Steemit Crypto Academy Season 2 Week 1 Task | ICO (Initial Coin Offering) | lecture by @imagen

What is ICO

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ICO abbreviated as "Initial Coin Offering" in crypto world can be defined as the way of raising funds for a new token in other to pave way for the token to be developed on the blockchain.

Initial Coin Offering (ICO) mostly comes as presale, the company offering the Crypto token sells a part of the crypto tokens to the project's early backers. They collect funds in fiat currencies like the US dollar or well-known cryptocurrencies like Bitcoin or Ether.
The start-up project team produces a whitepaper in which they describe the project and the market opportunity or business challenge it would fix. The whitepaper also explains the technology, why a crypto token is required, the project roadmap, and the amount of money needed to finish the project. The whitepaper also includes information on the project's governance, the ICO's timetable, the currencies allowed in the ICO, and the percentage of the crypto token that will be sold during the ICO. The whitepaper explains how the remaining tokens will be distributed, as well as whether there will be a private sale prior to the ICO, in which a small group of investors purchases a large number of tokens at a discounted price.

During the ICO, investors can purchase tokens with fiat currency or cryptocurrencies. The project is taken to completion if the ICO raises the ‘soft limit,' i.e. the minimum desired fund, or more than that. If a project team fails to reach the ‘soft limit,' the ICO is deemed a failure, and the funds are returned to investors.

Pros and cons of ICO:

Pros:

• Positive network effect: Often the crypto projects are distributed apps (DApps) and more users often benefit the users, which is an advantage of an ICO.

• Digital Marketing:The business website, social media, messaging applications, and other online forums are all used for marketing.

• Large Liquidity:If a cryptocurrency becomes common, most crypto exchanges will list it, resulting in a large amount of liquidity.

• Big profit: the investor has a good chance of making a profit if the value of the coin appreciates.

Cons

• Uncertainty Frequently, the startup launching the ICO lacks a product, and although the whitepaper may well explain the technology, there is no assurance that the product will be produced.

• Unregulated: Since ICOs are uncontrolled, investors have little legal recourse if their money is lost.

• Danger to Money laundering: Many cryptocurrency projects provide anonymity, which poses a danger since criminals might use the ICO to launder money.

• Regulations : Regulations vary by country and are still being developed in many, so it's unclear if ICOs would be permitted in the future in any given country.

Differences between ICO (initial Coin Offering) and IEO (Initial Exchange Offering)

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The IEO (Initial Exchange Offering) is similar to the ICO (Initial Coin Offering). It's also a way for start-ups to raise funds by selling new cryptos to the public. However, as the name suggests, it means using a cryptocurrency exchange to raise funds. As a result, IEOs are kept on a cryptocurrency exchange site.

Similarly to an ICO, investors purchase the sold tokens before they become available on the market. Nonetheless, in IEO, only the registered members of that exchange can contribute.

I give the difference of ICO (Initial Coin Offering) and IEO (Initial Exchange Offering) in the table below.

Initial Coin Offering (ICO)	Initial Exchange Offering (IEO)
The issuer offers the token directly	The token is offered by an exchange which serve as middle man
Participants does not need any documents verification to participate	The participants must verify his/her identity before he/she can take part
The participants usaully have access to thier token in thier wallet	The participants don't have any access to thier token cause it is usaully locked for a certain period of time

Avalanche (AVAX)

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Avalanche was founded by Emin Gun Sirer, A decentralized application network that allow developers to deploy blockchains that fit certain needs and that can interoperate with other blockchains to create a comprehensive ecosystem.
The project was developed by Ava lab which is backed by Andreessen Horowitz, Initialized Capital, Polychain Capital, amongst other investment firms.

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The seed sale of the token started in February 2019 , while the private sale started May 2020.

The Public pre-sales of the Token started on 15th of July 2020 and ended 29th of July 2020. Those that participated were able to buy the token through 3 option

• Option 1: The first option allow participants to purchased the tokens for $0.50 each, with a one-year vesting period and quarterly unlocking. The terms of this distribution are the same as those of the Private Sale. The maximum check amount is $25,000.

• Option 2: The second option allow the participants to purchased the tokens for $0.50 each, with a 1.5-year vesting period and quarterly unlocking. For the first four hours of the sale, the maximum check size is $25K USD, rising to $2.5M USD for this allocation.

• Option 3: This option allow Participants to purchased the tokens for $0.85 each with no lockups. This allocation impose a maximum check size of $5K USD to avoid concentration, incentivize distribution, and incentivize tokens for staking.

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The token is limited supply with a total number of 360 million supply of AVAX and a maximum 720 million supply of AVAX.
The Token current price is now $34.49 according to Coinmarket price.

_{AVAX price on Coinmarketcap}

Conclusion

ICO is a very good investment as huge profit can be attained, but not all ICO are real investor must be very careful before participating in an ICO he/she must make a very good research.

To the attention of professor @imagen this is my homework task.