The concept of fundraising has been popular over the past hundred years. Every person entering a new business will obviously raise funds for their inception. Many fundraising methods are followed for collecting the required capital such as finance, bank loans, peer-to-peer debt, etc. Following these, many new methods started emerging for fundraising. In that regard, after the advent of cryptocurrency, many new methods of crypto crowdfunding have been introduced and they are utilized successfully in the crypto marketplace. For launching a crypto fundraising campaign, you should have your own crypto token.
All the newly created cryptocurrencies are stored in a secure ledger named blockchain. Blockchain is illustrated as an open ledger that can be accessed by multiple parties at the same time. While discussing their benefits, blockchain records information that is really hard to alter barring all sorts of agreements from all the involved parties. Every new record that gets stored in the blockchain becomes a new block with a unique identifying hash. The process of linking those blocks into a mass chain of records is the blockchain.
There are numerous crypto fundraising methods prevailing in the crypto ecosystem. Now, we shall discuss those methods and the complete information about crypto fundraising.
Popular Crypto Fundraising Models
There are multiple crypto fundraising methods in the crypto space. Here I’ll list you with those methods.
- IPO ( Initial public offering)
- ICO ( Initial coin offering)
- STO ( Security token offering)
- IEO ( Initial exchange offering)
- IFO ( Initial farm offering)
- IDO (initial dex offering)
- ITO (Initial token offering)
- IAO ( Initial airdrop offering)
- IFO ( Initial fork offering)
- ETO ( Equity token offering)
- UTO ( Utility token offering)
- ICCO ( Initial convertible coin offering)
- ATO ( Asset token offering)
- DSO (Digital security offering)
These are the crypto-based fundraising methods. All these methods are not popular and well-known among the people. However, some popular methods are still preferred by many startups. The most popular methods of crypto fundraising are ICO, STO, and IEO. Now we shall discuss those methods in detail.
ICO ( Initial Coin Offering)
Initial coin offering is the most popular method of crypto fundraising. In ICO, the fundraising company will create a new crypto token, or establish a new service that will attract the potential investors to put funds into their project. The fundraising company will offer its newly created crypto tokens in exchange for funds raised from the investors.
For raising a maximum level of funds, the company will follow various marketing strategies for promoting its project on various channels. After the completion of an ICO campaign, the company will list its crypto tokens on popular crypto exchanges. Once the tokens get popular, the value of a crypto token will increase and investors will also get benefited. There are numerous benefits that can be obtained by launching an ICO.
Perks of Launching an ICO
- ICO is an independent platform for raising funds.
- High liquidity can be achieved in a short time.
- Launching an ICO costs very less when compared to the other methods.
- There is no limit to raising funds.
- No third party or central authority intervention.
- No regulatory measures are followed for launching an ICO.
STO (Security Token Offering)
Security token offering is a crypto fundraising method where the fundraising startup will raise funds using security tokens. Security tokens are created by pegging real-world assets like bonds, real estate, commodities, etc. But, for security token creation, getting approval from the SEC is highly mandatory. All the guidelines of the SEC should be strictly followed. After getting approval from the SEC, you can successfully launch your own STO campaign.
Depending on the types of assets backed, security tokens are divided into three types viz. Debt tokens, equity tokens, asset tokens. A popular token standard named ERC1400 is used for creating security tokens. STO also offers numerous advantages. Now, we shall discuss the…
Benefits of Launching an STO
- Asset value can be fractionated into smaller values.
- Offers complete ownership to the token holders.
- Highly risk-free and scam free due to SEC regulation.
- Doesn’t include middlemen and brokerage.
- Offers high liquidity.
- High market efficiency.
- Builds trust among the investors.
- More transparency.
- Global accessibility.
IEO (Initial Exchange Offering)
IEO is also a method of crypto fundraising where the campaign is facilitated by a crypto exchange. Crypto token sale is implemented by a crypto exchange but the fundraising startup should pay a listing fee for the percentage of tokens that are sold during IEO. The duty of a startup ends once the tokens get listed in an exchange. Then, the exchange will take a certain percentage of tokens and offer incentives for the token buyers as their marketing strategies.
In IEO, the token buyers can’t take a full contribution over the smart contract. The investor has to create an account in that particular exchange and fund their wallets with fiat currency. In return, the investor will get crypto tokens from the crypto exchange.
Benefits of Introducing your Token through IEO
- More legitimacy
- Startups need not worry about token sales.
- User-friendly experience.
- Highly fast process
- Secured token sale occurs.
Crypto Fundraising Methods that I’ve explained above are the most popular ones in the crypto marketplace. Most people are confused about choosing the fundraising method for their business. Now, we shall discuss…
How To Find The Best Method For Your Business?
Choosing the ideal fundraising method for your business completely lies in your hands. Because each method has its own advantages. First, don’t choose the fundraising method based on others’ opinions. You have to analyze and do ground research properly about each method and then go with that particular one.
Completely analyze which fundraising method exactly suits your business. If you still have any confusion on choosing the best method, approach a reputed and esteemed crypto fundraising platform development service provider in the crypto ecosystem. They’ll properly guide you with the best method and will help with launching your fundraising campaign also.
Closing Comments
From the above-mentioned information, it is clear that the crypto fundraising methods are more ideal than the traditional ones. Each method has its own features and benefits. Therefore, it completely lies in the hands of a user to choose the best method for your crypto business. In that regard, after deciding the ideal method, you should choose the best service provider for proceeding with your project in a successful manner. Hence, choose a renowned Crypto Fundraising Platform Development service provider in the crypto space for getting the job done. Having those skilled and experienced professionals on your side will help you stand top among your competitors.
