The end of the IPO: premarkets and permissionless capital formation

From Wall Street to Web3

For over a hundred years, the Initial Public Offering (IPO) has been fundamental to corporate finance. To access public markets, companies historically had to traverse a maze of regulatory paperwork, roadshows, underwriters, and institutional investors. This process not only established which firms could tap into the immense reservoirs of global capital but also bolstered the role of Wall Street banks as key gatekeepers. However, in the digital era, this model is revealing its obsolescence.

The emergence of decentralized finance (DeFi) and blockchain-driven capital formation questions the traditional concept of the IPO. Business owners no longer have to wait for regulatory consent, optimal market conditions, or underwriter endorsement to secure financing. Rather, they can release tokens straight to worldwide audiences in unrestricted markets. These innovative tools, be it via Initial Coin Offerings (ICOs), token presales, or liquidity bootstrapping pools, allow projects to gather funds with unmatched pace and accessibility. The conclusion of the IPO signifies not the demise of capital markets, but their transformation into digital-first, borderless systems.

The emergence of premarkets

A major innovation challenging the IPO model is the emergence of premarkets: platforms where tokens are exchanged prior to a project’s official debut. These platforms, typically situated on decentralized exchanges or dedicated launchpads, enable investors to guess on price discovery prior to the underlying protocol being operational. In contrast to conventional pre-IPO placements restricted to insiders and accredited investors, crypto premarkets are accessible to anyone who has an internet connection and a wallet.

This democratization reverses the previous hierarchy. During the IPO period, insiders secured the majority of the benefits via favored allocations, while retail investors had to come in at elevated prices. In permissionless premarkets, retail participants can join from the start, taking part in price discovery alongside institutional investors. The visibility of on-chain order books and liquidity pools guarantees that market dynamics are accessible to everyone, rather than concealed in confidential agreements or clandestine arrangements.

Permissionless capital formation

At the heart of this upheaval lies unrestricted capital creation. Blockchains such as Ethereum, Solana, and Avalanche offer the foundation for projects to introduce tokens worldwide without intermediaries. Liquidity bootstrapping pools on platforms like Balancer or Copper eliminate the requirement for underwriters, enabling projects to establish their own launch conditions. In the meantime, token standards guarantee interoperability, simplifying capital formation to the level of deploying a smart contract.

The consequences are significant. Startups can now raise capital without needing to be profitable or fully developed first. Teams in their early stages can access worldwide liquidity within weeks of starting up. Communities can support protocols financially, ensuring that incentives for users and developers match from the beginning. This stands in stark contrast to IPOs, where businesses usually become public following several years of private funding rounds, and only afterward can retail investors participate

Risks and volatility

However, permissionless markets have their shortcomings. The absence of gatekeepers also results in a deficiency of safeguards. The ICOs of 2017 showed how speculation can overshadow fundamentals, resulting in bubbles and fraud. Despite the advancements in today’s DeFi environment, token launches may still experience issues like liquidity manipulation, front-running bots, or governance takeover. Premarkets, although broadening access, also subject retail investors to severe volatility that most conventional IPO participants do not encounter.

In conventional finance, authorities enforce disclosure mandates, lock-up durations, and auditing responsibilities to reduce risks. In cryptocurrencies, these protections are voluntary and frequently upheld solely by reputation. Although decentralization provides transparency, it also shifts the responsibility for due diligence onto individual investors. The transition from institutional control to individual accountability represents one of the most important cultural separations between IPOs and token markets.

The hybrid future

Even with these dangers, it is improbable that permissionless capital formation will disappear. Rather, we are observing the emergence of a blended future. Similarly to how IPOs have developed to feature direct listings and SPACs, token markets are progressing towards regulated structures such as security tokens or registered digital offerings. Authorities are trying out regulatory sandboxes, while exchanges are pursuing licenses to facilitate compliant token offerings.

The long-term vision is not one of replacement but coexistence. Traditional IPOs will remain relevant for established firms seeking legitimacy and access to institutional capital. Permissionless token markets, however, will dominate the frontier of innovation, funding protocols, DAOs, and Web3-native businesses. Premarkets will continue to shape early price discovery, while secondary markets will blur the line between traditional equities and digital assets.

Capital markets without borders

Ultimately, the end of the IPO signals not collapse but transformation. Capital markets are no longer confined to national exchanges or controlled by underwriting syndicates. They are becoming borderless, transparent, and programmable. In this world, anyone can participate in funding innovation, and entrepreneurs can raise capital from global communities instead of elite institutions.

This shift is as significant as the invention of the stock exchange itself. Just as 17th-century merchants in Amsterdam created a new financial order with the first joint-stock companies, today’s protocols are building a digital-first order with permissionless capital formation. The end of the IPO is not the end of public markets it is the beginning of a more inclusive, dynamic, and decentralized era of finance.