Tozex’s Ways to Raise Funds

Many projects in the crypto industry rely on fundraising. Fundraising is a method of collecting money for a particular purpose. Generally, charity funds or other socially meaningful campaigns use fundraising methods to collect money from voluntary donors, but lately, this way of accumulating funds has become trendy for many for-profit businesses and other commercial projects.

Each crypto project differs greatly in its technical aspects, necessary legal procedures, and financial basis. Projects have different visions, and the company vision is usually the main feature that defines the way the project is funded.

We realize that funding is key to any project’s development. The fintech industry offers a variety of specifically designed funding methods, including ones based on tokens (initial token offering). With Tozex, companies can choose from three main ways for potential investors to invest in a project: ICO, STO, and BRO. Each method gives the team complete control over the fundraising process via a set of tools designed precisely for the chosen fundraising method.

Tozex aims to highlight the token’s value at each step of the fundraising campaign by developing different market mechanisms to support the token lifecycle.

ICO: Initial Coin Offering

ICOs have become a champion among fundraising methods, with billions of dollars raised within a limited period of time. Almost every fintech project has launched an ICO to raise funds.

ICOs are generally used by projects that provide a service or coin, access to which is provided digitally by using a platform or an application. Investors provide their funds in exchange for coins that enable them to use the company’s services, or they can keep the coins in the hopes that they will gain in value in the future.

Unlike stocks, the coins received in exchange for investment do not give the investors the power to participate in the project management (they are not shares), nor do they guarantee any returns on the invested money.

A team launching ICO can benefit from the campaign’s global reach. ICOs are not regulated by any national legislature, so they can easily go international. They give companies the ability to raise much more funds than state-regulated campaigns do. Additionally, the launch costs are insignificant in comparison to traditional fundraising methods.

ICOs are an extremely beneficial fundraising method for project developers. They give developers access to a global audience, do not require time-consuming red-tape procedures, and keep the company budget safe from being overstretched by outside investors.

As a result of an ICO, investors receive tokens that they can either trade on exchanges or keep in the hopes that their value will increase in the future

Key Points

• Fundraising does not give investors any power to control the company
• Company’s money is not spent on returns for investors
• Positive influence on the project
• No red tape
• Adjustable fundraising tools
• Emergence of project community
• No state regulations or legal system controlling the industry
• Not available for investors from the USA, China, and Korea

STO: Security Token Offering

STOs are a way of raising funds for a crypto project in exchange for tokens that greatly resemble securities. These digital securities are sold on cryptocurrency exchanges. They can be traded as currencies or stored in a digital wallet.

STOs are similar to traditional investing, where investors have some influence over how the company is run. STOs represent a fundraising method closer to classic investing methods than ICOs but with the benefits of transparency and liquidity offered by cryptocurrency exchanges.

Securities offer investors certain involvement in the company’s financial management. Investors are paid dividends and have the right to vote, as well as sell their shares. Securities held by investors have a nominal value because they are supported by the company’s real funds. Unlike ICOs, STOs attracts investors with the prospects of the project’s success and proposed future profits; STO investors receive returns on their dividends. Tokens received from an ICO have a price that is speculative and dependent on the supply and demand ratio. Security tokens, however, represent actual equities, such as bonds, that are issued by a real company.

Because security tokens serve as real securities, they must fully satisfy the requirements and legislature related to bonds and stocks. Therefore, they give investors specified rights within the issuing company. Investors find this fundraising method very beneficial because it enables them to claim their share of company profits, exercise their voting rights, and trade the securities on cryptocurrency exchanges.

Security tokens are more than utility tokens. In contrast to the latter, security tokens serve as real financial tools because their features are very similar to those of stocks or bonds. In other words, they reproduce company assets that are digitalized and tokenized on the basis of a blockchain system. Just like real securities, they must follow certain rules and standards to ensure better protection of financial operations.

The rules and regulations for security tokens are established by the country in which the issuing company is located. Still, specified legislature is required for security tokens to be properly managed worldwide and for their potential to be duly noticeable. A unified set of global regulations is necessary to make security tokens available globally and become a boundless asset.

Our security tokens fully comply with KYC and AML norms and entirely satisfy ERC-1400 technical standards. While ERC-20 regulations define the proper arrangement of ICOs, ERC-1400 standards aim to regulate the operation of STOs.

Key Points

• Investors receive certain rights within the company
• Investors participate in the company ownership
• Tokens are regulated by securities standards
• The company’s assets can be tokenized
• Automatic conformity
• Positive influence on the project

BRO: Believers Reward Offering

BROs are an innovative fundraising campaign designed by Tozex. They aim to raise funds for a project by taking contributions from Tozex users in the form of loans. Contributors offer stablecoin and receive them back at a scheduled time with interest and an additional payment as a reward for believing in the project’s future success.

The terms of these loans are clearly stated beforehand, so the campaign outcome is fully transparent. Unlike STOs, BRO contributors know exactly how many tokens they will receive — no additional risks or uncertainty.

What’s so special about BROs? Tozex developed BROs as a potential substitution for ICOs or STOs. They are a completely new, never-before-used method of raising funds in the crypto industry.

Apart from crowdfunding, BROs serve as a buffer for severe price corrections, recover volatility, and promote the company’s development and the token’s stable market performance by offering believers fixed and secure rewards.

How does that happen? BROs are a mechanism that provides companies with additional funds aimed at project development. BROs are a brand-new fundraising method entirely built on crypto assets. Users make contributions by lending crypto assets and receiving fixed rewards and additional benefits as believers — that is, users who believed that the project would become a success.

Lending TUSD and DAI, believers receive payments in TOZ over a period of 12 to 18 months, depending on the amount of contributed funds. The BRO terms are known to all parties from the initial stage and do not change over time — they are encrypted in the smart contract. The deal is transparent and secure, and no risks are incurred. Such an approach to fundraising is very attractive to investors because they know exactly what and when they will give to the company, when they’ll receive their reward, and how much they’ll receive.

How can BROs influence token volatility levels, given that the token is used to pay interest?

First, the rewards are paid in parts, and there is some time between the loan and the first distribution.

Second, each deal has its own time frames, meaning that each contributor has their own start and end date, so the company doesn’t have to pay everyone at once. Start dates are calculated individually for each participant, depending on the date when they lend funds.

Third, the BRO financial tools that we use serve as a stabilization system. BROs stimulate people to hold our token for the long-term because we are the first to offer rewards for just keeping the token.

Last but not least, BROs allow companies to attract funds without going through the inevitable difficulties related to ICOs or STOs. The investments are received as stablecoins, and reward distribution is postponed. Clearly stated terms guarantee that BRO participants are in for all the offered conditions and ready to wait for their rewards, which means they stay with the project because they believe in it.

It is a pleasure for us to offer the crypto community such an innovative way to raise funds. For now, BROs are open to all our believers for three months, but we may consider prolonging the campaign if necessary.

Key Points

• Good substitute for ICOs and STOs
• Investors don’t have control over the company
• Investments as stablecoin
• Fixed terms for all investors
• Emergence of project community
• Payments are preplanned
• Positive influence on the project
• Available for investors worldwide
• Investors become your believers