When it comes to acquiring funds for new ventures, the bitcoin market is highly inventive. In the conventional financial industry, there are only two ways to raise money: through loans or venture capital (VCs). However, over time, this tactic actually hurts the new project’s founders.
The cryptocurrency market is diversified, and new projects can generate money while interacting with the community thanks to the funding methods open to them. Startups in the blockchain and cryptocurrency space can sell their tokens for fiat money or other cryptocurrencies. The money received is then used to expand the initiative.
An initial coin offering (ICO), an initial exchange offering (IEO), and an initial DEX offering (IDO) are the three most common methods that cryptocurrency projects raise money. We discuss each of these approaches below, along with advantages and disadvantages.
Intial Coin Offering (ICO)
One type of crowdfunding is an initial coin offering. In the stock market, an initial public offering (IPO) is comparable to an ICO. ICOs were the first way that blockchain and cryptocurrency firms raised money from investors.
Any investor can purchase a company’s blockchain-based token during an ICO by utilizing well-known cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) or stablecoins like Tether (USDT). Later, the company’s tokens can be traded on a centralized exchange (CEX) or a decentralized exchange (DEX).
The first ICO ever launched was by Mastercoin in 2013, which is when the history of ICOs began. Through the process, the platform was able to raise almost $600,000. In 2014, an ICO was also launched by Ethereum, the second-largest blockchain network by market cap. In just 42 days, the ICO raised $18 million.
The greatest benefit of ICOs is that they make it possible for businesses to acquire capital without having to go through the drawn-out process of obtaining governmental permission. Although this is helpful for the enterprise, there are big hazards for the investor. Pros and downsides of using ICOs as a funding mechanism are listed below:
The fact that ICOs make it so simple for businesses to raise money is one of its main advantages. Additionally, they give the ICO management significant rewards. Tokens are created in accordance with the terms of the ICO, and these managers then distribute them to individual investors.
An ICO can give a startup the money it needs to advance if it is viable and has potential. With Ethereum, this was the situation; the project made use of the funds to expand. Major gains have also been made by ICO investors who have kept their tokens over time.
ICOs are extremely dangerous for investors because they are not governed by any regulations. Investors can be persuaded to take part in an ICO by a project by making them a promise of large returns. The majority of schemes, however, turn out to be bogus, and the developers elude capture with investor money.
The potential risks that ICOs pose to investors have been highlighted by the US Securities and Exchange Commission. However, the possibility of huge returns has led some investors to invest in underperforming or abandoned ventures. So, before making an ICO investment, spend the time to thoroughly research a project to determine its viability.
Initial Exchange Offering (IEO)
In many ways, an Initial Exchange Offering and an ICO are comparable. The main distinction is that an ICO is presented on a platform for bitcoin trade. Companies that enable the trade of digital assets are known as exchange platforms.
In this scenario, the bitcoin exchange platform will act as a neutral third party. The project will use an exchange’s services, which are often paid for, and the exchange will float the tokens on the project’s behalf. Similar to ICOs, an IEO enables investors to purchase tokens before they are formally introduced to the market, opening the door to significant profits.
The cryptocurrency exchange will be assisting this procedure, therefore the projects that wish to fundraise through this approach must make sure they include all the information necessary to give their projects a more credible appearance. The project is required to submit a proposal, which the exchange backing it will carefully analyze. Exchanges must exercise due diligence in order to maintain their reputation.
IEOs help projects in numerous ways, one of which is that they can attract a lot of investors. Because they have been examined by exchanges, the coin will be published on the exchange once the presale is over, increasing its liquidity as soon as it hits the market.
The fact that the initiatives must undergo due diligence is the major benefit. As a result, there is less chance that an investor may lose money to shady cryptocurrency businesses.
A cryptocurrency listed through an IEO will have more liquidity on the exchange where it has been listed, which is the other advantage. The token will immediately have access to a sizable user base, which will increase demand and raise the token’s value. Additionally, the exchange listing will serve as a marketing tactic.
There is a tradeoff even if an IEO is less risky than an ICO. Because an IEO is more centralized, you can only get the token through one exchange. You must register for an account on the exchange platform in order to take part in the IEO. For investors who like the complete decentralized feature of the cryptocurrency market, this may not be optimal.
The project has been reviewed, but this does not shield it from the turbulence of the cryptocurrency market. The SEC has additionally cautioned that some IEOs may be just as hazardous as ICOs if they violate federal securities laws.
Initial Dex Offering (IDO)
One of the more recent methods created in the cryptocurrency and blockchain sector to enable projects to generate money is an Initial DEX Offering. IDOs enable blockchain-based projects to raise money by selling their tokens on independent exchanges (DEXs).
IDOs have gained popularity as crowdfunding models for decentralized applications and decentralized finance (DeFi), despite being the most recent development (DApps).
In June 2019, RAVEN conducted the first IDO on the Binance DEX. The IDO was a success, and several have subsequently emerged on the market, including the SushiSwap IDO and the Universal Market Access Protocol IDO.
Tokens from projects that desire to raise money through an IDO are available on DEXs. Compared to CEXs, DEXs offer a greater degree of decentralization. The most well-known DEXs include Uniswap and PancakeSwap. However, the market has a greater number of these exchanges.
The initiatives build a liquidity pool using a variety of currency, including Bitcoin, Ether, and USDT. Then, anyone who owns a Web3 wallet that is supported by the exchange can buy the token. The best thing about DEXs is that no identity or Know Your Customer (KYC) procedures are required.
IDOs differ from IEOs and ICOs in certain ways. None of the tokens raised during the IDO fundraising process will be owned by the project. In addition, IDOs are decentralized in the sense that they are not subject to a rigid set of guidelines.
Due to their diversity, IDOs have experienced substantial growth during the past several months. Since the initial IDO by RAVEN, this innovative fundraising strategy has displaced conventional investment in the blockchain industry.
IDOs help decentralized exchanges have more liquidity, which is one of their key advantages (DEXs). Compared to centralized exchanges, decentralized exchanges in the cryptocurrency market have lower trading volumes. DEXs can hopefully close this gap and take control of a significant portion of the crypto trade volumes through IDOs.
IDOs also give projects in the blockchain and cryptocurrency industries a more decentralized approach to raise money. IDOs can access one of the blockchain markets that is quickly expanding and gaining popularity since they are compatible with DeFi protocols and liquidity pools.
The IDO crowdfunding tactic is still relatively new in the industry. It has not yet experienced the same level of growth that ICOs and IEOs have in recent years. Due to the fact that less funds are typically raised through the procedure, this could be a disadvantage for initiatives looking to raise money through IDOs.
IDOs are not well understood from the investor’s perspective. DEX launchpads can be challenging for the typical investor to comprehend. These launchpads are typically technological, and anyone without the necessary understanding may find it difficult to use them.
The crypto industry is continually generating new projects. The majority of these projects require finance, and ICOs, IEOs, and IDOs offer the ideal chance to generate the money required for success.
Crowdfunding does, however, carry a number of substantial dangers for the investor. Compared to the conventional financial sector, the market for digital assets is less tightly regulated. There is always a chance that some of the projects seeking funding are fraudulent, causing investors to lose money. Due diligence should therefore be performed before investing on these crowdfunding platforms.
IMPT Token is The Biggest Presale Happening Right Now – Here’s What You Need to Know
IMPT is an extremely innovative project, offering a variety of opportunities for users to acquire carbon credits, having the option to purchase carbon credits on the IMPT.io marketplace or acquiring them while shopping. This way, individuals, not just large businesses and corporations can help fight the climate crisis.
They have partnered with more than 10,000 of the biggest retailers to help users offset their carbon footprint while simply shopping. Each brand determines the percentage of sales margin that is allocated to impact projects. The sale margin is held in the user’s account in IMPT tokens until the user has enough IMPT tokens to purchase a carbon credit.
Carbon credits purchases and trades
Users can also buy the carbon credits directly from the IMPT.io carbon marketplace. The IMPT.io platform offers users to choose from hundreds of previously verified environmental projects. Users will be able to sell, retire or hold their carbon credit as an investment. What’s more, the platform will reward users for retiring their carbon credits. The project envisions that after burning their carbon credits users will receive unique NFT collectibles created by artists.
IMPT.io social platform incentives and promote individuals and organizations to be more environmentally friendly. It will establish the first global score that will enable everyone to measure how impactful they are in terms of carbon footprint. The platform will provide different rankings and levels for users to measure and track their impact. IMPT.io will offer IMPT.io points, the rewards that users receive for their contribution to positive climate change. Users will receive points for multiple activities on the platform, from referrals to retiring carbon credits. This way each member of society will be motivated to drive changes.
Sustainability as the goal
IMPT.io is a carbon-zero company. The platform is built using blockchain technology, which provides for increased transparency and security of the project. Currently, there are some concerns that blockchain is harmful to the environment. We tackle this issue by choosing a platform that follows sustainability principles. Thus, IMPT.io is built on top of Ethereum, one of the most eco-friendly and secure blockchain platforms.
Dash 2 Trade – Upcoming IEO That Shouldn’t be Missed
One of the best initial exchange offerings this year that is yet to launch is Dash 2 Trade. In a nutshell, Dash 2 Trade is building an innovative analytics dashboard that will offer high-level access to a full suite of crypto analysis tools. This includes a crypto signal service, which offers the Dash 2 Trade community trading suggestions.
For instance, the analytics platform might suggest going short on XRP/USD, with an entry price of $0.52. Each and every signal at Dash 2 Trade will also provide the suggestion stop-loss and take-profit orders for risk management purposes. Dash 2 Trade will also offer access to its analytical insights.
This includes metrics that scan social media platforms for insight into the top trending cryptos. Another notable feature of the Dash 2 Trade analytics platform is that it provides the community with real-time updates on the best IEO cryptos that should not be missed. This is in addition to trading competitions and access to high-level charts and market data.
Dash 2 Trade is expected to launch its IEO in October 2022, albeit, we are still waiting for a confirmed listing date. We do know that there will be just 1 billion D2T tokens in supply and that the project is built on top of the Ethereum blockchain. As per the whitepaper, Dash 2 Trade could be one of the best future cryptocurrency projects as we move toward 2023. Instructions on how to buy this promising coin can be found here.
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