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Today, we will take a look at different token sales like ICO, IDO, IEO. And do a short research on their advantages and disadvantages.
ICO, IDO, IEO: Difference, pros and cos
There are only three main types of token sales, all other variations in one way or another repeat one of the three popular models with minor changes.
Today, I’ll explain what ICO, IDO, IEO, are and how they differ from each other.
ICO
Initial Coin Offering, or ICO for short, translates to “initial token offering.” It involves a project issuing tokens intended for future use on its platform. ICO is a crowdfunding model where a project raises funds at an early stage for company development. ICO revolutionized crowdfunding by allowing investments in blockchain projects using cryptocurrency. However, with the rise of scammers who collected funds and disappeared, this method lost popularity.
IDO
Initial DEX Offering, or IDO for short, stands for “initial decentralized exchange offering.” It’s a token launch model that involves raising funds on a decentralized exchange. Unlike ICOs, where investors first purchase project tokens and then wait for them to be listed on an exchange, IDOs typically have the initial sale and listing occur almost simultaneously. In this case, developers and investors interact not with a centralized service but with smart contracts. The security of IDOs remains a concern, as the decentralized finance sector is still evolving, and even smart contract-based platforms are susceptible to vulnerabilities and hacks.
IEO
Initial Exchange Offering, abbreviated as IEO, stands for “initial exchange offering.” Similar to ICOs, it involves a project raising funds at an early stage for company development, but the key difference is that a centralized cryptocurrency exchange acts as an intermediary. You could consider it a more reliable form of token sale compared to ICOs, but it’s essential to pay attention to the exchange platform conducting the IEO.
In a typical crowdfunding sale, all you need to do is create a website and a fundraising form. However, in the case of IEOs, the entire process is overseen and controlled by the exchange, taking place on a platform owned by the exchange. So far, IEOs have been regarded as one of the more secure methods for protecting against fraudulent activities.
ICO, IDO, IEO: pros and cos
Here are some pros and cons of each of those token sale methods:
ICO
Pros:
- Participation conditions are very simple.
- Early access to projects.
Cons:
- There’s a possibility that tokens might be challenging to sell after purchase.
- High likelihood of encountering a fraudulent project (scam).
IDO
Pros:
- A wide selection of projects.
- The ability to start trading tokens immediately after the sale ends.
Cons:
- Low-security level since decentralized platforms can be vulnerable.
- Limited and closed formats of conducting IDOs.
IEO
Pros:
- High-security level as exchanges conduct project verifications.
- Projects with long-term potential are listed.
Cons:
- Centralization and a lack of full control over your own funds as they are held on the exchange.
The choice between these methods depends on your specific goals, risk tolerance, and confidence in the chosen project. It’s important to thoroughly research and analyze any token sale before investing in it.
ICO, IDO, IEO: sales platforms
Platforms for ICOs
- Coinlist
Platforms for IDOs
- Polkastarter
- Duckstarter
- BSCPad
- DAO Maker
- GameFi
- Poolz
- TrustPad
- Red Kite
Platforms for IEOs
These platforms serve as launchpads for various token sales, each with its own characteristics and advantages. However, always exercise caution and conduct thorough research before participating in any token sale on these platforms, as the cryptocurrency space can be risky, and scams do exist.
Summary
In conclusion, I want to emphasize that participating in all types of token sales involves very high risks! Launching new projects, even on a reliable centralized platform, does not guarantee that you will profit from your investments. Token sales can be considered one of the riskiest endeavours.
