Initial Coin Offering (ICO)
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Basics
- Initial Coin Offerings, also known as ICOs are the cryptocurrency version of crowdfunding. It is like a kickstarter, where the development team sells their new cryptocurrency to early investors to fund further funding. Startups are able to raise money directly from the public, without going through the rigorous process required of venture capitalists and banks.
- Since ICO's there have also been IEO's, STO's, and rICO's.
Usage
- "There were only 34 ICO funding deals until the end of 2016, raising a total of 121m, i.e. about 3.5m on average. In 2017, the Cambrian explosion of crypto projects began and brought us 1.8k ICOs raising a total of 12.9b since then, with 7.1m on average."
- Ethereum, The DAO and EOS total 74% of the total number of Ether collected in ICOs for the period of 2014 until 2018.
Critiques
- ICO's are often shady scams, but when you know which red flags to look for, you sometimes can find great projects. You can find a checklist here.
- From DeFi Weekly (12-9-2020):
"Flat rate ICOs - subjective to large/sophisticated snipers taking out the entire supply and creating a sense of the project being ‘sold out’. This feeling of FOMO then allows the sophisticated users to come in and dump on retail allowing them to pocket the difference."
