By 2019, the ICO has gained a bad reputation. It was replaced by a number of creative alternatives, each of which is designed to improve the model of the repeatedly ridiculed ICO.
Many beginning projects are trying their best to disown the term ICO, coming up with different names. Some of these terms are an attempt to avoid legal consequences. Nevertheless, more often it is an attempt to avoid associations with numerous fraudsters operating in this area. However, there are platforms, a sincere desire to provide an alternative way to raise capital. Below are six alternatives to the “incredible,” new and outdated ICO method.
Security Token Offering (STO) is a fully regulated ICO that takes place with the permission of the SEC. They are divided into various types, including Reg D (open only to institutional investors) and Reg S, which are held outside the United States. The most important type for companies conducting STOs is Reg A +, as it gives the right to the participation of retail investors. A number of projects, including Gab.ai and Knowbella, are just awaiting Reg A + approval.
Interactive Initial Coin Offering (IICO) was first proposed in an article by Vitalik Buterin as a fairer ICO model. It is designed to prevent FOMO varieties and “gas wars” that could cause whales to receive all tokens and crowd out smaller investors.
The decentralized Kleros protocol was the first project for IICO research. Authors may indicate a maximum size for sale; if the total number of earned funds exceeds this amount, their broadcast will be returned. This ensures that everyone is given a chance to purchase tokens at a price that they consider honest, at least in theory.
The recent Metronome project collection was conducted under the banner of Initial Supply Auction. As the team explains, “A decreasing price auction is used at ISA, where the sale starts at an overvalued price and as the fundraising proceeds, the price decreases. Buyers will receive their Metronome almost immediately after purchase at the price at which they purchased the tokens. Buyers should only buy coins when they feel that the MET price is fair. ”
Simple Agreement for Future Tokens is a means of overcoming the risk that the sold tokens for a project that is under development can be classified as securities. To get around this, investors invest in the understanding that they will receive their tokens only after the network starts working and the tokens are used. Thus, the project benefits from obtaining the capital necessary for development, and investors can sell their tokens in the future when the platform becomes useful.
By the way, the main part of the criticism received in the address of EOS or TRON is precisely that people invest in a project ($ 4 billion each) which has nothing but an idea. Perhaps if these and similar platforms chose SAFT rather than ICO, then there would be less problems and mistrust in the crypto sphere.
ICO alternative: Full airdrop
Most ICOs now allocate some of their tokens to Airdrop – to the project community, in the hope that these people will become users of the platform. The standard practice is to distribute less than 5% of tokens through Airdrop, but there is a bolder approach: give away most of your tokens in this way, keeping a part for the team as a reserve, and then hope that the market itself determines the fair price of the token as soon as he will go on sale. This is the model that Everipedia and many other EOS-based projects are testing.
Refusal of ICO
The ultimate alternative to ICOs is to abandon ICOs altogether. It may seem crazy in the era of multi-million dollar crypto projects, but in fact, it is a much better way to coordinate the aspirations of the participants. Bitcoin, Litecoin, and Decred are all examples of networks that started without fundraising. If your idea is truly revolutionary, you do not have to resort to ICO: implement it, and the funds will come on their own.