In the developing era of the cryptocurrency world, crypto businesses are constantly searching for the best ways to raise capital. Many companies opt for different methods to go public for the first time to expand their project, enhance their marketing efforts, improve their performance, and release their coins and assets.
With Decentralised Finance (DeFi) being inspired by traditional finance, Crypto capital raising models as well originated from the traditional IPO or Initial Public Offering; the difference consists of the methods and the conditions that each company prefers, along with ditching centralised financial services, such as banks and traditional exchanges through adopting smart contracts on the blockchain, to conduct transactions.
In today’s article, we will present to you the characteristics you might need to know about several crowdfunding protocols, which might help to understand what Coorest will be opting for to launch our utility token $CRST.
Initial Public Offering
Starting with the origin, the IPO is the standard fundraising model for the centralised finance market in which a company offers its shares to be listed for sale on stock exchanges and investment banks for the first time.
Initial Coin Offering
Amidst the most common fundraising methods. An ICO typically implies the first time a company releases its cryptocurrency, token, coin or any digital asset for sale on the market, it is the Initial Public Offering of digital assets.
Unlike the IPO, the issued assets are digital tokens of any kind, and anyone can release their digital assets via an ICO to be exchanged against other cryptocurrencies, they only have to inform the investors about their project via a clear whitepaper stating exactly what kind of tokens they are offering for the investors to not be mistaken. The project owners take charge of the transactions, they can even manage the ICO via their website.
Initial Exchange Offering
An IEO refers to when a company raises funds by directly getting listed on a selected centralised exchange, without going through an ICO. The project owner needs to find a trusted exchange to issue their token via an IEO, so this model is typically an ICO executed by an exchange, and it is far safer than ICO since it is secured by a verified third party, it assures the investors that they will not get scammed by the project owners.
Security Token Offering
This method consists of an ICO but this time offering security tokens, meaning tokenized securities such as bonds, equities, or any other similar financial asset.
Whereas, in a regular ICO, utility tokens are issued; an STO is a type of ICO in which security tokens are offered that might represent a share in the company, a promise for dividends, or any other promise of future revenue.
Initial Decentralised Exchange Offering
The newborn in the blockchain world, an IDO or an Initial DEX offering, is roughly the same as an IEO, the sole difference is that whilst the latter takes place in a centralised exchange such as Binance; an IDO is managed by a decentralised third party. This fundraising model not only grants security of the project, but also transparency, decentralisation, and flexibility for investors.
Initial Farm Offering
The IFO is an ICO (generally a crowd-sale of utility tokens) executed by a Decentralised Exchange, the thing here is that the crowdsourcing event is preceded by a farming event meant to raise funds through liquidity pools on the pre-sale and allow investors who participate to buy tokens at a discount.
Initial Airdrop Offering
The IAO, and as the name implies, refers to airdropping the tokens by distributing them for free and directly to the wallets of the investors who are interested in the project for the first time, this is a strategy of promoting the brand, boosting the project, and rewarding investors.
Initial Game Offering
An IGO is typically an ICO of a blockchain game, it is executed through the offering of NFTs and other game-related assets that have in-game functionalities earlier, at a lower price than that of the initial release of the game, and it is conducted on the game launchpad platforms.
Initial Liquidity Offering
An ILO is another stage of crowdfunding, where project owners stake their tokens directly on important Decentralised Finance-based Exchange platforms without launching an ICO to raise the liquidity of their tokens rapidly.
The blockchain world is developing continuously, and new fundraising mechanisms keep emerging all the time. A word of advice – before you choose a project to invest in, Do Your Own Research. Learn the benefits and drawbacks of each crowdsourcing mechanism and make sure the projects you’re considering are not prone to fraud. If you would like to support an environmentally friendly project then look no further. Our NFTrees allow you to easily and transparently compensate for your CO2 footprint or that of your business.