When Ethereum introduced the smart contracts feature, people instantly started making their own coins and the idea of ICOs was created.
Initial Coin Offering (ICO) is a type of investment search, when the founders of the project have full control over the money, invested and take full responsibility of it too.
The situation with ICOs quickly became extreme, because of how many projects were selling their coins and dumping after the launch, making investors lose their money.
Market needed controll and IEO gave the market what it needed.
Initial Exchange Offering (IEO) is a type of investment search, when the founders ask an exchange to hold the sale, also allowing the exchange do all the marketing.
This means a deeper project examination, because an exchange can’t lose investors’ trust and loyalty for listing garbage.
Expectedly, that worked well, but then the decentralisation hype started and the community was introduced to decentralised exchanges as well as IDOs.
Initial Decentralised (DEX) Offerings are similar to IEOs, but with one major difference: the exchange, they are held on, offers full or partly decentralisation. That makes buying token on an IDO much cheaper, because of reduced fees. When you use a centralised exchange - you pay a fixed fee, that is usually a quite expensive one. However, decentralisation means a user-based net with millions of computers, processing transaction, asking for much less money, then an exchange.
That’s why IDOs are so popular now. Three major factors: reliability, low fees and decentralisation trend have made IDOs perfect to find your first users and do the initial investment search.
And we’d like to top it all off with discussing three of the most interesting types of initial coin offerings: STOs, IFOs and SHOs.
STOs offer you a thing, called security tokens instead of regular utility tokens. Security tokens are assets, that not only have financial value - they can also give you some rights or obligations, signed in digital form. We will definitely discuss this topic in an article some time later.
IFOs are coin offerings of the assets, that are only to be released. You basically buy a coin, that doesn’t exist yet, pumping it’s price even before the launch. A risky, but rather profitable idea, because IFO usually deliver the lowest possible token price. As an example, Polkadot were the first ones to hold an IFO. The sold their DOT token’s futures for 75$ with a guaranteed 100$ value by launch time and the ones, who risked, made pure profit.
Strong Holder Offerings (SHO) have a goal of attracting the holders of a certain currency to the project. DAO Maker would be a great example of a platform, holding such offerings.
However, there is one more offering type left - LBP. Liquidity Bootstrapping Pool is an auction, where you can buy an asset, that constantly decreases in price, with investors pumping the price, while the auction is still on.
We could also mention IGOs, but those are basically IEOs and IDOs, that are used for gaming assets - nothing noticeable.
We would personally recommend you to switch between the types of coin offerings, you participate in, cause experience is what values the most. Cheers!
