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Greetings fellow steemians,
Welcome to the fifth week of the steemit engagement challenge for week 5. It is indeed a rear opportunity to witness week 5 in the engagement challenge. Just like every other week, this week we are also presented with a very wonderful topic "Initial Coin Offering in the Crypto Ecosystem". I will be attempting the questions given below as a sign of my participation in this amazing contest. Let's get started.

Share in detail your understanding of the Initial Coin Offering (ICO) and the purpose of the event in the crypto ecosystem.

There are numerous cryptocurrencies in the crypto space today. Before any crypto asset will be known to the general public, it has to be funded by some group of persons called investors. This is a set of people that purchase the said asset at a cheap rate so that the project will raise enough funds to carry out other activities such as launching it in a major exchange and making it more popular.

ICO which means Initial Coin Offering is a business strategy where a particular crypto project raises funds to continue the development of their project. They do this by giving out a certain percentage of the said token to investors at a cheaper rate. Here, this investor has the opportunity to be the highest holder of the token before it can be listed on exchanges.

ICO over time has proven to be a very effective method to fund any crypto project because aside from the money generated to continue running the project, the holders of the token also help to advertise the said token thereby making it more popular and having more reach to the public.

Those that participate in the ICO, over time have also gained a lot of profit from the projects if it goes successfully. Imagine buying a coin at $0.01 and after about 2 months the price of the token raise to about $8-$10. This was how BTC also started and those who hold the coin and believed in the project are all rejoicing today.

Purpose of ICO

The major purpose of ICO in the crypto ecosystem is to raise funds to assist the project owners to complete the proposed project. We are aware that a token is never complete if it has not been listed on an exchange be it a centralized exchange or a decentralized exchange.

Another key purpose of ICO in the crypto ecosystem is to make the token known to a few persons (Investors) I.e all the plans of making the token popular and also growing. These will be spelt out to all the investors so that they can boldly share with others their knowledge of the token and also convince them to be part of the project by investing in it.

Discuss your understanding of the Initial Exchange Offering (IEO) and Initial DEX Offering (IDO). What platform is utilized for IEO? Give an example of a platform and how it works for the coin offering.

Initial Exchange Offering (IEO)

IEO which stands for Initial Exchange Offering is another form of ICO but the difference is that in the case of ICO, the said token can be sold on the project website whereas, in the case of the IEO, the token is sold in an already existing exchange platform.

What this means is that the new project that is seeking funding will approach a well-known exchange platform and present its project proposal and the exchange will investigate it very well because they are presenting it to their customers who trust them with their funds and they won't want to bring any fake project to them.

When this investigation is completed and the said exchange finds this project worthy enough then the investors who are already having an account with the exchange platform can then purchase the said coin via the exchange platform and hold it until the said project is completed.

Initial DEX Offering (IDO)

IDO which stands for Initial DEX Offering is the same as IEO the only difference is that IDO is carried out on a decentralized exchange platform. Decentralized means that no central control is required. The decentralized platform creates a liquidity pool that investors interact with directly.

What this means is that if the project has a native token of YZZ, it can create a liquidity pool of YZZ/USDT in the decentralized exchange where the IDO is hosted. Here you can swap your USDT token to get the YZZ token. Recently, I was privileged to operate with a decentralized exchange that offers this coin mentioned above.

In essence, the IDO is a type of token sale that is carried out on a decentralized exchange platform. Since it is decentralized I.e permissionless, it makes use of smart contracts for its operations. You get the coin by swapping a major token they have paired it with.

What platform is utilized for IEO

As I have explained above, IEO is done on an already existing or well-known centralized exchange platform. This platform must have gone through the project in-depth to be sure that it is a worthy project before hosting its sales on its platform. To do these, they use what we call launchpads.

^{Current IEO on Binance}

One of the platforms that utilize the IEO is the Binance platform. Binance has a service it offers called the launchpad. These services help new projects have their tokens launched for sale on the platform.

For this to work, the project in question must have been scrutinised and found worthy. Those who want to participate will have to stake their BNB or BUSD or any other token needed on Binance to earn the new token. This is the way we can get more new tokens without even buying. The asset we stake saves as liquidity to run the project until the time expires then our asset is returned to us.

Have you participated in ICO/IEO/IDO before? If yes, what's your experience? Discuss a project that has performed a successful ICO before and the result of the event.

^{My participation on IEO}

Yes, I have participated in IEO before. As of May 2022, a friend told me about the binance launchpad and that I should stake some tokens and earn a new one. I never understood how the entire thing work but I decided to do it. I stake cake tokens to earn galaxy. I occasionally see a little fraction of the galxe token coming into my wallet and I was surprised then I decided to make more research and studies about the launchpad project and that is when I understood how the entire thing works.

Source

The Galxe is one of the projects that have performed a successful IEO, though, the result was not as expected. Before the performance of the IEO, the price of GAL was seen at about $1.5 but after the performance of the IEO, the price dropped and started struggling between $1.3 and $1.4, this program was a success but didn't push the price as expected instead it dropped the price. Though we are still hoping that the price will raise with time.

What are the merits and demerits of Initial Coin Offering?

Merit of ICO

The major advantage of performing ICO is to raise funds to use and support or continue the project. For any token to be successful it needs enough funds hence the need for the ICO
Another advantage of ICO is that this period allows investors to purchase and hold larger amounts of the said token since they are sold at a discounted rate within that period.
Giving access to the token to all who are interested. Before now only a few know about a particular project coming up hence not many funds is raised but since they now use the IEO, everyone around the world can participate in the pre-sale of the token and that will make the token more popular.
When the token is finally launched on other exchanges and the prices raises, those who purchase it at a very small amount will gain a lot at that moment.

Demerit of ICO

Some projects are not valuable enough and are brought in by scammers to extract money from others. I have made it clear that the project that is based on IDO is majorly a project where you swap a trending token to earn new ones. Sometimes they accumulate this trending token and that which they present to you dies off.
Since we don't get to see or know the identity of those behind the projects in most cases, there is no iota of security for those investing hence they are doing every investment on risk and trust.
Some project expectations are not always met and most times lead to the devaluation of the price of the asset. ICO is supposed to push the price of the asset upward but just like the Galex project, the price dropped and that has made many investors lose their money.

Conclusion

ICO is an important part of the crypto ecosystem because for any coin to be better known by more people and for the value of the coin to appreciate, more funds are needed to continue the development of the project. During the ICO, investors have the privilege to buy tokens at a very cheap price and then sell them when the price has appreciated after it is listed in an exchange and gets more reach to the people. Though there are risks as most of this project comes as a scam scheme to accumulate investors' money and flee away.

Hello friend. I'm happy to read through your post in this contest today and I will love to interact before I leave for work.

ICO which means Initial Coin Offering is a business strategy where a particular crypto project raises funds to continue the development of their project

This is the primary purpose of ICO, it's set up by the team to raise funds for the project for their furthermore development so that it can be available for the public to trade.

The process doesn't only benefit the project only but allow the early investors to buy at a very cheap price and they open themselves to multiplying their initial investments.

I'm happy you have used the Binance initial offering before to participate in an IEO, I have also used the launchpad to participate in LOKA token sale early this year. I wish you all the best in this contest.

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preye2 (69) · 2 years ago

You have explained the concept of ICOs and how it has generally helped in raising upcoming crypto projects. These events allow startups to raise funds by issuing digital tokens that investors can buy with cryptocurrencies.

Launching your ICOs can be a risky venture, but if done right and with the necessary research and observations, it can be very rewarding. Generally, you have shared nice points in this task.

Thanks for sharing friend, and goodluck in this contest. #steem-on.

I will appreciate if you equally engage on Mine

$0.21

1 vote

simonnwigwe (79) · 2 years ago

Thanks for your comments and contributions.

$0.00

steem.history (78) · 2 years ago

Thank you, friend!
I'm @steem.history, who is steem witness.
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steemcurator08 (55) · 2 years ago

Your post has been successfully curated by our Team 5 via @malikusman1 at 45%. Continue making quality content for more support.

Thanks for the support @malikusman1

starrchris (75) · 2 years ago

Hey bro,

The major advantage of performing ICO is to raise funds to use and support or continue the project. For any token to be successful it needs enough funds hence the need for the ICO

Yea this is right, so many projects have turned out to be successful and changed a lot of lives. So many developers and crypto founder like founder of Ethereum didn't have enough cash to develop Ethereum, do he sourced for funds using an Initial Coin Offering and with the funds generated Ethereum turned out to be the second most successful crypto project now.

Thank you very much for sharing, please you can check my own entry here

wishing you success

You are welcome my dear friend, you deserve it.

temitopef (70) · 2 years ago

Steemit Crypto Academy Contest / S5W5 - Initial Coin Offering in the Crypto Ecosystem.steemCreated with Sketch.

wishing you success

Steemit Crypto Academy Contest / S5W5 - Initial Coin Offering in the Crypto Ecosystem.