Token sales are the method of publishing your tokens on a platform for a special pool of investors to crowdfund the project through a scheduled opening event.

Depending on the platform where this event takes place, we have three different types of token sales: ICO, IEO, and IDO, which are characterised by the following differences:

The trend is moving from centralised towards decentralised with growing security and the popularity of the initial DEX offering or IDO in the later years.

ICO: Initial Coin Offering

• Pros: ICOs promote democracy in investment and allow everyone on earth to invest anonymously. Startups find this a great and easy opportunity for crowdfunding.
• Cons: Many legitimate projects find it hard to get their ICO token listed on cryptocurrency exchanges while ensuring liquidity and complying with complex regulations. Scams became ubiquitous because ICO launching is easy, and there’s no need to carry out due diligence.

IEO: Initial Exchange Offering

• Pros: The projects and their tokenomics framework must first make it through due diligence. Afterwards, the token will almost instantly achieve liquidity on the partner exchange. The team will also have access to their customer database and marketing toolkit.
• Cons: Participants must open an account on the exchange, and the process is still pretty much centralised.

Also Read: How asset tokenisation impacts business growth 

IDO: Initial DEX Offering

• Pros: The IDO provides a decentralised token sales process on DEXs. This modern crowdfunding type is also compatible with liquidity pools (smart contracts) and DeFi protocols.
• Cons: Smaller in scale and thus, fewer funds are generally raised. Because of their decentralised nature, some DEX launchpads can be too complicated for the common participants.

What it means for investors

In IEOs, centralised exchanges like Binance and Huobi will carry out vetting checks, KYC and anti-money laundering services (AML), and project marketing. This cost an arm and a leg, but more than a few IEOs still fail in despair.

IEOs are carried out through an intermediary, so it is the most different from ICOs and IDOs. ICOs tokens are minted after the sales event. As for IDOs, it is pretty much a DIY process of listing and selling your tokens without the support of a third party.

The biggest difference between IDOs and ICOs is the potential raised amount. No one has seen an IDO with a ten-figure total investment number. Meanwhile, for ICOs, getting US$4 billion (Block.one) or US$1.7  (Telegram) is a much quicker process.

However, for IDOs, they tend to be massively oversubscribed and quickly sell out in seconds. In April, OccamRazer, an IDO launchpad for the Cardano protocol, executed its IDO and achieved 200,000 OCC$ token sales in 20 seconds!

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