3 Fundraising Methods Disrupting the ICO Industry Today
| Updated by Maria Konash · 3 min read
ICOs were the first attempt at crowdfunding on the blockchain, but unforeseen problems have fueled the development of new fundraising solutions.
In 2017, ICOs were huge, and, in fact, they raised around $6 billion. Their success is continuing as we progress through 2018, and although ICOs maintain their popularity, companies have developed other methods of fundraising and token distribution. Let’s take a look.
Initial Loan Procurement (ILP)
Like Ethereum created the first ICO, blockhive have created the first ILP. It’s an entirely new innovation. Instead of sending your money to a smart contract and receiving tokens as you would in an ICO, you become a creditor and lend your money to a company. The loan is paid back at an agreed time and is legally binding.
The first ILP is blockhive’s. They’re issuing Future Loan Access Tokens – for blockhive, these are called HIVE tokens. HIVE are utility/access tokens that use smart contracts to handle the necessary KYC checks and provide an immutable record of the loan agreement. It is easiest to think of these tokens like keys to a house. You can’t enter a house without a key in the same way you can’t enter into a digital loan agreement without using HIVE to provide your signature.
Regulation-friendly ILP provides an alternative for companies, who may have little use form launching a native token but can still benefit from the use of blockchain technology. Blockhive’s ecosystem represents a collaborative funding effort that allows different companies to work together to achieve mutually beneficial goals, and HIVE token holders get to support a basket of companies.
Airdrops are becoming an increasingly popular way of distributing cryptocurrency tokens. They aren’t dissimilar to ICOs, but one feature makes them stand out – participating in an airdrop is free. This means that airdrops can sidestep regulations even in countries where the purchase of cryptographic tokens is banned.
For early-stage startups, airdrops are great because they incentivize newcomers to get involved with their project since people acquiring new tokens will want to know more about the issuer and will want to see the business succeed. Besides, who doesn’t love free stuff?
Security Token Offerings (STO)
Security Token Offerings, such as those provided on the Polymath platform, could be the future of the cryptocurrency market. This is because security tokens have the potential to revolutionize the trade of traditional stocks, shares, bonds on the blockchain. These tokens are different from those issued in ICOs because they have KYC/AML compliance baked into them.
The ability to trade these assets without friction has the potential to disrupt every major industry, so STOs could explode soon.
The Future of Blockchain Fundraising
Security Token Offerings, Airdrops, and Initial Loan Procurement have emerged from necessity and are addressing issues that the ICO may be unable to solve.
It follows that new methods of funding will increase in popularity and that the ICO may begin to fade. Airdrops could take the place of the ICO, though they are more likely to be used as a marketing strategy. We’re probably still a while away from the “death” of the ICO, but it looks like it’s coming.
Being a successful graduate of Belarusian State Economic University (BSEU), Maria has acquired competencies in economic and social studies. Given Maria’s previous research working experience, and desire to explore what's really shaping the future, the main research focus is placed on FinTech and Blockchain Technology.