The cryptocurrency world has been rapidly growing and Initial Coin Offerings (ICOs) have become one of the primary ways for innovative blockchain projects to gather capital. Whilst the ICO presale is, many thought an opportunity to get in on a project early before its official launch.
This article goes as far down the rabbit hole you need to about ICO presales in 2024. I am going to cover the positives and negatives for investors, how ICO pre-sales occur, what you should do before investing etc. Whether you are a veteran crypto investor or just diving in, this guide should give you the ammunition to wisely approach potential ICO presales and unlock some potentially sweet discount deals along your investment wisdom-mining journey.
What Is ICO Presale?
ICO Presale Explained ICO presale, also known as pre-ICO is an extremely important event during which the project that conducts crowdfunding releases tokens for a limited ( this is why you need to get in early) number of people or funds prior more than our usual investors to actual offering. ICO is a form of early fundraising for the launch of the project, which friends buy and leverage coins from these tokens imu.
It’s like a product pre-order. The project issues the tokens at a discount to investors in exchange for their capital upfront. This is a way for the project to gather funds that it can use in its development, marketing activities and other important things before starting the main ICO.
A deeper dive into an ICO presale:
For Projects:
- Gather some funds for development (development, marketing etc – if possible).
- Test demand for the project before conducting a full ICO.
- Discount the heck out of tokens to attract early adopters.
For Investors:
- Possibility of buying the tokens cheaper than in a public offering
- Occasionally offered bonus tokens or other perks.
- Completely high risk considering that the project is freshly out.
How Does ICO Work?
ICO presaleBear with me, An ICO works exactly the same as a normal ICO except for it is done before official launch of an INitial Coin Offer. Here is a step by step account of the standard process:
From the Project Side:
- In Preparation: The project team will write a whitepaper with the goals of their project, technology used and token usage They also set the presale details including token price, discount and funding goal.
- Marketing & Community Building: Project is building a community around it by organising marketing activities It can even include matters such as having a social media presence, regular developer outreach and opportunities for partnerships.
- Presale: During this period, the project is officially tokenizing but instead of being on an exchange directly because it hasn’t launched yet investors will contribute funds to receive tokens. For example, this can be sending funds to a specified address with cryptocurrency wallets.
- Funded collection: This model works on a collection of funds from investors and then distributing them to develop the application project as intended.
- ( If Presale ) Public ICO Potential: In case of a presale, the project has the cap also ( up to 1/3rd public sale in another round ); Where it is expensive than the one during presale
The Investor Side:
- RESEARCH/ DUE DILIGENCE: A research is done by investors on the project, team and white paper to know what they are getting into (potential risk vs reward)
- Participation: Investors choose an amount to invest and can be part of the presale in a given time frame. This could mean sending some sort of cryptocurrency out to the project’s address.
- Token Distribution: When the presale finishes, investors get their amounts of tokens which may be used to hold long-term or sell on an exchange (if any), and be used in the project ecosystem as well with utility tokens.
Note: ICO presale regulation depends on each jurisdiction. Getting a lay of the land is one thing, access to information is another and as such, both projects alongside contributors would need clarity on their legal standing before participating.
