If you are looking for great investment opportunities in the blockchain space, you need to know how to find good ICOs, STOs, IDOs, and IEOs.
The first step is knowing what these terms mean. The second step is finding out how they differ from each other so that you can make better decisions about the investment opportunities that will be most likely to succeed. The third is being clear in your process of picking those with the most potential.
Differences between ICO, STO, IDO, and IEO
Initial Coin Offering (ICO): A token sale is an activity by which funds are raised for a new blockchain project by creating tokens on an existing blockchain and selling them to the public. The fund raised from investors can be in legal tender currencies like the US dollar or other cryptocurrencies such as Bitcoin. Indeed, an ICO is similar to an Initial Public Offering (IPO) for stocks, with critical distinctions such as not having to register with financial regulators and also happening without a product in the market. It is also important to point out that while the returns for those holding shares sold through IPO is dividends, the only way to recoup from the investment made in ICO is to sell the tokens or use them to access a service provided by the funded project. Indeed, some of these tokens can be used to shop and some can be loaded on crypto debit cards.
Security Token Offerings (STOs) are similar to ICOs, except those undertaking them comply with securities regulations. STOs are still relatively new, but it is one of the most talked about topics in crypto because the concept could disrupt the wider investment landscape. In essence, tokens issued through STOs can represent ownership interests in assets like real estate properties/land registries/corporations, etcetera.
Initial DEX Offering (IDO) is selling tokens created on the blockchain through a decentralized exchange such as Uniswap. Owing to the nature of decentralized exchanges, this process gives projects more control and fewer legal obligations.
Initial Exchange Offering (IEO) This is a token sale that a project undertakes through the service of a centralized exchange. A few exchanges do offer to handle a token sale on behalf of a project.
5 Steps That Will Help You Find Great Investment Opportunities
If you want to invest in a project but don’t know where to start and what questions to ask, this method is for you.
Here’s how it works:
Create a list of projects you want to invest in. You can discover new projects as listed on platforms such as Foundico. These platforms make the work easier for you by reviewing, scoring, and rating the projects. You can study these projects and list those that interest you.
Read the white paper. This document is supposed to make you understand the project in question, including the technical aspect, business plan, and other critical areas. You might need some technical knowledge to comprehend some parts of the white paper. If you do not have this capacity, it is okay to seek help from those who have. However, you should be careful not to rely on the advice of paid marketers and salespeople. That advice is often biased.
Check the team members’ LinkedIn profiles (for example, If a project claims that they are an Ethereum-based network but there are no experienced developers on the team who have worked on Ethereum or similar blockchains before — this would be a red flag). Indeed, the success of any project is depended on the type of team it has behind it. Besides determining whether the team presented is qualified, you should also interrogate whether the project has all the talent it needs to succeed.
Check what kind of traction does this project have already? How many people are following it? How many followers do they have on social media profiles? What conferences is their CEO going to next month etc…While social proof does not necessarily translate to success or credibility, it is a critical indicator that you should not ignore.
Analyze token metrics: Is there enough supply of coins at launch so that early investors won’t be able to buy up all tokens immediately after release (which then causes a price drop)? Do we see any hype around this coin? Are there other factors like strong partnerships with big companies, etc.… It is also important that you determine whether the token has a utility value that will support it long after the initial marketing hype is gone. If a token lacks a utility value, then you might never recoup your investment but end up being a victim of pump-and-dump schemes. You should also consider how deflationary a token is. Most tend to mirror Bitcoin, which has a cap of 21 million coins.
If you’re looking for a good ICO, STO, or IDO, it’s important to do your research. There are plenty of scams out there, and this is exacerbated by the fact that this is a new industry with an unclear regulatory environment. If you don’t want to fall victim to them, then you need to do adequate due diligence.
We hope it will help you find the best investment opportunities and save some money in the process! Good luck out there!