ICO (Initial Coin Offering) is a form of raising capital in exchange for coins (tokens) of the project, a kind of crowdfunding. The term ICO is formed by analogy with IPO (Initial Public Offering) and is used in relation to projects selling cryptocurrencies or crypto tokens. Often the ICO is called crowdsale.
The first ICO in history was the issuing of tokens of the Mastercoin project in 2013 (since 2015, the project is called Omnilayer), which first raised $ 500,000, and later another $ 5 million. Then, in 2014-2016, other projects (Ethereum, ICONOMI, Golem Project, etc.) successfully raised funds as well. In total, between 2014 and 2016 various ICOs have raised more than $ 300 million.
2017 was the beginning of a golden age for many projects. According to elementus.io, ICOs have raised over $ 8 billion that year. And with the fall of the Bitcoin exchange rate in 2018, the fashion for ICO did not end - in total, from January 2014 to August 2018, projects raised over $ 28.3 billion. Total sales, according to elementus.io:
EOS ranks first in the list of the most successful ICOs, raising 4 billion 213 million dollars in one year of crowd selling.
Telegram ranks second with $1,7 billion.
Ta Ta Tu ranks third, raising $575 million during a private sale.
Among other companies that have raised a lot of money are also Dragon ($420 million), Huobi ($300 million), Filecoin ($257 million), Tezos ($236 million).
In general, the results of crowdsales are mixed. For investors, participation in the ICO turned out to be a risky undertaking. More than 46% of all projects that raised money through ICOs went bankrupt, about $ 100 million was stolen by scammers. At least 86% of tokens by 2019 cost less than during the ICO.
But the world has changed thanks to ICO. There is such a thing as DAO. The term “cryptocurrency” has become known to billions of people. Many projects have developed sustainable communities. Now in the world, hundreds of thousands of educated people participate in work on promising projects thanks to ICOs and, possibly, the world will still see amazing results of their activities.
The first form of crowdsale was ICO (sometimes projects called it ITO - Initial Token Offering, emphasizing the differences between their non-payment assets and cryptocurrencies). It was ICOs that raised the most funds and are the most famous.
In 2017, IEO appeared - Initial Exchange Offering. In this form of crowdsale, cryptocurrency exchanges collect funds on behalf of a startup. This reduces the likelihood of fraud and includes guaranteed listing of project coins on the exchange. 21 IEOs have been already carried out, raising $ 1,672 billion.
In addition to IEO, the new type of crowdsale that appeared in 2018 was STO (Security Token Offering). During STO, the project sells its future shares, as in the case of venture capital raising, the procedure is carried out under the control of regulators. This form of crowdsale seems appealing to many venture investors. Dozens of STOs are underway. Unfortunately, conducting an STO costs a lot, which in many ways undermines the main idea of ICO, which is raising funds for the implementation of the idea, when the project often does not have money and time to hire lawyers and do the paperwork for regulators.
Minter offers an innovative approach to crowdsale. In the Minter network, all coins are issued in PCO mode - Perpetual Coin Offering, that is, an eternal, unlimited supply of coins. The essence of PCO is that at any given time, an investor can buy or sell project coins at the current price, and the current price depends only on the total number of coins already sold.
Dependence of the price of a coin on the number of coins sold at PCO, example:
The initial issue of the coin is in the hands of the founder of the project, and the rest of the coins are either issued by the Minter network in response to purchase requests or are burned in response to selling requests. The funds from the purchase of coins replenish the reserve of coins in the base currency of the Minter network - BIP, which serves as the fund from which bids for sale are bought. You can get funds from the reserve only in exchange for project coins, no one has access to the reserve. Such a crowdsale model has no analogues, it looks promising, but so far its success is difficult to predict.
The Minter project distributed 1% (100 million) of its BIP tokens in the form of pre-sale - selling coins among early supporters, usually in large blocks. Potential buyers were grouped together into pools and bought out future BIP coins for Bitcoins and Ether. The pre-sale price was 100,000 BIP for 1 BTC.