Crypto airdrops, IDOs and more

2017 and 2018 After the final bull run of initial coin offering mania in 2017 and 2018, ICOs were generally believed to be dead in the water.

A combination of regulatory oversight, especially in the US, spectacular pump-and-dump schemes and a general sense of depression that has not seen the dot.com boom's back-biting ideas have sealed the fate of ICOs.

Which was a shame. Because despite the scams and incentives, tokens are a new way to raise money.

According to Stylianos Campakis, CEO of Tesseract Academy, fundraising for new projects has never been easier than in those days.

“In the ICO era, raising money was easy, but obviously, regulation killed that. With IEOs (Initial Exchange Offerings), you probably still have to go through guidance and research on things like that.

A variety of options emerged, including more creative three-letter acronyms such as Campakis hints, Initial Exchange Offerings (IEOs) or token generation events, and Initial Cross Offerings (INOs).

Jamie Elkaleh, Global Relations Manager at crypto exchange Bitget, said that with Bitcoin EFAs halving and Bitcoin EFAs triggering bullish conditions, token raising events are less common than they used to be.

“Any organization that wants to raise money by selling tokens can use transparency as a feature, and it doesn't matter what they call it – ICOs or token events – these are ways to connect with the community and raise money in a transparent way,” he says.

“The difference between 2021 and this bull market is that the sum is smaller. Before, they could have gone up by double or triple digits; Now it's small, it's going to be raised in the single digits, so it's $4 million, not $40. [million],” he says.

Token Fundraising Methods: Crypto Projects with Airdrops

New token types also differ in other important ways.

While many Web3 companies looking to raise money in 2024 will not include US citizens, the security-token push is extremely high. And companies have been forced to be more creative in how they approach using tokens to raise funds.

Air drops are the main ones. Free tokens in exchange for market insight, and watch the token increase in value. This raises the profile of the project, attracts users and leads to secondary sales and funding.

For a new ecosystem marketing technique, especially one without serious VC backing, airdrops can make a lot of sense. Building a community through advertising, key opinion leaders (KOLs) and other traditional marketing channels costs a lot of money, and trying to grow organically takes a long time.

Nick Campion, Flare Network's head of marketing, says airdrops have pluses and minuses. Even if some recipients don't have long-term interest in the chain, he said, if the campaign delivers early numbers and gains enough public awareness to foster early community growth, an airdrop can still be considered a success.

“The question is how to design airdrops to maximize short- and long-term benefits while minimizing waste and potential negative side effects,” says Campion. The trick is to design the incentives correctly.

“The incentive design needs to look at what behaviors will be rewarded, how to mitigate Sybil attacks to ensure widespread adoption, and what long-term benefits this will have on the wider ecosystem,” says Campion.

Sybil's attacks can be common on airdrops, the bad actor sets up multiple identities, thus requiring more airdrops.

ICO options: Crypto presales

David Dobrovitsky, the CEO of FUNToken, is a serial entrepreneur who often works in the Solana ecosystem. He sees airdrops as essentially a marketing tactic, meaning the project can collect wallet addresses that are more valuable than email.

Dobrovitsky raises the specter of renewal of interest.

“The term ICO is not used anymore, but there are many equivalent terms like token sale, pre-sale – they all amount to the same thing. If you are a new protocol or a startup and you have native tokens, a token sale makes sense. Equity is amazing. It's not complicated, difficult, and decentralized. Entrepreneurs looking to raise money and build a community are definitely better off looking at tokens.

It indicates that many projects have chosen to avoid venture capital financing, which means that a large amount of supply ends up in the hands of VCs.

“There are new variations this time. Some people want to do one giant round and skip all the middle rounds, especially those early rounds that involve VC and VC control.”

“The biggest difference between now and ICOs is the size. Before, it was common to raise double digits; now, raising a million dollars is very common.”

Blockchain Fundraising: Gaming Tokens and NFTs

Game projects are very bold in using in-game rewards and mechanics.

Simon Vieira is the CEO of MixMob, Solana's gaming platform, and comes from a Triple-A gaming background.

Like many in the industry, he sees the greatest challenge in combining the joy of web2 games with the mechanics of web3.

“Tokinomics should work,” he says. “We want fun games that are competitive and use blockchain [what] Great for payments, microtransactions, and ownership.

Instead of looking at a traditional token raise, MixMob opted for an NFT sale. In 2021, he launched the first NFT collection, which sold out in less than a day.

“We didn't want to do a simple token launch where people sell the tokens. We had an idea to make it like a child going to a toy store to buy a toy. The difference is that the NFT toy comes with coupons that can be redeemed for tokens to play in the game.

“It was a brilliant way to launch our token.”

But launching a token is not for the faint of heart, according to Vieira. It costs a lot of money; You have to go through multiple interviews with exchanges, engage marketers, and connect APIs for both centralized and decentralized exchanges.

“It's very complicated, and we're on both sides, including high-level exchanges. It is more complicated than before, and you need money in advance. The mechanics may be simple, but the success rate is extreme.

NFT supported INOs or first node offers

Similar to MixMob's NFT sale, Web3 companies have turned to selling “things” or licenses to raise funds.

Typically, in the form of NFTs, these things prove their income, often in the form of native tokens, that can be redeemed on exchanges. Currently the most high-profile is Aether, a leader in decentralized GPU cloud infrastructure, which announced the sale of a node last month.

Node sales are becoming increasingly popular as they help enable Decentralized Physical Infrastructure (DePIN) projects. These projects will see members of the ecosystem providing hardware and capital, said Amar Bedi, chief operating officer of Tashi – a project of DepEd in partnership with ETIR.

“The trend toward decentralization is just beginning, and we expect it to change the way many industries pay for infrastructure services. INOs allow the average retail investor to be a part of this movement in a more meaningful way by providing more capital.”

Upland's reverse blockchain fundraising model

In an unusual move in the blockchain industry, German-American Dirk Luth decided with his co-founders to headquarter their Metaverse project Upland in Silicon Valley, the tech hub of the United States.

While many companies building in the Web3 space have decided to do so outside of the US, Upland has adapted to the regulatory climate since the SEC began actively monitoring ICOs in 2017.

Rather than launching a tradable token, Upland has focused on the development of its gaming platform, and has seen it grow from a Metaverse replica of Planet Earth into an increasingly complex ecosystem of user-generated features, games and entertainment in an open economy.

Upland introduced Spark as a basic platform utility token at its launch into the economy. Every stakeholder is needed to help Spark create value through world-building, community development, user-generated content, and the development of unlimited games, experiences, and services.

However, Spark has never been sold to investors or given to the team, and cannot be traded in the Upland metaverse. There are currently over 130,000 Spark owners in Upland, and 93.6% of those who have purchased a Spark have used it to build in Upland.

A July 2023 ruling in the US case of Ripple, which ruled that secondary token sales are not themselves securities, created a new way for Upland to connect its in-game token to other chains. In addition to real ownership, this allows owners to trade it.

In October, the community voted overwhelmingly by 87.25% to launch Sparket as an ERC-20 token on Ethereum by administrative vote. Following a community review and feedback process, support has ignited the initiative to connect Spark to Ethereum, where it can be mirrored and operated, equivalent to a thousand Sparklets called Sparklets.

Lute explained that they are now preparing for the bridge, noting the exception in the Web 3 space, where instead of launching a token and building the ecosystem, Upland is building the ecosystem and taking the two-year in-app token. to the market.

“Sparklet allows us to responsibly move Upland's economy toward progressive decentralization while having mechanisms to protect and protect against unwanted externalities,” he says.

“Sparklet's presence outside of the Appland app includes greater visibility in the Web3 gaming community, greater ownership of digital assets for our users, and ways to encourage new creators, developers and builders to join the ecosystem.”

Return utility tokens

Undrgrnd is an underground Web3 media company that specializes in writing articles and podcasts and discovering underground artists and musicians. Founder Joe Gisondi tried to attract VC money but couldn't get any traction. Instead, he turned to tokens and membership cards.

“When I was trying to raise money with VCs, it hit me that I need a community first and give to people who believe in the project.”

Undrgrnd has launched what can be called a social token with utility.

“I'm not doing a traditional token where you open a liquidity pool and everyone buys it. This marketplace token allows people to buy space on the front page and promote their own work or the work of another artist.

“Overall, my goal is to keep the token price low enough to keep the utility going. It's used to promote art and music. If it's too expensive, people won't use it, which defeats the purpose,” says Gisondi.

Crypto IEO and IDO Launchpads: Back to the Future with Token Sales

And of course, there are still more traditional token sales that have shown their activity since the ICO boom.

Dan Thomson is the founder and CEO of Sensai, a platform that uses AI to preserve and replicate people's personalities and characters as digital avatars. The team is creating realistic digital versions of celebrities, historical figures and even fictional characters like Mr Grey.

Still in beta, the platform already has 20,000 users by word of mouth.

The co-founders have been using IDO to generate funding at Fjord Foundary, Uniswap and elsewhere, in different rounds at different prices, each lasting three weeks. They had hoped to raise between $1 million and $2 million in total, but ended up with $3.4 million.

Thomson recognizes that token sales in 2017 are very different from ICOs, which were often sold with a pledge.

“For starters, we have not one, but two high-quality auditors vetting contracts and listings, doing serious risk management. We also have a working product that's bigger than most ICOs in the past.”

“We are also very serious about the token service, which is designed for our own niche, not a copy of something on another chain.”

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Jillian Godsil

Jillian Gosil is an award-winning journalist, broadcaster and author. In the year