It looks like Ethereum’s developers and entrepreneurs have finally recognized the perils of being associated with the massively fraudulent ICO market.

ICOs have exploded since the beginning of the year as companies equipped with little more than a white paper sketching out some grandiose (and often highly improbable) killer app that somehow incorporates a monetized token trading on a blockchain much like bitcoin. So far, these offerings have raised more than $3 billion this year, and many of them are built on top of Ethereum’s platform, which enables the creation of decentralized “smart contracts” that can carry out higher level functions beyond simple transfers of value.

Last year, the collapse of the DAO - a kind of crowdfunded project meant to provide early stage financing to blockchain startups - sent the price of ethereum spiraling lower. Apparently, Ethereum’s top people are afraid the collapse of the ICO market might be even more damaging, CoinDesk repors.

"Grotesque" might not be the word you'd think ethereum developers would ascribe to today's ICO scene. But that's exactly how some of the platform's ardent supporters described the current state of affairs. At Devcon3 in Cancun, Mexico, last week, developers were decidedly unenthusiastic when approached for thoughts about the new funding method, some going so far as to allege that many projects that use it to raise money are little more than "scams." Even Fabian Vogelstellar, the developer behind the technology standard that helped make ethereum tokens so easy to launch, was keen to join the ranks of ICO critics, echoing remarks made by a colorful cast of commentators as diverse as MIT Media Lab Director Joi Ito and the "Wolf of Wall Street" Jordan Belfort. "The problem right now is that too many people outside of the blockchain space focus on tokens and ICOs; frankly speaking, it's the least interesting part of ethereum."

The tone of these remarks stands in stark contrast to the optimism about ICOs , which just earlier this year were being hailed as a groundbreaking tool for capable of revolutionizing how companies raise money.

Etherscan CEO and founder Matthew Tan went so far as to call ICOs ethereum's "killer app," a statement that aligns with the more than 10,000 token projects launched to date – 13 of which have eclipsed $100 million in total market value, according to Etherscan data. It's an interesting take seeing how ICOs are typically touted as a means to circumvent traditional fundraising methods. But, du Rose's sentiments hint at a crucial criticism: that many ICOs are simply executing incorrectly.

The criticism comes as regulators in US, China and many other major markets for cryptocurrencies have taken steps to curb or regulate the markets. The SEC has been slowly clarifying its stance toward ICOs since this summer, when it first declared - in a finding about the DAO fiasco - that ICOs are securities that must be registered with the SEC and subject to US securities laws.

To their credit, Ethereum developers have suggested some helpful “guidelines” of their own.

Here’s Jack du Rose, co-founder of ethereum startup Colony:

Ethereum developers largely believe that, at the very least, the individuals or company behind an ICO should have a prototype to prove their idea could theoretically work in practice. For instance, ethereum-based casino game platform FunFair launched an ICO over the summer, but only after releasing several prototypes. And FunFair founder and CEO Jez San Obe had strong words about issuers that do it differently. "You should have a product before you ICO, you should know how to run a company, you shouldn't have an anonymous team and you should release a prototype first," he told CoinDesk.

It’s something that, in conventional markets, should go without saying. But ICOs are anything but conventional. So Ethereum’s developers reminded investors and the companies doing the offering not to "risk other people's money on something, when there’s a reasonable likelihood we'd be prosecuted."

Issuing a token before the product is not only foolish from a regulatory standpoint, but also "incompetent and greedy."

Du Rose also insisted that ICOs be reserved for companies building a product that is decentralized, like the ICO being used to finance it.

"For a token to be interesting ... it should be a totally decentralized protocol, not just glitter on top of a centralized company with its own revenue models," du Rose said. In this way – although probably curiously for some – Giveth founder Griff Green pointed to The DAO as an ICO success story. Though its code had a bug that led to millions of dollars in ether being stolen from users, it was at least decentralized, said Green, who was the community organizer of the project. He thinks about The DAO in a more abstract way, though, saying that, in the future, people will be able to launch their own cryptocurrency to push against the power of the banks. "The power of creating currency is unfathomable. Banks are in a really good spot today. They have a lot of money and a lot of power. They can create money out of nothing. Instead, with ICOs, you can give that power to every person," Green said.

While regulators, investors and - increasingly - the general public believe the ICO space is fraught with bad actors, some crypto investors see this as the beginning of a learning process. ICOs could still revolutionize corporate fundraising, they believe, the market just needs to work out the kinks first.

"What I've seen is kind of unsurprising," said DappHub software engineer Andy Milenius. "People's first experience with an idea is allowed to be wrong."

As we've reported, two of the world's largest ICOs have already hit the rocks this year.

And we imagine those won't be the last...