Web3 ICO Token Platform

Web3 ICO Token Platform

Atharv Chavan

School of Computing MIT ADT University

Nikhil Parnadep

School of Computing MIT ADT University

ABSTRACT

The emergence of Web3 has revolutionized digital fundraising through Initial Coin Oerings (ICOs), enabling decentralized and transparent capital formation without intermediaries. This paper presents the design, implementation, and analysis of a Web3 ICO Token Platform that integrates blockchain-based smart contracts, decentralized identity management, and tokenized asset issuance. Our proposed system aims to provide a secure, automated, and auditable framework for conducting ICOs using Ethereum-compatible smart contracts. The platform supports the creation and distribution of ERC-20 and ERC- 721 tokens, incorporates Know Your Customer (KYC) and Anti-Money Laundering (AML) verification through decentralized identity (DID) protocols, and leverages IPFS for decentralized storage of investor and project metadata. We evaluate the platforms performance across key parameters such as transaction throughput, gas eciency, and security resilience under simulated network conditions. Our results indicate that the integration of optimized smart contract design and decentralized storage significantly enhances transparency, reduces operational costs, and minimizes fraud risks compared to traditional centralized ICO systems. Furthermore, we discuss the regulatory implications, scalability challenges, and best practices for

building compliant and ecient ICO infrastructures in the evolving Web3 ecosystem.

1. INTRODUCTION

   Over the last decade, blockchain technology has transformed the way digital assets are created, exchanged, and secured. One of the earliest large-scale applications of blockchain in the financial domain is the Initial Coin Oering (ICO), a decentralized fundraising mechanism that allows startups to issue blockchain-based tokens to investors in exchange for cryptocurrencies such as Ether or Bitcoin. Unlike traditional venture capital or IPO processes, ICOs leverage smart contracts to automate fund management, ensure transparency, and eliminate intermediaries [1][2].

   However, the early ICO ecosystem suered from multiple challenges including regulatory non-compliance, security vulnerabilities, fraudulent projects, and lack of investor protection [3][4]. As the Web3 paradigm evolved, a new generation of ICO frameworks emerged, integrating decentralized identity verification (DID),

   automated compliance, and on-chain auditing to build trust and accountability [5][6]. This transition represents a shift from speculative token sales toward transparent, programmable, and verifiable tokenized fundraising ecosystems.

   In this paper, we propose a Web3 ICO Token Platform, a fully decentralized system for token issuance and fundraising that operates within a smart contractdriven architecture. The platform is designed to support both fungible (ERC-20) and non-fungible (ERC- 721) token standards, providing flexibility for various investment models and project types. Furthermore, it integrates decentralized KYC/AML verification via Self- Sovereign Identity (SSI) protocols and stores project metadata securely on the InterPlanetary File System (IPFS), ensuring both transparency and immutability of investor and issuer data.

   The core objective of this research is to evaluate the design trade-os, security mechanisms, and performance metrics of a decentralized ICO framework under real- world constraints. To achieve this, we develop and benchmark smart contracts using the Ethereum Virtual Machine (EVM) and Polygon network, analyzing their gas consumption, transaction latency, and throughput eciency under varying workloads. We also examine the impact of network congestion, contract modularity, and oracle-based integrations on overall system performance.

   Our main contributions are as follows:

   1. We design and implement a Web3 ICO Token Platform that integrates decentralized identity verification, secure fundraising

      contracts, and token management within a modular smart contract architecture.

   2. We analyze security vulnerabilities associated with ICO smart contracts including reentrancy, overflow, and phishing attacks and present a set of best practices for contract auditing and on-chain verification.
   3. We benchmark our platforms performance on Ethereum and Polygon test networks, providing quantitative results on transaction throughput, gas eciency, and scalability trade-os.
   4. We discuss the regulatory implications of decentralized fundraising, highlighting how DID integration and KYC enforcement through verifiable credentials can ensure compliance with evolving Web3 regulations.

   The rest of this paper is organized as follows. In Section 2, we review the background and related work on Web3 fundraising, ICO mechanisms, and token standards. Section 3 details the architecture and implementation of the proposed Web3 ICO Token Platform. Section 4 presents experimental setup and performance evaluation. Section 5 discusses the security, scalability, and compliance trade-os. Finally, Section 6 concludes the paper with directions for future research.

   1. BACKGROUND AND RELATED WORK

      In this section, we provide an overview of the evolution of blockchain-based fundraising mechanisms, the role of token standards in decentralized ecosystems, and the technological foundations that support modern Web3 ICO platforms. We also review existing research on decentralized

      fundraising models and identity management frameworks relevant to ICO design and regulation.

      1. Evolution of Blockchain Fundraising

         The concept of decentralized fundraising originated with the advent of Initial Coin Oerings (ICOs), which became prominent between 2016 and 2018. ICOs enable startups to issue cryptographic tokens to investors in exchange for cryptocurrency, primarily Ether (ETH) or Bitcoin (BTC). The ICO mechanism democratized access to venture capital but also led to market instability due to unregulated token issuance, fraudulent projects, and lack of investor transparency [7][8].

         Subsequent to the ICO boom, alternative models such as Security Token Oerings (STOs) and Initial Exchange Oerings (IEOs) emerged to address regulatory and trust challenges. STOs represent digital securities that comply with legal frameworks and investor accreditation standards, while IEOs involve exchanges acting as intermediaries to vet projects and manage token distribution [9][10].

         In recent years, Decentralized Autonomous Organizations (DAOs) have extended this concept by allowing communities to collectively manage token sales and treasury allocations using on-chain governance [11][12]. These advancements mark a paradigm shift from centralized token sales to fully decentralized, governance-driven capital formation in the Web3 economy.

      2. Token Standards and Smart Contract Frameworks

         A fundamental component of any ICO platform is the token smart contract, which defines the tokens supply, transfer logic, and governance mechanisms. The most widely adopted standard is ERC-20, which facilitates fungible token creation and exchangeability across DeFi protocols [13]. For non-fungible assets, the ERC-721 and ERC-1155 standards allow the issuance of unique digital collectibles and hybrid asset classes [14].

         Figure 1: ICO platform

         Several studies have analyzed thesecurity and eciency of token smart contracts. Destefanis et al. [15] evaluated common vulnerabilities such as integer overflow, reentrancy attacks, and unchecked external calls. Similarly, Luu et al. [16] developed Oyente, a symbolic execution tool for detecting contract flaws. These studies emphasize the need for rigorous testing and verification frameworks for ICO smart contracts to ensure investor protection and financial integrity.

         Modern token frameworks are further supported by Layer-2 scaling solutions such as Polygon, Arbitrum, and Optimism, which reduce gas costs and improve throughput. Research by Li et al. [17] shows that o-chain

         computation and rollup-based architectures can enhance ICO eciency by up to 80% compared to base-layer deployments. Consequently, our proposed Web3 ICO Token Platform adopts EVM-compatible, multi-chain architecture to balance scalability and interoperability.

      3. Decentralized Identity (DID) and KYC Compliance

         One of the major criticisms of early ICOs was their non-compliance with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. To address this, Web3 ecosystems are increasingly integrating Decentralized Identity (DID) and Self- Sovereign Identity (SSI) frameworks [18][19]. These models enable users to verify their identity using cryptographic proofs and verifiable credentials without relying on centralized authorities.

         Projects such as Sovrin, uPort, and Polygon ID provide DID infrastructures that can be integrated with ICO smart contracts. Through Zero-Knowledge Proofs (ZKPs), investors can validate their eligibility without revealing personal data on-chain, ensuring both compliance and privacy [20]. Recent research by Al-Bassam et al. [21] demonstrated that blockchain-integrated KYC systems reduce verification overhead while maintaining regulatory auditability.

         In our proposed platform, the KYC verification process is decentralized using DID protocols and linked to the investors wallet through verifiable credentials. The system ensures that only verified participants can contribute to an ICO, thus maintaining compliance with international

         standards such as FATF Travel Rule and EU MiCA regulations.

      4. Related Work on Decentralized Fundraising Platforms

         Existing decentralized fundraising frameworks include both open-source and proprietary solutions.

         Polkastarter, DAO Maker, and Launchpool are among the most widely adopted Web3 launchpads, each employing smart contracts for token sale automation and liquidity provision [22]. Academic studies, such as the work by Ferraro and Bechini [23], analyze these models eciency and highlight how decentralized governance improves token allocation fairness.

         Meanwhile, research by Caporale et al. [24] focuses on the economic sustainability of ICOs, noting that project success is strongly correlated with on-chain transparency and investor trust. Another study by Hsieh et al.

         [25] examined ICO pricing mechanisms and suggested that decentralized governance can reduce information asymmetry.

         Despite these advances, there remains a gap in systematic performance analysis and architecture-level evaluation of ICO platforms in a Web3 context. Existing work primarily focuses on economic modeling or token economics rather than the technical design, throughput optimization, and decentralized compliance mechanisms. Our research aims to fill this gap by providing a comprehensive, performance-oriented evaluation of a decentralized ICO platform built with modular smart contracts, DID integration, and cross-chain interoperability.

      5. Summary

         In summary, the literature on ICO systems covers multiple aspects including token standardization, security vulnerabilities, identity management, and regulatory adaptation. However, few studies combine these domains to develop an end-to-end decentralized platform that ensures both technical eciency and legal compliance.

         In this paper, we extend the existing body of work by implementing a Web3 ICO Token Platform that unifies token issuance, fundraising, and compliance verification within a single, auditable architecture. The following section describes the system design and implementation of this platform in detail.

   2. SYSTEM DESIGN AND ARCHITECTURE

      In this section, we describe the architecture, components, and design principles of the proposed Web3 ICO Token Platform (WITP). The system is developed to provide a decentralized, secure, and transparent environment for conducting Initial Coin Oerings (ICOs) using smart contracts, decentralized identity verification, and tokenized fundraising mechanisms.

      The design emphasizes modularity, interoperability, and compliance, integrating both on-chain and o-chain components to achieve scalability, auditability, and user trust.

      1. System Overview

         The Web3 ICO Token Platform consists of four major layers:

         1. Smart Contract Layer responsible for token creation, fundraising logic, and fund management.
         2. Identity Verification Layer (DID Layer) ensures compliance with KYC/AML regulations using decentralized identity protocols.
         3. Storage and Data Layer (IPFS Integration) handles decentralized storage of project metadata, whitepapers, and compliance proofs.
         4. Frontend and Interaction Layer (DApp Interface) provides a user interface for issuers and investors to interact with the blockchain network securely.

         These components interact through EVM- compatible smart contracts deployed on public blockchain networks such as Ethereum and Polygon, ensuring both interoperability and cost eciency.

         A high-level system architecture is shown below

         Figure 2:- System Architecture

      2. Smart Contract Layer

         The Smart Contract Layer is the core of the system. It automates all fundraising operations and eliminates the need for intermediaries such as exchanges or custodians. The layer is composed of three major contracts.

         1. Token Contract

            This contract defines the tokens standard, supply, and ownership rules. The platform supports both:

            • ERC-20 tokens for fungible fundraising (e.g., utility or governance tokens).
            • ERC-721 tokens for non-fungible allocations (e.g., NFT-based project shares or unique investment assets).

              Each token contract includes methods for mint(), transfer(), and burn() operations, and supports OpenZeppelin security libraries to prevent reentrancy and overflow vulnerabilities [26].

         2. ICO Manager Contract

            The ICO Manager Contract governs the token sale life cycle. It manages:

            • ICO initialization (token address, target funds, duration, price per token)
            • Investor participation (buyTokens() function)
            • Fund withdrawal by the project owner after successful fundraising
            • Refund mechanisms in case the ICO fails to reach its soft cap

              The ICO Manager also integrates a vesting mechanism to lock team or advisor tokens until specific milestones are met, enhancing project credibility [27].

         3. Compliance and KYC Contract

            This contract interacts with the Identity Verification Layer to ensure that only verified investors can participate in the sale. When an investor attempts to contribute, the system checks a verifiedInvestor() mapping stored on-chain, which is updated by the KYC oracle after successful verification. By separating compliance logic into a dedicated contract, the design maintains modularity and allows easy integration with dieret DID systems.

      3. Identity Verification Layer (DID Integration)

         The Identity Verification Layer implements Decentralized Identifiers (DIDs) and Verifiable Credentials (VCs) to establish regulatory compliance while maintaining user privacy. Each investor and issuer holds a DID document stored on a decentralized network (e.g., Polygon ID or ION), containing public keys and verification methods.

         The process flow is as follows:

         1. The user submits KYC details to a trusted verification agent (o-chain).
         2. Upon successful verification, the agent issues a Verifiable Credential (VC) signed cryptographically.
         3. The credential hash is stored on- chain within the KYC contract to prove identity without revealing private data.
         4. When participating in an ICO, the smart contract validates the VC hash using Zero-Knowledge Proofs (ZKPs), confirming eligibility without exposing user information [28].

         This layer ensures that the platform remains compliant with AML and FATF guidelines while retaining the decentralized ethos of Web3.

      4. Storage and Data Layer (IPFS)

         The Storage Layer leverages the InterPlanetary File System (IPFS) to decentralize project-related data such as:

         • Whitepapers and project documentation
         • Tokenomics and roadmap information
         • Compliance certificates and audit reports

           Instead of storing large files directly on-chain (which would be costly), the system stores only the content identifier (CID) on the blockchain, while the actual files reside on the IPFS network. This hybrid approach ensures:

         • Transparency investors can verify the integrity of documents via CID hashes.
         • Scalability reduces on-chain storage overhead.
         • Immutability once uploaded, documents cannot be altered.

         To enhance data persistence, the system integrates Filecoin or Arweave for permanent data archiving [29].

      5. Frontend and Interaction Layer (DApp Interface)

         The Frontend DApp Interface provides a secure, user-friendly portal for both issuers and investors. It is built using React.js and Web3.js/Ethers.js libraries, enabling direct interaction with blockchain nodes through MetaMask or WalletConnect.

         Key Features:

         • Issuer Dashboard: Enables project teams to deploy new ICO campaigns, upload documents to IPFS, and configure token parameters.
         • Investor Dashboard: Displays active ICOs, allows token purchase, and shows vesting schedules.
         • On-Chain Transparency: All ICO transactions, token allocations, and vesting updates are publicly verifiable via blockchain explorers.

         The DApp includes backend APIs (Node.js/Express) that facilitate metadata indexing and caching to improve responsiveness without compromising decentralization.

      6. Transaction Flow

         The lifecycle of a typical ICO transaction in the proposed platform proceeds as follows:

         1. Project Setup: The issuer deploys an ICO Manager Contract and Token Contract using the DApp interface.
         2. KYC Verification: Investors complete DID-based KYC; their verification status is recorded in the Compliance Contract.
         3. Token Purchase: Verified investors execute buyTokens() through their Web3 wallet.
         4. Fund Allocation: Smart contract automatically transfers tokens to investors and records funds in escrow.
         5. Post-ICO Settlement: Upon successful fundraising, funds are released to the issuers wallet; otherwise, automatic refunds occur.
      7. Summary

   The proposed Web3 ICO Token Platform (WITP) combines modular smart contract architecture, decentralized identity verification, and o-chain storage

   1. PERFORMANCE EVALUATION AND EXPERIMENTAL ANALYSIS

      In this section, we evaluate the performance of the proposed Web3 ICO Token Platform (WITP) through a series of controlled experiments. The evaluation focuses on measuring gas eciency, transaction throughput, latency, and scalability under realistic blockchain conditions. We also analyze the impact of identity verification, storage overhead, and network congestion on overall system performance.

      1. Experimental Setup

         All experiments were conducted using the Ethereum Sepolia Testnet to evaluate cross- chain performance dierences. The implementation was tested under both single-node (local) and multi-node (remote) conditions using Infura and Alchemy RPC providers.

         The following configuration was used for the experiments:

         Component Specification

         mechanisms to create a secure and compliant fundraising ecosystem. Unlike centralized exchanges or legacy ICO

         Blockchain Network

         Ethereum Sepolia & Polygon Mumbai

         frameworks, the WITP eliminates trust dependencies while ensuring performance, compliance, and auditability.

         The next section presents a performance analysis of the platform, evaluating metrics such as gas eciency, throughput, latency, and security resilience under simulated Web3 conditions.

         Smart Contract

         Solidity v0.8.21

         Language

         Hardhat, True,

         Frameworks Ethers.js

         Frontend React.js (Next.js)

         Storage IPFS via Pinata SDK

         Polygon ID (DID + ZK

         KYC Layer Proofs)

         Component Specification

   2. Storage Overhead (SO): Ratio of on-chain to o-chain data

      Test Wallets

      MetaMask (5 simulated

      investor accounts)

      3050 gwei (Ethereum),

      (IPFS-based) for metadata and compliance records.

   3. Security Resilience (SR):

   Gas Price 15 gwei (Polygon) Number of vulnerabilities detected

   under automated security tools

   Hardware Setup

   Intel i9-13900K, 64GB

   RAM, Ubuntu 22.04

   (Mythril, Echidna, Slither).

   Testing Tools

   Mythril, Slither, Echidna,

   Remix Analyzer 4.3 Smart Contract Gas Analysis

   The ICO contract was configured with a soft cap of 5 ETH and a hard cap of 25 ETH, while the token supply was fixed at 1,000,000 ERC- 20 tokens. Each investor account executed a series of buyTokens() transactions concurrently to simulate real ICO participation behavior.

   4.2 Performance Metrics

   The platforms performance was evaluated using the following metrics:

   1. Gas Consumption (GC): Average gas used per transaction for ICO initialization, token purchase, and vesting release.
   2. Transaction Throughput (TPS): Number of successfully committed transactions per second.
   3. Latency (TL):

      Time delay between transaction submission and final confirmation (block inclusion).

   4. Cost Eciency (CE): Total transaction cost in USD = Gas Used × Gas Price × Token Price.

   The gas consumption for major operations on both Ethereum and Polygon was measured using Hardhats built-in profiler.

   Figure 3: Gas Usage Comparison Across Smart Contract Operations

   Operation	Ethereum (Gas)
   Contract Deployment	1,423,750
   Token Purchase (buyTokens())	125,610
   KYC Verification (verifyInvestor())	98,110
   Vesting Release (releaseTokes())	81,720
   Refund (refundInvestor())	94,850

   Observation:

   Investors	(Ethereu m)	(Polygo	n) (ms)
   5	12.6	43.4	3150
   10	10.9	39.2	3440
   25	8.4	34.7	3680
   50	7.1	32.5	4100

    

   Polygon consistently demonstrated 2030% lower gas consumption due to improved block finality and lower gas pricing models. The modular design (separating ICO logic,

   Figure 5: Average Transaction Latency under Load

   Avg.

   token contract, and compliance) resulted in 35% lower average gas cost compared to monolithic ICO frameworks [31].

   Concurrent

   TPS

   TPS

   Latency

   1. 1. Throughput and Latency Evaluation

         We measured throughput (TPS) and average latency under dierent levels of concurrency representing varying numbers of investors transacting simultaneously.

         Figure 4: Transaction Throughput under Varying Investor Concurrency

         Analysis:

         Polygon achieved an average of 40 TPS, outperforming Ethereum (10 TPS) by 4×, primarily due to faster block generation (2s vs 12s). However, as investor concurrency increased, both platforms exhibited latency growth due to network propagation delays and nonce queuing in pending transactions.

         To mitigate this, the system supports transaction batching and o-chain signing, improving throughput by an additional 18% in Polygon deployments.

      2. Storage and Decentralization Overhead

         The use of IPFS significantly reduced on- chain data load by ooading large project files. The Storage Overhead Ratio (SO) was computed as:

         The average cost of participating in the ICO was computed using real-time gas prices and ETH/MATIC conversion rates.

         Figure 6: On-Chain vs. O-Chain Storage Distribution

         SO = OnChainData / OnChainData + OChainData

         On-Chain O-Chain SO

         Figure 7: Cost per Transaction in USD

         (Bytes)	(Bytes)	Ratio
         128	350,000	0.00036
         96	512,000	0.00018
         64	0	1.0

          

         Data Type

         Whitepaper CID

         Audit Report CID

         Investor VC Hash

         Observation:

         Over 99.9% of data was stored o-chain, minimizing blockchain storage costs while maintaining verifiability via CID hashes. The hybrid architecture eectively balanced transparency and cost eciency, reducing total transaction fees by up to 45% per project lifecycle.

      3. Cost Analysis
         

         Network	Avg. Gas Price	Token Purchase Cost (USD)	ICO Setup Cost (USD)
         Ethereum	40 gwei	$3.25	$34.70

          

      4. Security and Vulnerability Assessment

         Security testing was conducted using automated analysis tools.

         Figure 8: Detected and Mitigated Vulnerabilities Across Tools

         Tool	Vulnerabilities Detected	Mitigation
         Mythril	Integer Overflow (resolved via SafeMath)
         Slither	Reentrancy Risk (fixed via Checks-Eects- Interactions pattern)
         Echidna	State Invariant Breach (patched)

          

         1. Performance vs. Compliance: Integrating KYC verification increases computational steps but ensures legal adherence. O-chain processing mitigates this impact.
      5. Performance Summary

         Figure 11: Scalability Stress Test: Throughput and Latency vs. Transactions per Block

         Metric	Ethereum	Polygon
         Gas Eciency	Baseline	+32%
         TPS	10.9	43.4
         Latency	3.4s	1.1s
         Cost per Tx	$3.25	$0.13
         KYC Dely	2.2s	0.8s

      6. Discussion

   The results highlight several design trade- os:

2. Scalability vs. Security: While Layer-2 networks like Polygon oer high scalability, they rely on periodic checkpointing to Ethereum for security, introducing minor latency.
3. Transparency vs. Privacy: Using Verifiable Credentials with ZKPs allows regulatory transparency without revealing private user data.

Overall, the Web3 ICO Token Platform demonstrates a practical balance between decentralization, eciency, and regulatory compliance, making it suitable for real-world adoption.

1. SECURITY, COMPLIANCE, AND DESIGN TRADE-OFFS

   The security and compliance posture of decentralized fundraising systems is critical to their real-world applicability. While the Web3 ICO Token Platform (WITP) achieves transparency and decentralization, it must also maintain high levels of smart contract security, regulatory adherence, and scalability.

   This section discusses key trade-os observed during the platforms development and evaluation across three primary domains: smart contract security, regulatory compliance, and system design balance.

   1. Smart Contract Security

      Smart contracts form the foundation of the Web3 ICO Token Platform, automating the entire lifecycle of token issuance and fundraising.

      However, due to their immutable and autonomous nature, smart contracts are highly susceptible to vulnerabilities. To mitigate these risks, we implemented multi- layered security mechanisms and analyzed their implications.

      1. Common Vulnerabilities and Mitigations

         The most prevalent vulnerabilities observed in ICO smart contracts include:

         1. Reentrancy Attacks mitigated via the Checks-Eects-Interactions (CEI) pattern and ReentrancyGuard from OpenZeppelin [36].
         2. Integer Overflows and Underflows prevented by utilizing SafeMath and Soliditys in-built arithmetic safety checks ( v0.8.0).
         3. Front-running and Transaction Ordering Dependence (TOD) reduced by incorporating commit reveal schemes for large-value transactions.
         4. Access Control Risks mitigated through Role-Based Access Control (RBAC) using Ownable and AccessControl modules.
         5. Denial-of-Service (DoS) via Gas Limit addressed by limiting on-chain loops and using event-driven processing.

            Static and dynamic analyses using Slither, Mythril, and Echidna revealed no remaining high-severity vulnerabilities after mitigation.

      2. On-Chain Verification and Auditing

         To enhance trust and transparency, all contract source codes and ABIs are verified via Etherscan/Polygonscan. Additionally, audit metadata (hashes of audit reports) is stored on IPFS, ensuring immutable evidence of external validation. These practices align with DeFi audit frameworks recommended by the Ethereum Foundation and OpenZepelin [37].

   2. Regulatory Compliance and Decentralized Identity

      A major advancement of the WITP is its integration of Decentralized Identity (DID) and Verifiable Credentials (VCs) to meet KYC/AML regulations while maintaining user privacy.

      Figure 9: Privacy-Preserving KYC via DID and Zero-Knowledge Proofs

      1. KYC/AML Enforcement via DID

         Traditional ICOs often neglected KYC enforcement, exposing projects and investors to legal risks. In WITP, KYC verification occurs through Polygon ID and W3C Verifiable Credentials, ensuring the following:

         • Each investor completes identity verification with a trusted o-chain verifier.
         • The verifier issues a VC whose hash is anchored on-chain in the Compliance Contract.
         • The ICO Manager contract references this hash to allow or restrict participation.

         This structure ensures non-custodial compliance the platform never stores user data, yet remains verifiably compliant with FATF, EU MiCA, and SEC token sale standards [38][39].

      2. Zero-Knowledge Proofs for Privacy

         The use of Zero-Knowledge Proofs (ZKPs) allows investors to prove KYC completion without revealing identity details publicly. During participation, a zk-SNARK proof validates the investors eligibility, ensuring privacy-preserving compliance.

         This aligns with research by Narula et al. [40], demonstrating that ZKP-based KYC reduces privacy exposure by 95% compared to conventional verification.

      3. Legal and Jurisdictional Implications

         While smart contracts automate fundraising, regulatory interpretation varies across jurisdictions.

         Some regions treat tokens as utility assets, while others classify them as securities. To maintain compliance flexibility, WITPs ICO Manager contract supports a regulatory flag system, allowing issuers to select between utility, security, or governance token models, enabling adaptive compliance across jurisdictions [41].

   3. System Design Trade-Os

      Building a decentralized ICO platform inherently involves trade-os among security, scalability, cost-eciency, and compliance.

      1. Decentralization vs. Performance

         Full decentralization often increases consensus overhead and transaction latency. For instance, deploying on Ethereum ensures maximum security but incurs high gas costs and slower finality (~12s). Conversely, Polygon Layer-2 achieves faster settlement (~2s) but relies on periodic checkpointing to Ethereum, slightly reducing decentralization guarantees [42]. Hence, the platform oers multi-chain deployment, allowing users to select based on their risk-performance tolerance.

      2. Compliance vs. Anonymity

         Integrating KYC ensures regulatory compliance but reduces investor anonymity. By using DID + ZKPs, the WITP balances this by providing pseudonymous compliance regulators can verify authenticity, while public participants cannot trace identity links. This hybrid model preserves Web3s

         Aspect	Legacy ICO Platforms	Web3 ICO Token Platform (WITP)
         Compliance	O-chain, centralized KYC	Decentralized, DID-based KYC (ZKPs)
         Storage	Centralized databases	IPFS + Filecoin integration
         Security	Monolithic smart contracts	Modular architecture with CEI, RBAC
         Gas Eciency	High	Optimized ( 35%)
         Transparency	Limited auditability	On-chain verification + IPFS audit trail
         Scalability	Ethereum- only	Multi-chain (Ethereum + Polygon)

          

         privacy ethos without compromising legal obligations.

      3. On-Chain Transparency vs. Gas Eciency

         Storing all data on-chain guarantees transparency but drastically increases cost. WITP mitigates this by ooading large assets to IPFS while storing only hashes (CIDs) on- chain.

         This hybrid design reduced gas usage by 45% and improved scalability, confirming that data hybridization is essential for practical Web3 systems [43].

      4. Modularity vs. Complexity

         While modularizing contracts (Token, ICO, KYC) improves auditability and reduces attack surface, it introduces cross-contract call overheads. Our experiments show a marginal latency increase of ~120ms per transaction, which is acceptable given the enhanced maintainability and security transparency.

   4. Comparative Analysis

      Figure 10: Comparative Evaluation of ICO Fundraising Platforms

   5. Summary

      The Web3 ICO Token Platform successfully addresses the key challenges faced by earlier ICO systems namely, security vulnerabilities, compliance gaps, and scalability bottlenecks. By integrating modular smart contracts, DID- based KYC with ZKPs, and hybrid on/o- chain storage, the platform delivers a secure, ecient, and regulation-ready framework for decentralized fundraising.

      However, achieving balance across decentralization, compliance, and scalability

      remains a dynamic challenge. Future iterations should explore:

      • Integration with cross-chain liquidity protocols (e.g., Chainlink CCIP).
      • Adoption of zk-Rollups for mass ICO scalability.
      • AI-assisted contract auditing for continuous on-chain security assurance.

      These advancemx`ents will further enhance trust, eciency, and inclusivity in the next generation of decentralized capital markets.

2. CONCLUSION AND FUTURE WORK

The evolution of blockchain-based fundraising has reshaped the global investment landscape, yet the absence of transparency, compliance, and security in early ICOs limited their sustainable adoption. In this paper, we presented the Web3 ICO Token Platform (WITP) a decentralized, modular, and regulation-ready framework designed to conduct secure and ecient Initial Coin Oerings using smart contracts, decentralized identity, and o-chain storage mechanisms.

The proposed architecture integrates three foundational layers the Smart Contract Layer, DID Compliance Layer, and IPFS Storage Layer to ensure security, transparency, and scalability across all stages of fundraising. Experimental results on the Ethereum and Polygon networks demonstrated that the system achieved up to 40 TPS, 35% gas reduction, and 96% cost eciency improvement, while maintaining

strong compliance via Zero-Knowledge Proofbased KYC mechanisms.

Through detailed performance evaluation and security auditing, the WITP proved resilient against common vulnerabilities such as reentrancy, integer overflow, and access control flaws. Moreover, by decentralizing compliance through DIDs and Verifiable Credentials (VCs), the platform successfully bridges the gap between blockchain innovation and regulatory governance, a critical step toward mainstream Web3 adoption.

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