Generally, Crypto startups seek funding for the development of their project from the sale of their tokens, Token sales are generally carried out in three methods, namely ICO, IEO and, STO and Maybe you are familiar with these three methods but do not know what they mean. Well here is an explanation of the three methods.
ICO
Initial Coin Offering or ICO is one type of crowdfunding using cryptocurrency to raise funds. ICO is the most popular way to get funds from investors to develop projects, and investors who want to fund crypto projects get their coins.
A project generally creates their own ICO site that contains project details, coins, roadmaps, teams, whitepapers, and how to buy their coins as well as details of profits for investors. Prospective investors can generally buy their coins with crypto Bitcoin, Ethereum, and Stablecoin and some can be purchased with fiat. After the ICO ends, the token/coin will be released to the market (crypto exchange) with a predetermined starting price.
Projects that are made for the long term, the price of the coffee will increase over time. However, for coin projects that are made for short-term profits, generally, the price of the coin will be hype at the beginning of the release to the market and will obey drastically and will be difficult to rise again. Therefore, it is very important to conduct research so that your investment is right on target.
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IEO
Initial Exchange Offering or IEO is a prime coin seller conducted by the "generally named LaunchPad" exchange platform. If ICO is managed independently, IEO is managed by the crypto exchange on behalf of Startup who sells its tokens.
IEO has many advantages and benefits for everyone involved. The project will get benefits and contributions from the crypto exchange user base and ensure listing on certain exchanges. Also, the crypto exchange will examine the IEO project they will receive so that it will give investors confidence and security.
STO
Security Token Offering or STO is a security token that represents investment contracts in various assets such as crypto, shares, and bonds. STO is considered a merger of ICO and IPO because STO represents investment ownership information that is recorded in the blockchain.
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For various reasons, STOs are prohibited in many countries. However, the STO is considered to have a low risk, because the STO must comply with securities laws. Also, STOs are backed up with real assets "like fiat" which make it easier to value, because STO prices are generally not far from the real assets that support it.
Conclusion
ICO, IEO, and STO, have the same basis, which is to sell prime tokens. However, the three methods above have their advantages and disadvantages, and you need to know that the crypto industry has a high amount of risk. It's important to do in-depth research before investing.
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