Every day, new projects come up with ideas in which human life and activities can be bettered. Sadly, it takes more than these ideas to set up structures and systems that work let alone solve problems. One of the major challenges companies face asides from the planning of the business is cost (the fund or capital required to set up the business).
Today I want to talk about two project fundraising systems, ICOs and IDOs common to the blockchain. The difference between these two is in the level of risk involved and the trust you have in the project.
What is a Blockchain
Since these apply to the blockchain, let’s know what a blockchain is. A Blockchain is a decentralized, distributed ledger that records the provenance of a digital asset.
What are ICOs
Initial Coin Offerings mostly referred to as ICOs is a fundraising system on the blockchain for crypto-related projects. It is similar to IPOs (Initial Public Offerings) a system adopted by private corporations where shares of a proposed company are issued out to the public. In this process, the proposed company hopes to raise capital for the business from public investors.
How an ICO works
When a cryptocurrency startup wants to raise money through ICO, it usually creates a whitepaper that outlines what the project is about, the need the project will fulfil upon completion, how much money is needed, how many of the virtual tokens the founders will keep, what type of money will be accepted, and how long the ICO campaign will run for.
During the ICO campaign, enthusiasts and supporters of the project buy some of the project’s tokens with fiat or digital currency. These coins are referred to the buyers as tokens and are similar to shares of a company sold to the investor. If the project becomes successful, these tokens add value and increased in price.
Some of the ways a project can share its business plan with the public include videos and whitepapers. The availability of a good webpage and whitepaper helps the investor identify a business with a likeness to succeed. This, however, does not hold true for all projects as there are lots of factors that can destroy the progress of the business.
Disadvantages of ICOs
Despite the various benefits of investing in ICOs, there are also disadvantages to this system that you should be aware of. A good whitepaper or project plan is not sufficient enough to assure the investor of the success of the business.
- Many ICO projects have a low success rate.
- If the ICO project fails, the tokens will lose value and become worthless.
- ICO-related regulatory mechanisms are not fully available.
- There are a huge number of scam possibilities.
- It is easy to be used by malicious companies to cause uneven ICOs.
What are IDOs
Initial DEX offerings known as IDOs, are tokens that represent a type of asset hosted on a decentralized exchange (DEX). In an IDO, a project launches a token through a decentralized liquidity exchange.
How an IDO works
If a project is launching an IDO, it means the project is launching a coin or token via a decentralized liquidity exchange. This is a type of crypto asset exchange that depends on liquidity pools where traders can swap tokens, this includes crypto coins and stablecoins. For instance, ETH/CWS is a liquidity pair.
ICOs vs IDOs
When referring to IDOs they are the new trend. Here’s why they are preferred.
ICO and IDO compared
Initial Coin Offerings
- ICO are centralized and vulnerable.
- Possibility of third-party discrimination
- Vulnerability to theft and human error
- Lack of privacy.
Initial DEX Offerings
- No third-party influencer
- Optimal Security
- Transparency and accuracy
With the decentralized nature of IDOs, this new fundraising model is attempting to solve the issues of ICOs while adding new possibilities to the crypto market.
Seascape is a game-oriented network on the blockchain. It uses core concepts and technologies on the blockchain to promote blockchain games. These technologies include but are not limited to, DeFi, crypto-tokenization, NFTs etc.
Their vision is to make gamers (players and developers) benefit from the time and effort invested into games. Thus their model for games, and their drive for future gaming, centres around incentivization.
Seascape and IDOs
Seascape in partnership with Moonriver has set up a structure that can benefit other projects in the cryptosphere. This set-up is Lighthouse.
Lighthouse is an IDO launchpad with a focus on DeFi gaming and usability for game developers. On lighthouse, you can find new, interesting gaming projects that you can support through funding, which in turn will generate rewards and profit for your effort.
This will make new projects have the funding they need to release new games that will be unique with their own token, backed by the Crowns token.
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