Danny J. C.
IEO, IMO, IDO, IDO(2), ICO, rICO, ICO(2), UTO, ICCO, STO, ATO, TRMI, DAICO, ETO, IFO, IAO, DSO, STEO
First things first, the terms ‘coin’ and ‘token’ are often used alike. The line between coins and tokens is not clear and sharp. Both are used to transfer value, as a means of payment, in a similar way to that both USD and shares are used to reward people for work.
A coin is a means of payment, a money equivalent, something that defines value and serves as a value transfer. Coins tend to take the form of native Blockchain 'tokens' like Bitcoin (BTC) or Ethereum (ETH).
A token has wider functionality such as to hold votes by the community on key business decisions, and may deliver value to investors, beyond speculative returns. Tokens are not a currency and generally hosted on another Blockchain.
Now to the main topic - coin ...sorry... token offerings... a new way of raising funds used to start up a business, or for development and expansion. A company can create a new token, coin, app, or service and launch a private and/ or public sale via the digital asset. Interested investors can buy in to the offering, either with fiat currency or with other preexisting digital currencies like Ethereum. In exchange for their investment, investors receive a new cryptocurrency token specific to the project which they support. The company or startup uses the raised funds as a means of furthering its goals, launching its product, or expand existing businesses.
This new way of raising funds, allows existing companies and startups to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks, and opens up investment opportunities to a broader investor crowd by enabling small or fractional sales to virtually everyone, democratizing investments.
The Initial Coin Offering is a method of fundraising, where a company which is looking to establish a new product or service will look for outside investment to help fund their venture. The company running the ICO will do this through various forms of marketing. in exchange for their investment, the investor will receive a certain number of cryptocurrency coins or token that are unique to the ICO. Investors can either use traditional, fiat currency or other tokens. Investors buy into the project with the hope that the value of the token will increase from the base price, and later sale for a profit. Other coins might not be of such speculative nature, but fulfill a certain utility and role within a project.
Some use the term 'reverse ICO' as a method of fundraising specifically for existing companies. There is almost no difference to ICO, simply - not a startup, but an stablished companies selling tokens to interested investors as a way to accrue additional investment, or to help launch a new, Blockchain-focused branch.
The Security Token Offering is a method of fundraising through a crypto 'security' token which can entitle the owner to either a share of the profits of the business, a stake within the business itself or some other form of reward in exchange for their own money.
In theory we can tokenize everything that ever existed on traditional platforms, ie. real estate, government bonds, public equity, private equity, startups in their seed stage, votes, diamonds, gold, commodities, etc.
The Initial Exchange Offering is a method of fundraising, whereby a project gets listed on an exchange directly without going through an ICO. The exchanges hosts the offering and funds can be raised through the exchanges user base. The coin exchange listing, which is a separate process in an ICO, is mostly guaranteed shortly after the IEO sales period.
The Initial Country Offering is a method of fundraising, whereby a country aims to create a Central Bank Digital Currency (CBDC), a digital representation of their own fiat currency, a cryptocurrency coin. To facilitate the offerings are applied to either test or start transitioning to these Stable Coins.
Initial Mainnet Offering is a method of fundraising, that allows users to purchase coins directly from the network (main net) in order to operate and secure the technology. The crucial difference to ICOs is, that an IMO offers users to participate in a technology that has already been successfully delivered.
The Initial Dezentralised-Exchange Offering is a method of fundraising, whereby a project gets listed on an decentralized exchange directly without going through an ICO. Since on Decentralized Exchanges (DEX) the main token holder, the project is able to place sell blocks of their token (and at the same time no-unlocking any token sold in private sales) as the only seller, the project determines the sales price levels. #Binance Chain and Binance DEX is an example of this new, not-officially-endorsed yet, way of raising funds.
The Initial Fork Offering is a method of fundraising, whereby an existing Blockchain ie. Bitcoin is 'forked of' the main chain, trying to improve the protocol. The fork-resulting new coins, are in principal free. The thesis goes, that if enough people receive it, they will start to trade it, then it eventually increases value. The project owner ultimately can sell their own (often pre-mined) coins into the market and raise funds.
The Initial Airdrop Offering is a method of fundraising very similar to IFO. Newly created project coins are 'airdropped' (distributed) free to targeted participants wallets. Often certain criteria apply in order to receive the 'free money' such as pre-holdings of particular other coins or participation in marketing activities for the projects (which then, makes it a bounty). Same as IFO, assuming peoples interest in the project leads to trading the coin, potentially resulting in value appreciation - the project later can sell their coins to raise funds.
The Decentralized Autonomous Initial Coin Offering is a method of fundraising, which incorporates some beneficial aspects of a Decentralized Autonomous Organization (DAO), some sort of digital companies with certain rules smart-contracted on the Blockchain, making their management transparent and auditable. The DAICO concept adds a dimension of accountability towards the project team. Instead of releasing all the raised funds at once to the project owner, the contributors are empowered to make investment funds available in a more controlled manner, via a consensus mechanism, voting how many funds they want to release to the project team on a periodic basis.
The Equity Token Offerings is a method of fundraising, whereby investors receive actual pro rata ownership of a company, including voting and dividend rights (depending on the share type). This equity-crowdfunding mechanism allows for “off-chain” companies to issue part of their shares via a blockchain platform. Shares in private equity and seed-stage startup companies now become available to an international investment crowd, to everyone. And ETO is a form of a Security Token Offering, since equity is categorized as a security.
The Utility Token Offering is a method of fundraising, similar to ICO, whereby the token or coin has a clear utility. Honestly, not heard about that before, and probably a way of cheeky project owner to avoid getting checked on security vs utility of their coin / token. Ultimately, being categorized as utility allows a less-stringent way of raising public funds from a regulatory perspective.
The Initial Delegator Offering is a method of fundraising, where investors place their existing tokens or assets at stake using one or many PoS networks to “interchain-mine” a new token instead of liquidating their valuable assets to acquire new, highly speculative tokens. Essentially, investors delegate their tokens to validators charging a commission of all block rewards, and instead of receiving the same token they staked — investors receive a newly minted token.
The Initial Convertible Coin Offering is a method of fundraising, whereby a ‘tokenized convertible warrant’ will be regulated by a prospectus which is to be approved by an public authority. These projects are subject to stringent rules, and its issuance will hand investors the right to convert these tokens into companies shares a certain defined time after they are issued.
The Asset Token Offering is a method of fundraising, whereby the income generated by the assets will be converted into services or products. The public can purchase in advance, to participate in i.e.. property development. The assets will be supervised by a third-party to ensure that the project develops and operates as scheduled.
The Digital Security Offering is a method of fundraising, where investors receive ownership of an interest in real estate, either directly or indirectly, implemented on a Blockchain in compliance with securities laws and regulations.
The Security Token Exchange Offering a combination of STO + IEO appears to emerge. I always said, token-issuing firms might become redundant over time since all they really do is 1) Token / Smart-Contract creation, and 2) KYC / AML (which is actually provided by a third party). Hence, they are currently needed, but as soon as Exchanges would offer these services, token-issuing businesses have to rethink
Timed Release Monetary Issuance (TRMI) is a way of raising funds, where investors buy TRMI units, that can later be exchanged one-for-one with SOV units. Main idea is to establish liquidity, and test the market for the upcoming real product, a local cryptocurrency.
A Continuous Securities Offering (CSO) is a long-lasting, continuous, global and equitable financing method that enables anyone who believes in the project to invest at any time. It enables companies with growth potential to raise funding by selling a claim on a reserve, funded primarily by a fixed portion of revenues.
A Continuous Token Offering (CTO) is a way of raising funds, which replicates the private equity approach of staged, de-risked financing. The firm/ project will continuously release additional tokens into circulation in line with real demand. The proceeds from the ongoing sales are invested in real assets that hold accretive value, aiming to bring-in real cash flows. Hence, the token is part Store of Value and part Asset-Backed.
A Dynamic Coin Offering (DYCO) is a way of raising funds, in which utility tokens are USD-backed for up to 16 months. The token downward movement is limited through guaranteed buybacks (3 rounds, over 16 months) financed by 80% of the raised funds. The circulation consists of only refundable, money-backed tokens.
An Initial Convertible Token Offering (ICTO) is a way of raising funds, which gives investors the right to convert the initial token into some an asset-backed token after the fundraise. The whole process is controlled by the investors’ choices and implemented by smart contracts.
An Reversible Initial Coin Offering (rICO) is a way of raising funds, whereby all- or parts of the - for investment - reserved tokens can be returned to the investor. Commit phase is the period where everyone can reserve tokens and return those reserved tokens if they change their mind, without having bought anything. The project has no access to the ETH, as the buy process has not started yet. The Buy phase are the months in which everyone gradually buys their reserved tokens. Meaning with every block on Ethereum, the allocation of ETH to the project and bought tokens to the buyers changes.
An “Special Purpose Acquisition Vehicle” essentially allow entrepreneurs, investors, or a group of sponsors to raise money with the sole intention of acquiring other companies. After raising funds, a SPAC has two years to fulfill a target acquisition or it will have to give the money back. And those who participated in the initial pool will have their SPAC shares converted into the shares of the acquired company, plus access to purchase even more shares.
The Initial Public Offering is, what is getting disrupted in this new age of digital asset tokenization, with lower fees, less-stringent execution, broader investor pools, suitable for Startups, shorter fundraising periods, more efficient contract management, higher and faster liquidity.
Sources: Investopedia, Cointelegraph, Ernst & Young, IWS FinTech