The initial coin offering (ICO) is a means of financing the development of a new crypto-currency project. Currently, more than 1000 coins are available on different stock exchanges. Not all crypto coins have their own chain since they can be released on another Blockchain. A good example is the ERC-20 tokens, which are the standard of interaction in the Ethereum blockchain. Ethereum is a one-piece general-purpose chain, on which different tokens can be released without creating its own infrastructure.
In order to participate in the upcoming ISO, it is necessary to go through several steps:
Step 1: Investigation of upcoming ICOs
Study the various resources, which present the latest ICOs.
Step 2. Performing due diligence
It is necessary to conduct a study to make sure that a particular project is good. Among the key factors should be the idea of the project, the team, how long the project exists, its partners and so on. There are also various resources that will provide you with a proper fundamental analysis.
Step 3: The ICO Participation Process
Open an account
If you are sure in the project that you have chosen and you want to invest in it, you should first open an account in order to convert the domestic fiat currency to the cryptocurrency.
Follow the instructions of ICO
More often, the ICO will provide a step-by-step guide for participants. You should join their official communication channels to receive the latest updates and ask questions directly to the developing team.
Step 4: Trade in coins
If the project, in which you have invested, is worthwhile, then you can hold the coin in the medium and long-term. If you just want to get a certain percentage of profits quickly, you can sell it as soon as it goes to the crypto exchange. You can also buy tokens directly on the exchanges.
How to invest in ICO?
Most ICOs are built on the Ethereum platform using the ERC20 protocol. There are also other platforms such as NEO, Qtum, Lisk, Komodo, Strat, ICX and many others. Every person who represents digital assets for the project should confirm his/her identity by sending scans or photos of his/her ID. Participants should have a suitable wallet and tokens for transactions. After the ICO the technical group require several weeks for tokens’ programming. Finally, the tokens will be transferred to the depositors.
Different stages of the ICO includes:
- Early financing
At this stage, the project is committed to improving its idea, establishing work processes, including team building, website preparation, strategy and technical document. On this step, the team often seeks to find funding from its own sources, since the project is not yet known to anyone. It is the mriskiestto invest in the project on this step, as not all companies reach the ICO stage.
- Private sales
At this step, the project already usually has the white paper, a page in social communities and on targeted resources. Private sales as in the previous case can provide participants with high bonuses. However, it is also the risky step for investments.
- Preliminary ICO or preliminary sales
Prior to ICO, the project should secure sufficient funding for a full marketing campaign. At this stage, the project tokens are usually sold at a discounted price.
- Active ICO
The actual ICO is the main sale of the project tokens. Usually, most tokens are left for sale at this stage, as the marketing momentum has reached its apogee, and most potential investors have received information about the ongoing crowdsale. For example, in the Dan Service crowdsale funds were collected for the initial development and promotion of the DAN project among users (https://dan-service.com/). Crowdsale lasted for two months. However, part of the tokens remains on the DAN Fund address blocked for 24 months. It will allow the project to finance the subsequent development, operating costs and attract advertisers in the future. At this stage, potential investors already have enough information, so they are more willing to invest.
- After the ICO
After completing the ICO and generating the tokens, each participant should receive a share of the total pool of tokens. Tokens are transferred or programmed by the technical team of the project.
After the ICO, the team should agree with the crypto-exchange markets, so that their tokens could be traded. Exit to the exchange usually leads to an increase in tokens’ demand and value.