What are INOs, IC0s, IE0s and IDO

A remarkable means of increasing awareness, sustainability, and profitability of a company in the traditional Finance system was offering its stocks to the public. These shares target large firms, venture capitalists, and individual investors. These Stock launches or Initial public offerings (IPOs) were used to raise additional equity capital for businesses, to monetize the assets of private shareholders such as firm founders or private equity investors, and to make current holdings or future capital raising easier to trade by becoming publicly traded.

Using Similar yet refined methods, the Blockchain and Cryptocurrency ecosystem has adopted these systems in terms of INOs, IC0s, IE0s, and IDOs for fundraising and creating seed capitals for its projects.

Start-ups developing Blockchain solutions typically use these methods to raise funding to support the project without having to give up a portion of their ownership to investors or the general public.

With this method, investors can buy into a new cryptocurrency token launched by the project through an INO, IC0, IE0, or IDO. This token could represent a stake in the company or project, or it could have some utility connected to the product or service that the company is selling.


How do the INO, IC0, IE0, and IDO work?

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In simple terms, you have a value proposition that you want to build on top of the Blockchain Technology infrastructure, but you don't have the cash to make it happen. What do you do? Firstly, You write a technical but simple document that gives a comprehensive explanation of the problem you desire to solve, the solutions you are prescribing as well as the process it would take to attain this solution. This document could be a whitepaper, lightpaper -as it gives the investors reason to either buy into the project or not.

Second, you must devise a strategy for pitching and marketing your concept to investors ranging from those with extensive expertise in the Blockchain niche to those with little or no knowledge of the Blockchain. To easily answer inquiries from investors on the utility and benefits of your project, you'll need partners like a developer, a project manager, community moderators, and digital marketers.

Those who invest in your project would pay in either Fiat or cryptocurrency and receive a portion of the technology sent to them In form of a token until the token is listed on the Cryptocurrency exchanges.

We'll go through each of theseTerms in further detail, as well as their advantages over one another, in the sections below.


IC0s - Initial Coin Offerings

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Initial coin offering (IC0) is a type of fundraising activity in the cryptocurrency and blockchain environment. In an IC0, a fraction of the project's coin is sold in the form of "tokens" to investors . The tokens are promoted as future functional units of currency if or when the project's funding goal is met.

The first IC0 in the cryptocurrency markets which was then known as a token launch took place in July 2013 by a company called Mastercoin. One of the successful IC0s was later performed by Ethereum which was able to raise 31,000 BTC in July 2014 from her token sales.

IC0s could be Public just like IPOs, the target is the general public anyone could be an investor in these types of IC0s. The other type of IC0 is the private IC0, which allows only a trusted and limited number of investors to participate.

IC0s have been a fundamental way of raising capital for startups but they are highly unregulated and as such the probability of failure and fraud is high. It is of worthy note that the SEC has started looking for measures to regulate IC0s of late to secure investors from being scammed.


IE0s - Initial Exchange Offerings

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The initial exchange offering, like IC0s, is a technique of raising funds that are regulated by a recognized cryptocurrency exchange. IE0s are different compared to IC0s because the fundraising process and token sales are controlled by the exchange. It gives room for more credibility as the project is thoroughly investigated before approval.

IE0s are preferred by investors because exchanges take the time to review the project whitepaper, which includes information about how the funds received will be used. The project's tokenomics, roadmap, and utility. If all of the prerequisites are completed, the exchange will list the token, giving it public legitimacy

As much as IE0s appear to have advantages over IC0s in terms of easy operation and trustworthiness, projects may be required to pay for high-cost listings and may also fall victim to a pump-and-dump strategy.


IDOs - Initial Dex Offerings

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Initial Dex Offerings is more or less an improved version of IC0s and IE0s which is performed on a decentralized exchange. This indicates that projects who follow this new fundraising method launch a token through a decentralized liquidity exchange. These tokens are listed on the decentralized exchange directly and right away for investors to purchase from this exchange In liquidity pools. The Raven Protocol was the first of this kind to be announced in June 2019 and was a huge success due to its advantages which were available to all IDOs. Fast trading, immediate liquidity, and an open way of fundraising in a fair manner.

IDOs are exempt from paying significant fees before being listed or vetted on centralized exchanges. The members of the projects, which are decentralized autonomous communities(DAOs), vet them. This enables for and encourages project-wide creativity and collaboration.

A major limitation of IDOs is the technical know-how to operate Dex platforms and the need for scalability and awareness. A simple Dex platform could pose an operational challenge for an average crypto trader.


INOs - Initial Non-Fungible Token offering

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An Initial Non-Fungible Token (NFT) offering is based on a Crowdfunding model of the previous systems we have highlighted but with its difference, as it deals with raising funds from the sales of a definite number of non Fungible tokens at the early periods of the project.
Due to the increasing and swift adoption of NFTs, several projects are now built with the NFTs using decentralized launchpads and marketplaces as a means of raising capital for their project. This non Fungible token grants access, uniqueness, and utility of the technology to the investors.

Many of the advantages of INOs include being easy to launch, cheaper listing cost or transaction fees, Community building and a strong public image as owners/holders of these NFTs become ambassadors of the project.

With that said, it is important to note that these are simple and common ways of raising capital to fund Blockchain projects, but they may be subject to future government regulations. Regardless, Blockchain Technology has a wide range of applications, and we can only imagine what innovation the future holds.


Author: Gate.io Observer: M. Olatunji
* This article represents only the views of the observers and does not constitute any investment suggestions.
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