Crypto has become a fertile ground for new projects to develop when it is possible to raise capital in many different forms from the community such as ICO, IEO, IDO. So what are ICO, IEO, IDO? Join Weakhand to learn the differences between the three forms of capital raising mentioned above.
What is ICO?
Definition of ICO
ICO (short for Initial Coin Offering) is a method of raising capital in the field of cryptocurrency, allowing the project to issue a digital currency (new coin or token) and sell them to the market to mobilize money. capital. Token buyers will receive that token at a preferential price, expecting that the value of the token will increase in the future and they will profit from holding the token.
The way ICOs work is usually done through a website or an open source platform. Projects will post a document presenting their project, including details about the product or service to be developed and the planned use of the funds raised from the ICO. After the project releases new tokens, token buyers will use digital currencies such as Bitcoin or Ethereum to pay and receive new tokens.
Some advantages of ICO are that it allows crypto startups to raise large sums of capital more quickly and easily, giving potential investors the opportunity to invest in potential projects and possibly Get great profits from holding tokens. However, the disadvantages of ICOs are that most ICO projects are still young and risky, finding information about the project before investing is often difficult, and token buyers do not have their rights protected. benefit if the project encounters problems or fails.
Development history of ICO
The term ICO has appeared since 2013, however it was not until 2014 that this term became popular with the Ethereum ICO event and has gradually become more popular in the community since then.
In the beginning, ICO projects were mainly advertised on special forum pages for the community of cryptocurrency believers. Then, with the development of blockchain and cryptocurrency technology, online sales and ICO platforms were created, allowing ICO projects to attract a significant amount of investment from the global community. bridge.
Since 2017, ICO has become a widespread trend and attracted the attention of investors and the public thanks to its potential and highly profitable projects. Many blockchain startup projects have conducted ICOs and raised large amounts of money, but there are also many cases of failure and causing confusion for investors.
Since 2018, due to potential risks and unclear legal issues, the number of ICO projects has decreased and investors have become more cautious.
What is IEO?
Definition of IEO
IEO (short for Initial Exchange Offering) is a form of capital raising similar to ICO, but the difference is that instead of organizing ICO directly on their platform, projects will cooperate with centralized exchanges. center like OKX to sell tokens and raise capital from investors on that exchange.
We can simply understand how IEO projects work as follows:
- Projects register and issue tokens through a centralized exchange.
- The exchange will conduct a project quality check before agreeing to conduct IEO and list the token on the exchange.
- Buyers will register an account on the exchange and use cryptocurrencies such as Bitcoin, Ethereum or stablecoins to buy tokens. Buyers will need to comply with customer policies and platform standards.
- Tokens sold through IEO will be listed directly on the exchange, creating conditions for buyers and sellers to trade tokens easily and quickly.
The advantages of IEO include minimizing risks for investors because ICO projects must be thoroughly checked by the exchange, ensuring the quality of the project. Besides, the fact that the token is listed directly on the exchange helps increase liquidity and development of the project.
However, IEO still has some risks such as exchanges can create fake ICO projects, or accept projects that are of low quality or do not meet various factors. Therefore, investors still need to self-evaluate and check information about the project before deciding to invest in IEO.
Development history of IEO
IEO has begun to appear and develop since 2018 after the decline of ICO capital raising because the censorship nature helps users feel more secure in buying tokens.
IEOs thrive because centralized exchanges can provide outstanding benefits such as accurate authentication of users, ensuring ICO projects are not a scam, conveying Quick information to users,…
However, IEO subsequently experienced certain challenges, including security attacks and legal issues. Even so, IEOs are continuing to grow and are used by many crypto projects to raise capital.
What is IDO?
Definition of IDO
IDO (abbreviation for Initial DEX Offering) is a form of startup capital raising organized by crypto projects on a decentralized exchange (DEX). At an IDO, investors can buy a project’s new tokens with other tokens on the DEX by participating in trading “pools” established on the exchange.
During the IDO process, the project’s tokens will be offered to investors at a preferential price compared to the publicly listed price afterward. After the IDO ends, new tokens are issued and listed on the DEX for all users.
IDO has become popular because it allows DeFi projects to attract capital from the crypto community quickly and quite flexibly, as well as allowing investors to find investment opportunities in projects. Potential in the Crypto industry. However, IDOs also have potential risks, including the risk of price bounces and crashes, as well as competition with other projects in attracting investors’ attention.
Development history of IDO
Compared to other forms of capital raising, IDO is quite new, only appearing since 2020 and growing thanks to the explosion of DeFi summer. With the support of blockchain, an IDO is always transparent because users can check any parameters of the capital call such as the amount of money raised, number of participants, etc.
IDO is growing strongly because the profit it brings can reach hundreds or even thousands of times from the selling price, so many users have flocked to hunt for projects selling IDO. However, because of the lack of censorship, some projects also take advantage of users’ gullibility and commit fraud.
The Difference Between ICO, IEO, IDO
What is the difference between ICO, IEO, and IDO capital raising forms? Let’s compare through the table below:
|
|
Evaluation criteria |
ICO |
IEO |
IDO |
|---|---|---|---|---|
|
first |
Risk |
High |
Short |
Medium |
|
2 |
Related parties |
Project |
Cex floor and project |
Dex floor and project |
|
3 |
Profit margin |
High |
Medium |
High |
Summary
Above are the things everyone needs to know to understand what ICO, IEO, IDO are. Weakhand hopes that through the above article, everyone can see the difference between the above 3 forms of capital raising and then choose the appropriate method. appropriate to seek profit.
