The last year has been an exciting time in technology, and going into 2018 more and more start-ups are being launched and developed with an ICO – a new, Blockchain-based business paradigm. ICOs allow the simultaneous construction of a user and stakeholder foundation (an ecosystem), based on the issue of a native coin, or token, This token offers utility to the system's users and acts as payment to its service provider.

However, as the new paradigm begins to mature, financial analysts have observed some inherent challenges and some definite risks. One big challenge is the sheer volume of ICOs, which has gone up substantially since the introduction of Ethereum's smart contract protocols, and puts pressure on the Ethereum network. Some of the token sales have not been designed properly, and this also adds to the strain.

This network pressure can result in severe congestion, with a huge number of transactions being verified on the Ethereum network. This in turn can lead to a delay in the distribution of tokens; some examples of extreme price volatility for the native coin, Ether; and very high transaction fees. It can also slow down or stop proper functionality of distributed applications (dapps) on the Ethereum blockchain.

These issues can seriously affect confidence in the ICO market, and can be bad for the reputation of dapps that are otherwise well-designed.