How ICO is changing capital-raising?
An initial coin offering (ICO), also called a token generation event (TGE) or a token sale, is an event during which a company sells digital tokens to obtain public capital to fund things like software development, marketing, business operations, community management and other incentives. Because it offers many benefits, raising capital through ICOs is becoming increasingly popular.
One of token sale’s advantages is decentralization of investments — ICOs enable international accessibility, meaning that, due to low entry barriers, investors from all around the world are able to take part. Also, the amount of money invested is optional, which enables smaller investors to participate. A third benefit is the high liquidity premium — tokens are easily converted into fiat and vice versa. And fourth, due to online marketing, tokens can be marketed over the internet to a large, general audience, enabling potential buyers to learn about ICO through the organization’s website, online messaging applications, forums, social media websites, and more.
Even though raising capital through ICOs looks appealing, caution is necessary. Investors should be aware of dubious projects, that is why careful due diligence of a project and its team has to be done prior to investing in any ICO.
Crypto tokens
Tokens are largely fungible and tradable as cryptocurrencies, while their uniqueness is shown in their value, which is derived from something they represent, not from their utility as a currency or their store of value.
However, not all tokens are fungible; non-fungible tokens also exist. Fungible tokens are perfectly interchangeable with other identical tokens, while non-fungible tokens are unique in nature and hold information instead of value. Both meet the standards described on the Ethereum blockchain — ERC-20 for fungible tokens and ERC-721 for non-fungible ones.
Fungible crypto tokens are usually also divided into two categories — equity tokens and utility tokens. Equity tokens represent ownership of an asset, such as a debt or company stock. Utility tokens, also known as app coins or user tokens, provide users with future access to a product or service.
PAN token
PAN-designed as an ERC-20 compatible fungible utility token — empowers businesses worldwide to trade in a trustworthy environment while enabling the network to grow in a stable micro-economy.
PAN is the vital component of the Procurean network due to its various roles and use cases, such as holding guarantees, governing disputes, providing escrow, and paying for bids in the various scenarios supported by smart instruments.
- Bidding
- Disputing
- Guarantees
- Escrow
Bidding
To enable daily business transactions, Procurean provides a set of smart instruments, each meant for a specific procurement role and each paid for with PAN tokens. Businesses use PAN tokens to place bids on inquiries in various scenarios enabled by smart instruments. The price-per-bid covered in PAN is relative to the estimated inquiry value.
This means that sellers pay PAN to win new business in blind reverse auctions and multistep auctions and buyers pay PAN to gain new information in market inquiries and group purchases.
Disputing
In case of disagreement with a given rank after a transaction, the disagreeing party can issue a dispute. Businesses opening a dispute on the network have to provide enough PAN tokens to fuel the dispute by rewarding businesses invited to the resolution process. The amount of required tokens is summarized from a fixed amount and an amount relative to the estimated inquiry value. These tokens incentivize potential resolutioning businesses to join the resolution process.
Guarantees
Businesses use PAN tokens to pay for a guarantee they request from other trusted businesses on the network (to enhance their trust rank). This incentivizes businesses with a strong trust rank to help less-established businesses conduct their first transactions. The amount of required tokens is summarized from a fixed amount and whatever both the guaranteer and the requesting business agree to.
Escrow
To further enhance trust, buyers can use PAN tokens to lock themselves into a smart contract (contractual agreement) in which a third party receives or disburses the tokens dependent on conditions agreed to by the transacting parties. The amount of tokens locked into the escrow smart contract is relative to the estimated inquiry value and is decided by the buyer.
