Sales and presales
Working with cryptocurrency, you will meet with the terms sale, presale and ICO and IDO more than once. In this article we will analyze these concepts.
Token is the internal currency of the network entering the ICO. The command indicates the total number of tokens in the issue, as well as their equivalent in cryptocurrencies (BTC, ETH) and the value in USD.
Sale is basically selling cryptocurrencies to early investors. During it, those who wish to buy cryptocurrency from the owners directly. The founders of cryptocurrencies arrange tokensales as part of a crowdfunding program, and collect investments in the project in this way.
Token Sales are held regularly and attract millions of dollars of investment. For example, Ethereum held a tokensale in 2014 to sponsor the development of the project, collecting 31,529 BTC, which was about $ 18 million.
But it is possible to invest in tokens before the official start of sales. Before becoming publicly available, the platform gathers an audience of interested investors who are given the opportunity to purchase tokens at lower prices in advance. This token sale process is called Presale.
Often, at this stage, only a small amount of funds is attracted from the initially planned volume of investments. In addition, everyone who invests in a startup already on the presale receives a special bonus in the form of additional tokens. This is usually 20–30% of the purchase volume.
There are different models for launching a token, the most popular are ICO and IDO
ICO (Initial Coin Offering) is the initial offer of a certain amount of new cryptocurrency, in order to attract investment. This is a kind of crowdfunding, when a certain crypto project declares that it is a promising product and funds are needed for further development.
Investors provide capital to the project and in return receive its tokens, which will benefit them in the future, for example, the right to manage the project or simply an increase in the exchange rate value of the token.
In this model, it is very easy to buy tokens, without any problems, directly from the seller. But there are risks for investors here: there are no fixed deadlines for the project to start, that is, you can wait a month, a year, two, if the project starts at all.
Initial DEX Offering (IDO, Initial Offer on DEX) is the initial coin offering of the project on a decentralized crypto exchange.
Unlike ICO and IEO, where investors first buy coins of the project, and then its listing on the exchange takes place, in IDO, the initial sale of coins and their listing occur almost simultaneously. The main difference between these models of fundraising is that in IDO, projects do not need to be verified by the crypto exchange.
IDOS are conducted either independently by the projects themselves, or on specialized sites called launchpad sites.
To conduct an IDO, you need to activate a special contract, register a new token and provide the pool with liquidity. In order to avoid garbage IDOS, the sites still select projects. The selected projects end up on launchpad platforms.
Launchpad platforms — these are platforms where novice crypto projects can attract capital for further development and launch. They help in creating communities by bringing together investors and developers at an early stage. New projects attract start-up capital, and investors get early access to innovations with a high potential for stable profits.
Also, one of the main goals of launchpads is verification. Using a smart contract, launch pads guarantee investors the exclusion of fraud risks. In fact, the money that is returned to investors when projects are not implemented is unprecedented.
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