Crypto Fundraising
The various methods by which blockchain projects raise capital to fund development. These include Initial Coin Offerings (ICOs), Security Token Offerings (STOs), Initial DEX Offerings (IDOs), venture capital rounds, community token sales, launchpad platforms, and retroactive public goods funding. Fundraising methods have evolved significantly in response to regulatory pressure, with greater emphasis on compliance and fair launch principles.
“A project might raise a $5 million seed round from VCs, then conduct a public IDO on a launchpad platform to distribute tokens to the community and establish initial liquidity on a DEX.”
ICO (Initial Coin Offering)
A fundraising method where a cryptocurrency project sells newly created tokens to early investors before the token is publicly tradable. ICOs were extremely popular in 2017-2018 but attracted significant regulatory scrutiny due to widespread scams and securities law violations. Many jurisdictions now require ICOs to comply with securities regulations.
STO (Security Token Offering)
A regulated fundraising method where blockchain tokens represent ownership in an underlying asset — such as equity, debt, real estate, or revenue shares — and comply with securities laws. STOs offer more investor protection than ICOs through regulatory compliance, including investor accreditation requirements, prospectus filings, and transfer restrictions.
Tokenomics
The economic model and design of a cryptocurrency token, encompassing its supply schedule, distribution plan, utility within the ecosystem, value accrual mechanisms, inflation/deflation dynamics, and incentive structures. Well-designed tokenomics align incentives between all stakeholders and sustain long-term value. Poorly designed tokenomics can lead to unsustainable inflation or wealth concentration.
Token Distribution
The plan for how a project's total token supply is allocated among various stakeholders — including the team, investors, community, ecosystem grants, treasury, and public sale. Token distribution is a critical element of tokenomics because it determines initial ownership concentration, vesting schedules, and potential sell pressure over time.