[Terminology] ICO, IEO, IDO, SHO – Mechanism of Coin Issue in Crypto

by GameAZ
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ICO, IEO, IDO and SHO are some of the terms we use in the crypto world and they all refer to the initial coin offering for fundraising/funding in development projects on the platform. Blockchain platform. They raise funds through different methods, through cryptocurrency exchanges and all of them have their own distinct pros and cons. 

1. ICOs

1.1. What is ICO?

ICO is an acronym for Initial Coin Offering, which is a method of raising investment capital widely applied by cryptocurrency projects in recent times.

When groups, businesses or investors issue their first cryptocurrency, the issuer will generate a certain amount of Tokens and they will sell the Tokens to the public investors in the different Crowdsale. ICO creators will agree to pay in the form of Bitcoin or Ethereum from public investors.

1.2. How ICOs work?

Define fundraising goals

Every ICO activity begins with the company’s decision to raise capital. The company will define goals for its fundraising campaign and create relevant brochures about the company or project for potential investors.

Generate Tokens

Tokens are generated using designated Blockchain platforms. Token generation process is relatively simple as a company is not required to code from scratch like when creating new cryptocurrency. Instead, existing Blockchain platforms that run existing cryptocurrencies like Ethereum allow for the creation of Tokens.

Promotion campaign

Promotion campaigns are usually carried out on community sites such as Telegram, Twitter to achieve the widest reach of investors. However, currently, some major platforms like Facebook or Google have banned ICO ads.

Launching a new route

After the first sale, the company can use the proceeds from the ICO to launch a new product or service while investors can use the tokens obtained to benefit from the product. /service or wait for the increase from the value of the Token.

1.3. Advantages and disadvantages of ICOs

Advantages of ICOs

Simplicity

Project owners only need to prepare a Whitepaper describing information and project features as well as a Product Website that connects community channels instead of complicated procedures for STOs and IEOs.

Low cost

The cost of an ICO launch is relatively small, so it is suitable for amateur investors who are new to the market.

Good liquidity

ICOs have liquidity in just a short period of time

Fund control

Investors have full control over their funds.

Diversified distribution channels

Projects can raise funds through bounty programs, private and public sales, or through Airdrops.

Disadvantages of ICOs

Poor security

Poor security is an opening for hackers to interfere and affect the operation of the project system

Short term investment

ICO is not a first choice when investors do not have enough project information to have a long-term investment plan.

1.4 How to recognize a scam ICO project

An anonymous organization or individual. Leaving personal information anonymous is a sign that the project is raising chickens. Regardless of whether the founder’s country is legal for ICOs or not, they always publicize their identities. It’s a must-have for every project.

Get paid a very good price with a very attractive profit margin. The promises of the interest payment model are withdrawn at a very high rate, this is most likely a sign of fraud. Take the money of the latter and pay the former like multi-level models do.

There is no clear roadmap. The lack of a clear roadmap also shows that the person raising money from the ICO has no intention of long-term implementation and is really serious about the project.

1.5 Should I invest in ICO or not?

The field of Blockchain in general and Cryptocurrency in particular is currently a fairly new investment trend in Vietnam. Many investors use ICOs as a form of investment due to the high returns. To limit the dangers associated with investing in an ICO or cryptocurrency project, you should carefully study the investment information. Moreover, when you are ready and have expert knowledge about investing, the returns are huge. So, learn before investing and master your money and decisions..

1.6.Top ICO projects for investors

CoinMarketCap

CoinMarKetCap is a statistics page for cryptocurrencies that everyone who invests and Crypto needs to know.

In addition to statistics, CoinMarketcap currently has its own ICO schedule for projects about to launch. This is the place where users can track and select information about the fastest ICO projects.

CoinList.co

CoinList is used to provide Token Sale service (to sell tokens) for projects and companies that are in need of raising capital.

CoinList was built to support the early stage for those interested in the project in the desire to promote the success of the best Crypto projects in the world (including Solana and Flow). It does this by empowering the new and growing digital asset trading and investment communities on their platforms.

1.7. Top ICO List

Top ICO List helps you discover potential new ICOs in the cryptocurrency market. Top ICO provides a list of all ICO projects, furthermore an ICO classification in order to compile for users a list of the best upcoming ICOs.

ICO Bench

ICO Bench ranks professional ICOs using reviews from professional crypto traders and crypto experts themselves. These experts grade and score based on project evaluation and look for a variety of parameters.

CoinGecko

CoinGecko is like coinmarketcap and it has been recognized as a very good tool for crypto traders and investors who want to know the market in advance.

CoinGecko simply provides a real-time ranking of active cryptocurrencies on multiple exchanges (similar to Coinmarketcap). Just a glance at CoinGecko is enough to provide a comprehensive view of cryptocurrencies, real-time pricing, and trading rate up/down.

Smith + Crown

Smith + Crown is establishing itself as the Bloomberg/Zacks/Financial Times page of the crypto space.

Smith + Crown provides access to a set of “tagged and abstracted indexed public studies for reference and exploration”. The company also maintains an archived comprehensive list of active and upcoming ICOs. The company provides a rough summary of all the ICOs on the list.

Cryptowatch

The aforementioned tools are mainly made to help users research and test before you buy into any ICO or virtual currency.

2. IEO

2.1. What is IEO?

IEO stands for Initial Exchange Offering, which is a method of raising initial capital through the sale of tokens on the platform of a cryptocurrency exchange.

In contrast to an initial coin offering (ICO), an IEO project managed by a cryptocurrency exchange on behalf of a startup raises funds with newly issued tokens.

Since the token sale takes place on an exchange platform, token issuers need to pay a listing fee as a percentage of the tokens sold during the IEO. In return, tokens of crypto startups will be sold on the platform of the exchange and listed immediately after the IEO ends.

2.2. How does an IEO work?

Prepare ideas

Just like ICOs, the first step in launching an IEO is to prepare an idea. DEV has to come up with a strong business idea related to Blockchain and cryptocurrency.

Outline Whitepaper – Project Information

After analyzing the idea and thinking through all the details like the required budget, the technology you want to use, etc., you have to proceed with the whitepaper. The whitepaper outlines everything you come up with and all the information about your project.

Appraisal and listing by CEX – Decentralized Exchange

You can see a list of some CEX – centralized cryptocurrency exchange hosting IEO such as: Binance Launchpad, KuCoin Spotlight, Huobi Prime, …

Marketing

This stage is important because not only the DEV benefits but also those who invested in the project are satisfied.

2.3. Advantages of IEO

High reliability

The first advantage that IEO brings to investors is peace of mind about the credibility of this investment method. Before any project is publicly funded on their platform, exchanges often select and check the reliability of the project very carefully to ensure its credibility to avoid scam cases. . Because of this, investors are also somewhat assured when participating in IEOs on exchange platforms.

Enhanced security

To participate in the IEO, investors need to create an account, including KYC on the exchange platforms first. Therefore, when participating in IEO, they will have less worries that they will have to conduct a completely new KYC for the project that has not been officially launched. As a result, all information seems to be absolutely secured by the exchange.

Easy to buy and sell tokens

The IEO through the exchange makes the project more accessible to users than doing it alone. By paying % of tokens and listing fees, the exchange will help the project to market and organize the IEO according to the desired fundraising amount set by the project, without any further action. In addition, the project can take advantage of the long customer base on the exchange and receive this user’s contribution to the project.

2.4. Disadvantages of IEO

High cost

With the above advantages, IEO seems to be considered a perfect alternative to ICO. However, in order to get an IEO, the project fee is quite high, sometimes up to 20 BTC and even dividing an additional 10% of the tokens sold in this fundraising round to the exchanges to conduct the IEO. This also becomes the biggest disadvantage of IEO compared to other fundraising methods.

Minimum amount of native tokens required

For IEOs, investors are required to hold a fairly high minimum platform native token if they want to participate. Keeping the native token comes with many associated risks. First, there will be some potential investors who give up because of the requirement to hold a large amount of tokens and they do not meet that requirement.

The second is by setting a minimum holding amount, creating a demand to buy tokens for all investors, then the exchange dishonestly increases the price of tokens to create scarcity, creating a price risk for them. with participants.

2.5. Is IEO a scam?

Basically, IEO is a smart form of capital raising, reducing risk for investors. However, the limitation of IEO is that the number of Tokens is too much held by a few people. If investors are not well-informed and do not have a strategy, it is easy to lose money and lead to distrust, which is considered a form of fraud. Therefore, users should learn carefully, and have a strategy before investing.

2.6. Should I invest in an IEO?

If you are a person who likes to take risks and increase profits quickly, this is an investment channel. Your property value will increase at least 2 times or 3 times as much as 4 to 5 times.

However, the risk is extremely large, because basically this rally is pushed up because of too much demand and due to FOMO, so it is not supported by any sustainable factors. In addition, because the number of people buying and selling coins is too small, technical analysis does not work.

And if you don’t want to take risks, you should not participate in IEOs and the current crypto market only has old investors, new money has not yet poured in. Therefore, if you want to invest in crypto for a long time, you should choose Bitcoin or old coins, reducing the possibility of losing all your capital later.

2.7. Top outstanding IEO exchanges

Currently, there are quite a few electronic exchanges on the market that support the IEO platform. Here are some prominent IEO exchanges that have been appreciated by crypto in recent times:

Binance Launchpad – Binance

Binance Launchpad is the first IEO Release Platform – the most prestigious today. Binance is considered one of the famous exchanges in the crypto market. Therefore, with its pre-built reputation, along with the exchange’s large user community, IEO projects on Binance Launchpad become the hottest. Some successful IEO projects on Binance Launchpad can be mentioned as Bittorrent, Sand, AXS, Matic, etc.

Huobi Prime – Huobi

After Binance Launchpad, the second prominent name that can be mentioned is Huobi Prime. With the main goal of benefiting users, IEO projects on this platform are all rated by the Huobi team through a fairly strict inspection process.

One of the outstanding IEO projects of Huobi Prime that can be mentioned is TOP Network – with the amount of TOP tokens “sold out” after only a few seconds after the sale and recorded a good growth after that.

OK Jumpstart – OKEx

With the goal of supporting and developing potential cryptocurrency startups, OKEx has established the first official IEO platform called OK Jumpstart.

To ensure the quality of IEO projects on OK Jumpstart, OKEx also designed itself a process of verification, registration and token allocation according to certain rules. From there, investors can be assured of the transparency and consistency of projects.

3. IDO

3.1. What is IDO?

IDO stands for Initial DEX Offerings which is Initial Coin Offering on DEX – Decentralized exchange. IDO is a special case of IEO. The main difference between IEO and IDO is that IDO is executed on a DEX

Most IDOs will keep the majority of tokens for the team and investors. The assessment over time will assist in preventing dumping. However, when it comes to the scheduled unlock date, this almost always leads to big profits.

3.2. How does IDO work?

Presale – Pre-sale

As the issuer connects to early stage backers and venture capitalists and offers tokens with some discount. So these institutions will take the risk first.

Public Sale – Public Sale

This stage is done on a decentralized exchange (DEX) and investors make their trades.

Listing

Listing is done on exchanges based on AMM – Automated Market Maker Automated Market Maker. Listings do not require approval or fees. The project issuer can create a pool using its Tokens.

Staking promotion

This process proposes running programs that attract people to use the product/service. For example, allow to earn Tokens by providing liquidity.

3.3. Advantages of IDO

Almost any project can raise funds

The removal of IEO censorship has allowed many projects access to crowdfunding. With the IDO fundraising method, companies, startups, do not need to meet complicated regulations to be allowed to raise funds.

Also, anyone can organize or participate in an IDO, not just private investors. In theory, this is a huge boon for the crypto industry.

flexible

Investors do not need to wait a long time for the token to be listed on the exchange. The listing takes place immediately after the IDO is completed, giving them the flexibility to monetize their investment faster than in an ICO.

High liquidity and instant

Liquidity means the convertibility of an asset to money in the market. For a crypto asset, liquidity is one of the key factors that determine its value.

For IDO, after the fundraiser ends, investors can access and trade tokens immediately. This is extremely convenient for creating new markets, improving liquidity for digital assets, and increasing access to tokens for everyone.

Optimizing cost and time for the project

Unlike other forms of fundraising, IDO projects do not have to pay exchange fees and have to wait a long time for tokens to be listed. As a result, the project can maximize the cost and time of the token sale to the public.

3.4. Disadvantages of IDO

Chances of buying tokens in IDO sessions are not high

Due to the high profit potential, tokens sold in IDO rounds bring, so the rate of competition among participants buying IDO also increases. However, redemption opportunities are limited, additional users are required to hold a large amount of platform tokens to be eligible to participate in the IDO. So many cases participate in IDO many times but have not been able to buy tokens once.

The whitelist mechanism lacks transparency

Most of the projects implementing IDO today apply the whitelist mechanism. Whitelist can be understood as the list of individuals and organizations registered to participate in a special event of the project that have used the whitelist, specifically here participating in the IDO phase.

To join the whitelist you must complete KYC operations and perform a few required tasks such as keeping platform tokens, providing liquidity, inviting friends via ref, joining Telegram community, following Twitter, reposting a message. number of posts,… Then the project randomly selects those on the whitelist to buy IDO.

However, many people use tools, bots, … to cheat when performing whitelists to increase their chances of winning. In addition, some projects also do not select random users in the whitelist to give priority to family, acquaintances, partners, etc. This makes the whitelist mechanism unfair and the chance of winning the whitelist becomes difficult. than.

Risk of holding coins when participating in IDO

Some IDOs require you to hold/lock a certain amount of platform tokens. So you face the risk that if you don’t buy IDO tokens and the price of the underlying token drops, you’ll double your losses.

3.5. How to recognize a scam IDO project

The first form is the project of launching a real scam coin, attracting investors by “drawing” an attractive whitelist, an experienced dev team or a lengthy roadmap to create a drama. future growth with impressive ROI.

After building trust with investors, the money flowed to that project, the project team disappeared with all the investors’ capital.

In the second form, the scammer will create a fake website or social network account with information that matches a real IDO round and invite investors. For some investors who are inexperienced or do not check the information carefully, they will participate in ICOs through fake websites and lose money to scammers without receiving any tokens.

Should I invest in IDO or not?

According to statistics, almost all investors who buy IDO make a profit, just a little or a lot. In many cases, after the IDO ends, the token price is x5, x10 even x300 times the original price. With the platform token rising in price, investing in IDO looks like a bargain.

In fact, to be able to buy tokens through an IDO is relatively difficult. Usually, IDO rounds have a round called Whitelist to select lucky people who have the opportunity to buy tokens at the public sale price. However, the rate of winning the Whitelist is extremely low due to the limited number of people selected.

For example: IDO of Tidal Finance will have more than 183,000 Whitelist registrations, but the number of selected people is only 200 => The whitelist winning rate of this project is only 0.01%.

In the unfortunate event of winning the Whitelist, the platform token you are holding to participate in IDO decreases, at this time you will have to suffer “single loss, double loss”.

In addition, not all IDO projects offer good value or growth potential in the future. With the growth of DeFi and the advent of a variety of launchpad platforms that act as launchpads for projects, there is no guarantee that all the projects they support are reputable and potential. .

Besides, the criteria for selecting launchpad projects are now simpler and simpler. A series of unverified projects without much value are still put on launchpad.

Therefore, before deciding to invest in any IDO project, you should also consider many factors and aspects to make the most accurate judgment.

4. SHO

4.1. What is SHO?

Strong Holder Offering (SHO) is a fundraising method in which eligible participating investors are selected based on the project’s Block activity and other proprietary data sets. SHO is a technique for distributing tokens on DAO Maker – This strategy uses Blockchain SaaS (Software-as-a-Service) for funding to assist in starting new business projects. To win the SHO participation slot, the user’s wallet must be active. That is not to say that an inactive wallet cannot win an IDO ticket.

4.2. How does SHO work?

SHO allocations will be divided into 5 groups, each group will have to hold a certain amount of DAO to receive a certain number of tickets to participate in SHO.

The 5 stages include:

  • Stage 1: hold 500–999 DAO – (~3% chance)
  • Stage 2: hold 1,000–1,999 DAO – (~6% chance)
  • Stage 3: hold 2,000–3,999 DAO – (~ 14% chance)
  • Stage 4: hold 4,000–9,999 DAO – (~22% chance)
  • Stage 5: hold 10,000 DAO and more – (~28% chance)

Future SHO projects on the Dao Maker platform will have to spend a dedicated round for the community, the participation condition is to follow and do simple tasks on Telegram, Twitter.

4.3. Advantages of SHOP

Safe

SHOs are more secure because of limited accessibility and only properly verified investors can participate in SHO activities.

Long-term calculation

DAO Maker puts a project through a series of tests before opening its doors to a SHO. In doing so, only a handful of startups can offer 12 months of service. This means that only projects that can stick to their roadmap will dare to apply, thus discouraging scammers and low-quality startups.

4.4. Disadvantages of SHOP

Limited distribution channel

SHO is distributed on DAO Market, so it is almost difficult for investors to find and buy Tokens in other channels.

Not for inactive users

Although there is still a low percentage of winning IDO tickets. But almost only for active investors

Must Hold – hold more DAO

From February 22, 2021, DAO Maker issued a new law, that is, you must hold DAO – the token of DAO Maker to be able to participate in IDO. And Yield Protocol will be one of the first to launch IDO with this rule.

4.5. Does SHO have any impact on the price of DAO Token or not?

Personally, I find it greatly affected the price of the DAO token (on the positive side). Currently, the YIELD construction site real estate project has just listed a large ROI. Therefore, it attracts more and more attention from SHO investors.

The more DAO Token holders, the more difficult it is to charge down the price. Not to mention, if only a few IDO real estate projects in the form of SHO succeed as expected like YIELD, the buzz of DAO will be quite big.

Price DAO Public Sale ($0.1), the ROI of DAO is now 60x and the charge increases even more! Hopefully the DAO price will go higher after this one!

Should I join IDO in the form of SHO or not?

In general, the real estate projects of the IDO construction site are quite successful. Real estate projects of any construction site will also bring a large ROI. Almost all 500-700% or more. There are even construction projects with extremely high ROI like MahaDao (MAHA) on P.okastarter or GUM on Falconswap.

So whether to join IDO in the form of SHO or not depends on your personal decision.

4.6. Instructions on how to join the SHO

Step 1: Register an account on the website: https://socialmining.daomaker.com/ 

Step 2: After registration is complete, go to the interface as shown below, then select the SHO item on the left menu bar.

Step 3: After selecting the SHO item. Users only need to connect the wallet to the application as shown below and wait for the results (Note: only Metamask wallet can be used). Results will be announced in the SHO section.

 

4.7. Instructions to join SHO Yield Protocol

What is the Yield Protocol?

Yield Protocol is designed to simplify the creation of investment strategies for yield farming, trading, lending on the Ethereum DeFi ecosystem.

Yield Protocol allows automation of investment strategies. While maintaining all user money management rights.

Information about SHO Yield Protocol rounds

Only whitelisted participants can send money to buy Yield Protocol.

There will be 3 rounds for SHO Yield Protocol:

Round 1: $150,000 for DAO Holder ($500 per person)

This is the official public sale round, participants must login to website: https://socialmining.daomaker.com/ and connect wallet. The DAO Maker project is based on the number of DAO tokens in each wallet and assigns different investors and groups with a certain percentage of winning tickets to buy Yield Protocol.

Round 2: $15,000 for the community

This community round is exclusively for members of the Yield Protocol community.

In this round, participants are required to fill out a form and do some simple tasks including:

Round 3: $35,000 for Gate.io (this round everyone can buy a certain amount of Yield Protocol)

This round takes place on Gate.io exchange. Participants must lock the DAO within 7 days, $35,000 Yield Protocol will be divided among all participants.

Conclusion:

The article about ICO, IEO, IDO, SHO that GG gives readers some extremely useful information, helping readers have a more objective view. If you find this article interesting and useful, don’t forget to share it with others. Thank you very much GG.

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Disclaimer: This website’s content is offered as a general market overview and does not constitute financial advice. GameAZ recommends you to conduct additional research before to investing.

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