In the field of cryptocurrency, crowdfunding is a method of gathering the initial capital to begin the development of blockchain projects. Today, let’s take a look at various types of crypto crowdfunding and how they generally work.
One of the crowdfunding methods is the Initial Coin Offering (ICO). During an ICO, projects create tokens and offer them to early contributors. This process functions as a campaign, where investors acquire project tokens in exchange for funding the project.
Another type of crowdfunding is the Security Token Offering (STO), which involves issuing security tokens that represent ownership in an underlying asset, such as equity in a company or rights to a share of profits.
Initial Exchange Offerings (IEO) are token sales conducted through cryptocurrency exchanges. This provides projects with an existing user base and platform for fundraising and offers investors more assurance regarding the credibility of the project, as exchanges generally conduct due diligence.
The Initial DEX Offering (IDO) resembles the IEO but only targets traders within a particular decentralized exchange (DEX) for fundraising. This crowdfunding method is considered flexible as tokens are usually instantly listed on an exchange after the completion of an IDO. However, varying liquidity levels in DEXes may negatively impact the fundraising process compared to methods with more consistent liquidity.
An Initial Game Offering (IGO) is a method of crowdfunding utilized to raise funds for the initial development of blockchain games, often offering discounted in-game assets and tokens to early investors. IGOs are tailored to the gaming industry, enabling developers to directly obtain funding from their target audience. IGOs have contributed to an expansion within the blockchain gaming sector.
Learn more: What Is an Initial Exchange Offering (IEO)?
