Fundraising is important for any project. In both the real world and the crypto world, fundraising is important to kickstart. It also brings lots of investors and lets many people know about the project. In the crypto world, fundraising happens in an interesting manner. There are things to offer people who are ready to invest. And later when the project goes very well, the initial investors are rewarded well. But the concept differs from one project to another project. In some projects, the initial investors are always considered and rewarded well whenever the project gets a fortune.
With the help of modern world blockchain technology, we now have several ways to do fundraising. The traditional way is to create an IPO in the standard share market but in the crypto world, a similar thing is called ICO. The top methods to do fundraising have been listed as follows and ICO is the first item that many crypto projects are already doing and are also very successful in doing this. When I started my crypto journey, I did not know about all these options. Only recently I came to know about these many fundraising facilities.
Initial Coin Offering (ICO)
Similar to an Initial Public Offering (IPO) for stocks, an ICO is a way for a company to raise funds by issuing and selling digital tokens to investors. The initial offering and circulation supply can also decide the value of the token and the project promotion becomes an easy task.
Security Token Offering (STO)
Similar to an ICO but real-world assets, like company shares or real estate back the tokens. For fundraising sometimes people come up with great concepts but pledge their real-world assets to get the necessary funds. This is a very common thing in real-world business planning as well.
Initial Exchange Offering (IEO)
An IEO is a fundraising event in which a cryptocurrency exchange acts as an intermediary between the project and the investors. There would be some benefit here for both the project owners as well as the exchange. The good thing about this is that the coin gets an easy exchange listing too, which can be a challenging task.
Airdrop
A method of distributing new tokens to existing holders of a specific blockchain currency, such as Bitcoin or Ethereum. This is also a very common approach. People airdrop their tokens to existing currency holders by saying that a snapshot would be taken at one point and from then on the token distribution would start. Some projects do the airdrop for nearly a year and some projects would do it in one shot.
Mining
A way to raise funds is by creating new digital currency through the process of “mining,” which involves using computer power to solve complex mathematical problems. Many projects release mining software and provide instructions to mine. This way the coin can be mined and at the same time the early miners would also get some benefits from mining.
Binance Launchpad
Binance, one of the largest cryptocurrency exchanges, has a launchpad where projects can raise funds by selling tokens to their users. This is gaining popularity these days and not just Binance, there are also other cryptocurrency exchanges adopting this model.
It's important to note that raising funds through cryptocurrency can be risky, as the value of digital currencies can be highly volatile. It's also essential to make sure that you are in compliance with all relevant regulations, as the regulatory landscape for cryptocurrency is still evolving. More than project owners, investors should be very careful as there are many cryptocurrencies that are mere scams.
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