. By 2020, ICOs had slowed to a trickle, with 88% of ICO tokens trading below their issuance price.
Fast forward to 2025, the market can see some significant investments converging, which reintroduce compelling investment opportunities that are very different from ICO 1.0.
Key Elements of ICO 2.0:
1. Updated Regulatory Stances
Ryan predicts that value accumulation will become a fundamental part of the 'reason' for this investment in tokens. Entrepreneurs and investors in this field have matured and are ready to collectively acknowledge that most tokens have profit expectations. In fact, one might say that the major question that arose initially is how token holders will be compensated to evade the Howey test has been obscured.
Know Your Customer (KYC) and Anti-Money Laundering (AML) mechanisms will focus on entry and exit points such as exchanges and L2 bridges, and will reasonably concentrate on the realization points for returns to fiat currency, which is an appropriate light touch that should be able to satisfy reasonable regulators.
2. Market Volume
The market sees certain mid-sized companies rapidly declining, which could reshape their business models through community-led and decentralized approaches. For example, mid-sized media companies, including newspapers and magazines, represent a clear business model that could leverage token economies to professionalize citizen journalism, significantly improving their business model.
3. Development of Cryptocurrency
In 2017, the market held ICO click competitions on very rough UI/UX interfaces; before the launch, the Simple Agreement for Future Tokens (SAFT) rounds attracted only a handful of venture capital firms and had to wait years to launch a live network. Therefore, it is not surprising that most ICO projects faltered. The Darwinian nature of any emerging technology is such that most will perish, but a few surviving technologies will continue to create immense value.
Cryptocurrency now has decent entry-level and user-facing applications, and most importantly, the community has demonstrated an astonishing ability to publicly condemn nonsense and root out bad actors, which is far better than government oversight. The brilliance of an open decentralized ledger is a particularly powerful disinfectant.
Insights and Predictions
Ryan mentioned that this wave of ICO 2.0 decentralized capital formation will dwarf the approximately $20 billion capital allocated in the 2017 and 2018 ICO 1.0 periods. In the coming years, investors will see total capital formation in DeFi, NFTs, real-world asset tokenization (RWA), and many other crypto primitives reach hundreds of billions of dollars.
M&A activity will become an important part of on-chain capital formation activities, whether traditional companies seriously embrace cryptocurrency and acquire lost ground, like the Stripe-Bridge deal, or EVM L2s coming together as they realize that only a few companies will survive and play significant roles, the market will see M&A activity worth billions of dollars in the coming year.
Moreover, mid-market Web2 and traditional companies are now able to use token incentives in a more moderate environment, which will lead them to seek to reshape their business models. The market has seen companies in the energy, media, art, and cellular communications sectors begin to seriously consider token incentives to transform their value chains into open markets, quickly attracting customers and leveraging cheap labor.
Ryan is also optimistic that regenerative finance will find its place, combining the mission of capitalism with the mission of charity. I am very excited to see that cryptocurrency can change the paradigm in a more compelling way than seen so far, linking reasonable capital returns with social goals.
"I predict we will see new ways for ICO participants to choose, whether as rewards for LPs, relying on reputation based on on-chain activity, or using certain proofs. The byproduct of this will be a better balance between retail investors and institutional/venture capital investors," he added.
Finally, like cryptocurrency, the market will continue to see constant innovation and new ideas, leading to more early funding opportunities. Many exciting new teams clearly see that the natural trading medium for artificial intelligence (AI) will be through cryptocurrency and are preparing for it. AI agents will use token-supported financing mechanisms that blend debt and equity principles to guide themselves.
Ryan summarizes: "Overall, I am optimistic that the crypto community has absorbed the lessons learned so far on the relentless path of evolution. With a range of capital allocation opportunities emerging next year, I encourage everyone in the crypto industry to be outspoken, highlighting the danger signals of due diligence, and steer the development of this industry towards open access, fair launches, and projects that create value for token holders."
"Fair launches are a better way forward, and we should all strive for more equitable and transparent fundraising practices. As we move forward, there are still many issues to address, and some astonishing failures will occur, but decentralized capital formation is the original killer application of cryptocurrency, and it deserves to continue to evolve."