Just as we have IPOs (Initial Public Offerings) in the stock market to raise investments and capital of a certain asset, we have the same idea in the crypto market. But as the fundamentals are very different the way investments are raised is also in terms of blockchain.
In IPOs shares of a certain company are sold to the public and as a result, they raise capital. In the crypto market, the coins are taken up for sale and the project raises money. This article aims to help you understand the basic differences between different types of offerings in the crypto market.
About ICO
ICO stands for Initial Coin Offering. Newly launched projects and crypto coins are offered to the public in exchange for other cryptocurrencies or in some cases fiat as well. Since the crypto markets are unregulated there are chances of pump and dump schemes that investors may fall prey off. 2017 was the time when ICOs took over the market and its craze was everywhere. A study suggests that in 2017 80% of the ICOs done were scams and as a result, a lot of people lost their money.
People invest in ICOs in the hope to get newly launched coins at a very cheap price that has a huge potential in the market.
ICOBench, CoinFactory, CoinGecko are some of the platforms that allow users to partake in ICOs.
About STO
STO stands for Security Token Offering. It is like the ICO but it goes a step ahead and links itself to the underlying assets just like stocks, real estate, or bonds. STO that are listed on exchanges have to undergo extensive investigations and need to fully comply with the financial regulations. STOs are considered more credible and have less chances of manipulation as compared to ICOs.
STOScope, STOKR are some platforms that you can visit if you are interested in STOs.
About IEO
IEO stands for Initial Exchange Offering. This is supervised by exchange and is exclusively for the users of that particular exchange. Although the same project could have a lot of IEOs happening at the same time. IEOs started getting attention near the end of 2019 when Binance came forward with their Launchpad. After the offering is done. The token issuer pays a listing fee along with any amount of tokens are to be given to the exchange for using its services.
Binance, Kucoin, Huobi, OKEx allow IEOs.
Trading comes with risk, if you are looking to join any of these offerings or investing you should know certain things, What Should You Look For When Buying New Coins? is a good start.
