5 | Other Capital Raise Formats

IEOs and IDOs may be the most popular form of fundraising for startup crypto projects today, but there are a number of variations (or simply plays on words) that have sprouted up since the advent of the IDO. Let’s take a look at a few of these variations and how they differ from the typical IEO/IDO formula.

STO - Security Token Offering

A security token is a unique token issued on blockchain which represents an ownership stake of an external asset or enterprise. Governments, businesses, and other entities may issue security tokens that serve the same purposes as stocks and other equities.

Security Token Offerings (STOs) were born due to regulators requiring that token offering remain compliant with existing rules and laws related to securities. An STO is very similar to an ICO; however, they are compliant with securities regulations in the jurisdiction in which they are offered for investment. This creates additional legal obligations for the companies issuing security tokens and offers an additional layer of assurance to potential investors.

INO - Initial NFT Offering

An Initial Non-Fungible Token Offering is a token offering in which non-fungible tokens (NFTs) of a project are sold at the early stage for a specified period of time. INOs work in the same way as IDOs through DEXs and launchpads, but they may also be offered on dedicated NFT marketplaces. INOs provide an innovative solution to resolve many of the challenges surrounding NFTs such as NFT liquidity, cumbersome listing process, compliance risks, and they provide an inclusive experience for all levels of user.

IFO - Initial Farm Offering

Initial Farming Offerings (IFOs) are a type of fundraising activity that utilizes farming events to generate funds for participating projects. Farming is the process of staking or locking a crypto platform’s native tokens on the platform in order to earn reward tokens whether it be the same token or a new one. Projects that wish to raise funds through IFO have to pass the same due diligence processes associated with IDOs and INOs to ensure the integrity of the project. IFOs are commonly used to create initial liquidity on a DEX for the launching project.

IMO - Initial Metaverse Offering

The Initial Metaverse Offering (IMO) is a fresh take on fundraising designed specifically to raise capital for blockchain-based metaverse projects. The IMO can be considered a combination of an IDO and INO and is divided into two parts: a token offering and a metaverse NFT item sale. Participants can use their acquired token allocation to purchase the metaverse NFTs during the item sale which typically takes place once the initial token sale is completed.

The variety of token offerings are expanding at a rapid pace and fundraising processes will continue to evolve over time. Now that we have covered the various token offerings, let us take a step back and compare the pros and cons of the three main types of offering: ICO, IEO, and IDO.
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