An initial coin offering (ICO) is a popular fundraising mechanism for crypto projects to access capital. The crypto industry’s answer to the conventional initial public offering (IPO), a project launches an ICO to sell their cryptocurrency tokens at a fixed value to raise funds for development.
Investors interested in supporting a project can buy the tokens put up for sale in the ICO in exchange for a stake in it. The funds raised in exchange for selling the tokens can serve as vital capital to help the crypto project progress with its development and growth.
However, ICOs received much notoriety after several crypto projects tanked after their launch, resulting in losses for thousands of investors. While a small percentage of projects succeed following ICOs, an overwhelming majority cannot progress and give back adequate gains to investors.
Although ICOs managed to overtake venture capital firms as a fundraising method, the ICO route became infamous after malicious actors used this route to scam unsuspecting investors and steal millions of dollars from them.