This paper explores the use of Initial Coin Offerings (ICOs) as a means of fundraising for companies through the issuance of blockchain-based tokens. Specifically, we investigate how a company can implement ICOs and issue tokens supported by its products while taking into account the presence of network effects. We examine several aspects of ICOs, including the impacts of network effects on the company's optimal token sales design, such as the optimal token issuance price, the ICO cap (which refers to the number of tokens to be issued), and the amount of funds raised. We also consider the cases of deterministic and uncertain network effects, the impacts of limited speculators purchasing tokens during the ICO period, and the comparison between ICOs and traditional bank financing.Our research yields four main insights. Firstly, we find that network effects have significant implications for the optimal token sales design. Specifically, an increase in production costs results in an increase in raised funds for a low network effect but a decrease in raised funds for a high network effect. Secondly, we find that under a limited number of speculators and faced with a medium network effect, the company only needs to adjust its token sales design by decreasing the token price and ICO cap for medium production costs. Thirdly, we study the impact of network effect uncertainty and show that in the case of high expectations and low variance for network effects, the uncertainty is independent of the company's decision. However, in all other cases, the uncertainty always increases the company's expected profit. Interestingly, in the latter case, faced with uncertainty, the company may choose to reduce its raised funds. Finally, we demonstrate that compared to bank financing, ICOs can enable the company to obtain the same profit while decreasing the volatility of its profit. In summary, our study sheds light on the optimal ICO token sales design in the presence of network effects and highlights their potential benefits and limitations compared to traditional bank financing
