Understanding Fundraising Models
The term “Cryptocurrency” has become synonymous with the word gamechanger. It has changed the entire outlook of the digital finance sector. Cryptocurrency is a mode of payment where digital assets are transacted in a decentralized network that is built on blockchain technology. Bitcoin, Ethereum, Litecoin, and Dogecoin are popular examples of cryptocurrencies. Cryptocurrency has given rise to many high-level decentralized finance applications and protocols, and fundraising mechanism is one of them.
Security Token Offering (STO) is a type of security-based public offering model, where the crypto tokens are traded by the investors for real-life physical financial assets like equities.
Initial Liquidity Offering (ILO), has become a popular choice for the inventors to invest in and raise funds. In this model, the investors receive crypto tokens in exchange for liquidity to contribute to the pool.
A fundraising model is a new way of raising the capital of a business entity by raising funds on a decentralized exchange. It has been essential for start-ups and small-scale businesses. There are several types of fundraising models, such as Initial Coin Offering (ICO), Security Token Offering (STO), Initial Dex Offering (IDO), Initial Liquidity Offering (ILO), and Initial Farm Offering (IFO).
Initial Coin Offering (ICO), is the first most discovered type of fundraising model. The working of Initial Coin Offering is similar to the working of an Initial Public Offering. In an Initial Public Offering, the investors invest in a business entity, and in return, they receive a small share of the entity. Similar to that, in an ICO, the investors invest in the businesses, and in return, they receive crypto tokens.
Initial Dex Offering (IDO), is the latest fundraising model, where the crypto tokens are raised in a decentralized liquidity exchange.
Initial Farm Offering (IFO)- A Detailed Explanation
The fundraising models originated from the cryptocurrency space have been an enormous upgrade for investors and business models. These models have assisted the business models in a great way and yield higher returns of profits, but these fundraising models are not perfect. They have certain drawbacks. These drawbacks are rectified by the introduction of a new type of fundraising platform, which is known as Initial Farm Offering (IFO).
Initial Farm Offering (IFO) is a token offering event that is being executed by a decentralized exchange platform. The process of this model is similar to other fundraising models, but with the exception that, in the other fundraising models, the token offering is initiated only in a decentralized exchange, whereas, in IFO, the token offering can be initiated in a pre-sale platform.
The rise of cryptocurrency has paved the way for many innovative creations and applications that are changing the functioning way of decentralized finance applications. The fundraising model was part of those innovative creations. Before the arrival of the fundraising platforms, investors heavily relied on venture capitalists. It is a very slow and time-consuming process. After the introduction of the fundraising models, these drawbacks were rectified by providing safe and transparent funds. The initial Farm Offering model is specifically designed to solve these problems and to execute sales offers for transparent funds.
The Workflow Of Initial Farm Offering (IFO)
Initial Farm Offering is the latest fundraising model that provides funds for the participation of projects. The users can take part in the pre-sales hosted through a decentralized exchange to gain crypto tokens before listing them on their respective platforms. At the beginning stage, the decentralized exchange team executes the verification and analysis process to the project before hosting an official IFO. During the analysis process, the user is not guaranteed any crypto token as they should have due diligence while initiating financial transactions.
Blockchains for Tokenization Platform
Free from KYC/AML
KYC/AML integrated exchanges enable the investors to initiate the verification process in the platform and do background checks for the investors.
Fair fundraising methodology
Immediate liquidity has been the primary benefit of an IFO model as it allows private investors to purchase a large number of tokens for a less price and the token value is increased in a public sale offering.
The users who are investing in the IFO model trust the fundraising company due to its efficient checking by the decentralized exchanges.
The fundraising platforms like IFO models have their own listing process as the exchanges immediately open for tokens that are required to be listed in the secondary market.