Steemit Crypto Academy Contest / S5W5 - Initial Coin Offering in the Crypto Ecosystem
Share in detail your understanding of the Initial Coin Offering (ICO) and the purpose of the event in the crypto ecosystem.
Discuss your understanding of the Initial Exchange Offering (IEO) and Initial DEX Offering (IDO). What platform is utilized for IEO? Give an example of a platform and how it works for the coin offering.
Have you participated in ICO/IEO/IDO before? If yes, what's your experience? Discuss a project that has performed a successful ICO before and the result of the event.
What are the merits and demerits of Initial Coin Offering?
Hello friend's,
To start up a crypto project or any Blockchain technology is really expensive because a Crypto project is successful due to the fact that it is made up of so many awesome technologies like smart Contact, cryptography and consensus mechanisms. All this make the development of crypto project really expensive and complex to design or develop especially to ordinary people.
As I was saying to successfully develop a Crypto project like steem or Tron a lot of money is needed so therefore developers participate in what is currently known as ICO also known as Initial Coin Offering. From the term Initial Coin Offering you should know the meaning because it's a self explained term.
The term Initial Coin Offering is coined from three words Which are Initial, Coin and Offering. The term Initial means beginning, first or starting point of an activity or event. The term Coin is a medium of exchange between two or more people especially during business activities because this coin tends to have a specific value, the last term Offering mean willing contribution for a specific project in a specific period.
So if you bring this definitions together you would be glad to get a lovely and understandable definition for Initial Coin Offering like mine below. Initial Coin Offering can be defined as a contribution done by selling and buying the first set of token for the sake of finishing up an upcoming crypto project. The above definition is the simplest definition for Initial Coin Offering. Also you can also define Initial Coin Offering formally by saying, The ICO (initial coin offering) program is used by projects to introduce new tokens to the crypto space and to raise funds required to make the token a full cryptocurrency. There are basically two types of of Initial Coin Offering there are:
- Private Initial Coin Offering and
- Public Initial Coin Offering.
Public Initial Coin Offering:
As the name implies this is an Initial Coin Offering that has to do with the sourcing of funds by selling initially set of tokens to the public, so therefore when this Initial Coin Offering is created every person is permitted to participate in this fund raising project. In public Initial Coin Offering every individuals can buy such tokens with out and pass or special permission. Unfortunately this type of project mostly turns out to be scam where the developer runs with the funds generated and never use the funds generated for any future cryptocurrency as the promise. In this coin offering this are not limited to how much you can buy for example you can decide to buy just 1$ worth of the Initial Coin Offering.
Private Initial Coin Offering:
Just as the name implies Private initial Coin Offering is the opposite of Public Initial Coin because this offering is done by just fewer set of people like a company, in this offering there are limited amount of funds that can be bought because the developers mean only few high rated investors, traders or companies would be permitted to buy the Initial Coin Offering. For example an Initial Coin Offering can decide that you cannot buy less than 500$ worth the offering.
🐬 The main reason for running an Initial Coin Offering is to raise funds or you are free to say it's a way developers of crypto project seek for funds to successfully develop a crypto asset, without the exitance of Initial Coin Offering alot of crypto project won't be in existenace all because they money used to create a coin is really much and we know only few people or developers can do that with out disturbing or seeking for financial support.
🐬 The second reason why Initial Coin Offering are held is to scam people, despite the fact that the has been so many sucesssful initial Coin Offering so many criminals has now turned initial Coin Offering into a Ponzi schemes or a get rich fast way. At the end of the Initial Coin Offering the developers tends to use the fund's raised for their selfish reasons and this set of people usually wait until a targeted amount of funds is generated before the disappear into thine air with the funds.
Initial Exchange Offering
Initial Exchange Offering is another term that has same concept with the Initial Coin Offering because it also has to do with the creation and selling of initial Coin/token for the sake of generating funds to successfully create a crypto asset. Just that in initial Exchange Offering this offering is done on a very much trusted and famous exchange like Poloniex, and Binace, instead of hosting the offering in the project official site
An initial exchange offering (IEO) is a method for new businesses to raise capital by selling utility tokens that confer preferred status with the company via a cryptocurrency exchange platform. In short, crypto exchanges help to oversee the token sale by scrutinizing the project vetting process. The IEO began in January 2019 with the launch of the BitTorrent Token by Binance Launchpad (BTT). The initial offering sold out in less than 15 minutes, raising more than $7.1 million.
Initial DEX Offering (IDO).
Initial DEX Offering IDO is more like an advanced type of offering because it was developed to counter the terrible scamming active and other terrible activities held on Initial Coin Offering and Initial Exchange Offering, unlike the Initial Coin Offering and Initial Exchange Offering, Initial DEX Offering is decentralized and free from control and permission. In other words I do say the Initial Dex Offering is a permission-less type of of offering done to raise funds for projects.
As the name implies Initial Dex Offering can also be defined as a crypto token offering that takes place on a Decentralized Exchange (DEX). The Liquidity pools affects in IDOs by producing liquidity after the sale of asset. During the token generation event, a typical Initial Dex Offering allows users to lock funds in exchange for new tokens. Most of the funds generated are then added to the Liquidity Pool where the new generated token is before being used for the project afterwards.
IDOs was Initial designed to allow projects to distribute their tokens at a low-cost and straightforward manner. IDOs have been around for a while. To participate in an IDO, you'll need a digital wallet like MetaMask as well as some cryptocurrency to subscribe to and pay transaction fees. Always conduct your own research on the project and invest through a reputable DEX.
Binance Launchpad is a service provided by the Binance exchange that assists new projects with their launch while hosting an IEO for the token on their exchange.
As previously stated, before an IEO can be held, the exchange platform must conduct a series of evaluations to determine whether the project is worthy of being promoted on their exchange platform. The project developer will pitch the project idea to the exchange in the first stage, and the exchange will investigate whether the project is real or a pump-and-dump scheme.
The exchange then investigates the token's risk tolerance in relation to the proposed solutions to problems assumed by the project in the second stage.
How to participate in offering using Binace launchpad.
❤️ Navigate to [Binance Launchpad] > [Earn]. There, you can find out which projects are getting ready to launch token sales. You will be able to commit BNB to a specific project if it is available for subscription.
Note :The subscription/calculation period is usually 7 days long. Binance will calculate your participation limit during this time period based on your average BNB balance over a specified number of days. Following that, you will be given a short time (1 hour) to commit your BNB. Follow the Binance Announcements Telegram channel to avoid missing out on this opportunity.
❤️ Go to the Launchpad page and select [Commit BNB]. Your maximum commitment limit will be displayed based on the amount of BNB in your Spot Wallet.
❤️ When you commit BNB, they are temporarily locked and cannot be redeemed until the final token distribution period. The remaining BNB will be unlocked and transferred back to your wallet after deducting the appropriate amount of BNB and distributing the tokens to your Spot Wallet.
❤️ Binance will begin trading for the new token after the final token allocation. You can keep your tokens or trade them on the spot market.
No I haven't taken part in an initial Coin Offering or initial Exchange Offering or any kind of offering, although I have been reading and hearing about the offering. In other words I don't have any experience to share with the great community.
As of now November 2022, Ethereum was the second-largest digital currency by market capitalization. While Bitcoin is a cryptocurrency, Ethereum is a digital currency as well as the platform for decentralized applications that use smart contracts.
Ether tokens were sold for $0.31 each, and the token is now worth just over $3,128 as of September 27, 2021, providing a substantial return on investment (ROI) for those fortunate investors who purchased during the ICO.
Over 60 million tokens were sold at an average ETH ICO price which was approximately $0.31, at that time, one Bitcoin could purchase as much as 2,000 Ether tokens, so by the end of the Ether ICO, Ether pumped to 1,337 ETH for each BTC. Then Ethereum was initially launched in the month of July 2015, approximately one year after the ICO took place, with this success rate
ETH token Initial Coin Offering is generally concluded as one of the most successfully Initial Coins Offering , it has a record of more than $18.3 million with the $0.31 Ethereum token ICO price.
Despite how much features that is embedded in to Initial Coin Offering, it would definitely have done sides just as it has good sides. In the table below you can learn More about the merits and demerits of Initial Coin Offering.
| Merits | Demerits |
|---|---|
| ✅Initial coin offerings allow crypto projects to raise funds to cover some of the costs associated with developing the token in order to make it available to all and possibly add more functionality. | ❌ Some projects may fail to even reach the ICO potential price after the program, rendering them unsuccessful and negatively impacting investors' capital. |
| ✅Because the tokens are sold at a much lower price during the ICO, it allows investors to get in on new projects early and position themselves for a high return on investment. | ❌ Because some ICOs are designed to defraud the public, they can be used to rob people of their hard-earned money. |
| ✅The ICO program does not always involve paperwork, making it simple for investors to participate in the token sale. | ❌ High hopes of investors dashed by a failed ICO; this is a case where the project team resolves to dissolve the project and return investors' money shortly after the ICO. |
| ✅ICOs are always highly liquid, which means that there are no liquidity barriers when attempting to invest in them. During the ICO sale period, tokens are always freely available for purchase. | ❌Most ICOs lack a legal framework to guide the program, making it extremely risky to participate. |
Thank you very much for going, the offering of coins is so amazing because it has made the Crypto world a place for both the rich and poor and it has also caused so many people to accumulate much wealth than the would ever expect, for example just imagine how much wealth the buyer of Ether token must have accumulated. Please and please make research well before investing in a Initial Coin Offering!!!
I am inviting @sahmie @preye2 @jueco to Participate in this lovely contest
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Yes that's a wise decision because failing an exams is worse missing a crypto assignment, I am wishing you success brother, please make steemians 🥲 proud.
Thank you, friend!
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You always deliver when it comes to writing quality and understandable articles friend. ICOs offer entrepreneurs with an easy and direct way of raising money by allowing them to release their own digital currency in exchange for investments from the public.
When thinking of participating in either an ICO, IEO or IDO, we should make sure we make proper research so we're assured of making smart investment decisions.
Thanks for sharing friend, and goodluck in this contest. #steem-on.
I will appreciate if you equally engage on Mine
Sure bro I will do just that, I am glad that you appreciated and learnt something new today from my post. Thank you very much for going through.
🥰 awwn I am really grateful and I appreciate .
ICO allows crypto project to raise funds which will be used to sponsor other expenses that will be incurred during the process of the development of the said token. This is indeed a valid point my friend because crypto projects needs funding and to get this funding a portion of the crypto asset is always mapped out to be sold at discounted rate to investors so as to raise the amount needed to continue the project. I wish you success in this contest @starrchris.
Thank you very much bro, I am really grateful 🥲. I love how you gently went true my post
Upvoted! Thank you for supporting witness @jswit.
Thank you very much
@starrchris
This is well said as ICO is used by project to raise funds for their growth and flourishing and also to introduce new tokens in the crypto ecosystem. I totally agree with this Salient Point #steem-on
Thank you very much for appreciating and going through my article, your comment will really go a long way
This article is so wonderful man, you wrote like a genius, indeed I have gained a lot of knowledge from this article. Thank you very much for sharing.
That's nice to hear my brother, I am glad you went through my post. Thanks 👍
Hola amigo.
Si es cierto, con tu post aprendí también y comprendí más acercas de las ofertas inicial de monedas, las públicas y privadas.
También que las diferencia a cada una y las ventajas y desventajas.
Te felicito. Suerte.🤗❤️
That's really amazing that my article has really made you much more knowledgeable. thank you very much, wishing you success.
Gracias a ti amigo.
Feliz noche.
Sweet dreams friend