In the world of cryptocurrencies, understanding the success of a project and interacting with investors depends on understanding the basic terms found in white papers. These terms explain the stages of funding and distribution mechanisms, and help investors make informed decisions. Here is a detailed explanation of the most important terms:
1.ŰŁ. TGE (Token Generation Event)
đ The token creation event is the date when digital tokens are created and distributed to investors. These tokens represent the digital currency of the project. This event is determined after the technical development of the project is completed, and it is the moment when these tokens start trading in the markets.
- Example: After the platform development is completed, the TGE date is set and the tokens are distributed to the investors who participated in the initial funding.
2.b. Presale
đ° A pre-sale is a stage where tokens are sold before they are officially released to the public. Tokens are usually offered at a discounted price to attract early investors. The goal of this stage is to raise early capital for the project.
- Example: A new project might offer to sell 10,000 tokens at a below-market price before listing them on exchanges.
3.ŰŹ. ICO (Initial Coin Offering)
đ An initial coin offering (ICO) is a process in which a project offers its currency or tokens to investors to raise funding. ICO is one of the most popular ways to raise money in the world of cryptocurrencies, as any investor can buy tokens during this stage before the project is officially launched.
- Example: Investors can participate in an ICO to purchase tokens at a discounted price before launching on the market.
4.ŰŻ. IDO (Initial DEX Offering)
đ An Initial Coin Offering (IDO) is the process of selling new tokens on a decentralized exchange (DEX). This process allows investors to purchase tokens directly from the exchange without the need for a central intermediary, which increases transparency and control for investors.
- Example: A DeFi platform launches an IDO offering, allowing investors to purchase tokens in a decentralized manner.
5.Ù. IEO (Initial Exchange Offering)
đŠ An Initial Coin Offering (IEO) is a token sale via a centralized exchange such as Binance or Huobi. In this case, the platform vets the project before listing it, providing additional confidence to investors.
- Example: If a new project wants to launch its tokens, it can partner with a platform like Binance to launch an IEO, where the platform promotes the token and ensures the security of the sale process.
6. Soft Cap (minimum financing)
đ Minimum funding is the minimum amount of money that must be raised for a project to be considered successful and continue development. If this amount is not raised, the funds may be returned to investors or the project may be cancelled.
Example: If a project has a Soft Cap of $500,000 and does not reach that number, the project may be canceled or postponed.
7.z. Hard Cap
đ The funding cap is the maximum amount of money that can be raised in a funding campaign. Once this cap is reached, the funding process is closed even if there are more investors willing to participate.
- Example: If a project has a Hard Cap of $5,000,000, fundraising will stop when that number is reached.
8.h. Vesting (distribution of tokens at intervals)
âł Vesting is a schedule in which tokens are distributed to investors or the contributing team in multiple stages rather than all at once. This is intended to ensure that contributors remain committed to the project for the long term.
- Example: An investor may receive 10% of the tokens after TGE, and the rest is distributed over two years.
9. Airdrop (Free Distribution of Tokens)
đ Airdrop is a way to distribute tokens for free to users in order to promote the project and raise awareness. This is usually done to platform users or to holders of specific tokens.
- Example: A new project might give away 1000 free tokens to every user who has a certain token in their wallet.
10.i. Whitelist
đ A whitelist is a list of people who are eligible to participate in a pre-sale or initial public offering. Typically, these people are selected based on certain conditions such as the size of investments or the time of registration.
- Example: Investors must register on the whitelist to be able to participate in the token presale.
Understanding these terms enables investors to better evaluate projects and interact with the different stages of development. Each project can have a different structure, so it is essential to read the white papers and understand all the details before making any investment decision.
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