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There are several fundraising events that precede the full-fledged launch of almost any cryptocurrency project – they are called ICO, IDO, and IEO. Although these abbreviations differ from each other by only one letter, the essential difference between them is much more significant. Below, we will explain what exactly it is.
In the context of Web 3.0 solutions, fundraising is the process of attracting money and other resources necessary for the successful implementation of the project's full-fledged concept. By participating in fundraising events, investors have the opportunity to become owners of assets with potentially high liquidity.
The three most popular approaches to fundraising for Web 3.0 projects today are ICO, IDO, and IEO. So, what is IDO and ICO in crypto? What does the IEO acronym mean? Let's consider each of them in more detail.
An ICO (Initial Coin Offering) is literally the first release of a project's tokens or cryptocurrency to raise investments for further project development. The Mastercoin project held this event in 2013, and a little later, more famous projects, such as Ethereum, EOS, etc., followed suit.
Projects launching ICOs take on the responsibility of buying back part of the sold tokens at a fixed price, higher than that was during the ICO. In addition, they allow investors to exchange their products for the purchased tokens or cryptos at a reasonable rate or, as an option, get other bonuses that may benefit them.
At first glance, ICOs seem to be a big deal for both parties: projects obtain devoted supporters interested in their development and get their money, and the investors themselves receive the opportunity to access the extra services of these projects and, of course, to purchase coins, the value of which can quickly grow hundreds of times.
However, given the growing number of scam platforms that close down immediately after their launch (so their investors lose their money), trust in ICOs has dropped significantly since 2013.
That’s why, to interest the audience, you must put in much effort to gain trust and attract their attention. In such cases, it makes sense to contact a reliable ICO marketing agency.
IDO (Initial Dex Offering) is another well-known type of crowdfunding for new cryptocurrencies. It involves listing them on decentralized exchanges (DEX) and attracting investments through exchange liquidity pools.
The first-ever DEX event took place in 2019. According to this model, the project must be placed on the DEX launchpad for analysis by a third-party team of auditors. Upon receiving their positive verdict, the project is transferred to the launchpad exchange, which is specially created for startups. This makes IDO more reliable for potential investors since this audit helps protect their finances from scammers.
Another difference from an ICO is that during the IDO, investors receive only promissory notes to purchase tokens and not the project’s cryptocurrency. This means that they can obtain the tokens or cryptos after the completion of the IDO.
The disadvantages of IDO include possible gaps in auditing that still allow some scam projects to be listed, rapid growth in the cost of tokens/cryptocurrency due to a possible sharp increase in their demand, and risks associated with manipulating their cost due to the associated artificial increase in their sales activity.
If you want to bypass all these challenges without much effort and only take advantage of this event, contact our IDO marketing agency.
Due to the colossal number of people worldwide who suffered from fraudulent activities during ICOs and IDOs, IEOs came into their place in early 2017.
An IEO (Initial Exchange Offering) is held on a centralized exchange. However, unlike ICOs, IEO participants do not send money through a smart contract. Instead, they create an exchange account and deposit funds into their exchange wallets. Because the crowdsale is held on the exchange itself, the counterparty audits each project that plans to launch an IEO.
Projects also benefit from this fundraising format (particularly compared to launching an ICO) since they do not have to pay fees for subsequent listing. Moreover, due to the generally recognized reliability of the IEO concept itself, the budget for promoting this event can be much smaller. And, of course, one should not discount the presence of a large client base of the counterparty, which can automatically join this event even without knowing about the project's existence before.
A disadvantage of IEO can be considered the unobvious costs associated with the sale of tokens: in some cases, the listing fee can reach 20 BTC, and the exchanges themselves can request up to 10% of the proceeds during fundraising campaigns.
To overcome these obstacles successfully, you can resort to services of our IEO marketing agency.
Concerning reliability for potential investors, ICO is considered the riskiest event, while IEO has a high trust rating. At the same time, both ICO and IEO involve centralization (in the first case, it is provided by the project team itself, and in the second case, by a centralized exchange). In turn, IDO, as the name suggests, takes place on decentralized exchanges.
To participate in ICO and IEO, investors will have to register accounts and open crypto wallets on separate platforms, while IDO will be available to anyone who has a wallet compatible with a decentralized exchange.
Finally, implementing the ICO and IDO crypto events (excluding marketing – its budget may vary significantly) will most likely cost less than IEO since, due to intermediaries, projects will have to pay large commissions, which we wrote about above.
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Now, let's go over the key parameters that depict the ICO vs IDO difference:
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As investors increasingly encounter scam projects, their expectations of what those who want to earn their trust can offer them are also growing. Therefore, in the near future, an alternative fundraising model, STO (Security Token Offering), is expected to grow in popularity. This involves the issuance of security tokens that represent ownership of the underlying asset and comply with generally accepted financial standards.
Also, due to the popularization of GameFi and SocialFi in Web 3.0, more and more entertainment projects will launch IGOs (Initial Game Offerings). However, to successfully conduct such events, it is important to really be “in the know” and understand how to attract potential investors.
We can expect an extra boom in private sales, during which cryptocurrency tokens are sold to a select group of investors, long before the public offering. In particular, Telegram once resorted to this option, having raised $1.7 billion.
Whatever format of attracting investments into your Web3 project you choose, you must understand its unique features and, importantly, its shortcomings – only after that, you will be able to build the right strategy for their on-time bypass. Ultimately, the choice in favor of one or another approach will depend on the specifics of your project and your financial capabilities.
Each of the ICO vs IDO vs IEO crypto events has their advantages and disadvantages, so the success of their completion will largely depend on the marketing efforts you make. If you want every cent you spend on promotion to pay off in full and your fundraising event to collect the required amount of investment, sign up for a consultation with us, and we will select for you a unique set of methods and tools that will lead your project to worldwide fame.
Any of these activities, if positioned correctly, can help you achieve your business goals. Of course, from the point of view of reliability, IEO comes first, but it is also the most resource-intensive type of fundraising of all those listed. Therefore, if you doubt your choice, you better seek the help of a crypto marketing agency that will help you not only choose the fundraising format that best suits your goals but also prepare for it so as to attract as many crypto enthusiasts and their finances as possible.
Whichever approach to fundraising you choose, the key to its success will be three aspects: high-quality implementation of your concept in the digital environment, ensuring your audience is informed (including about its reliability), and competent marketing. We are ready to take on the latter, as we have relevant experience in successfully promoting dozens of Web3 projects.
