Token Sales & Fundraising Models

Welcome to the world of cryptocurrencies and token launches! 🚀 If you're wondering how new crypto projects raise capital and bring their tokens to market, you're in exactly the right place. This guide explains the most important models – simple, clear, and without unnecessary tech jargon.

What is a Token Generation Event (TGE)?

Before we look at the different models, we should understand what this is about: In a Token Generation Event (short: TGE), new tokens are created on the blockchain for the first time and distributed to investors. It's like a virtual IPO, but for digital assets.

Most projects don't distribute tokens all at once – part is released immediately, the rest is staggered or locked over time (this is called Vesting). This prevents everyone from selling at once and crashing the price.

The Early Investors: Seed Sale and Private Sale

Every successful project begins with Seed and Private Sales. These are the absolute early phases, where only selected investors – venture capitalists (VCs), business angels, and influential crypto personalities (KOLs) – can participate.

Characteristics:

🔒 Very limited availability
📉 Strong price discounts (often 50-80% below listing price)
⏳ Long lock-up periods and vesting schedules (6-24 months)
📋 Personal negotiations and contracts
✅ Professional due diligence by investors

This phase is designed for major investors who want to get in early and participate in the project's development.

For the Community: Presales and Public Sales

Once the major investors are on board, projects open their doors to the broader community.

Presale (Pre-ICO)

The Presale is a kind of "VIP preview" for early community members. Here, real users and supporters get the chance to enter before the general public – often with better prices and without caps or with extended limits.

Highlights:

🎟️ Often whitelist systems ("sign up to participate")
💰 Better prices than public sale
🌍 Globally accessible, but often with regional restrictions
⚠️ Medium risk – less oversight than later

Public Sale (Main Sale)

The Public Sale is the open phase for literally everyone. The price is usually fixed, and there are limits per wallet to prevent whale dominance.

The Major Launch Models: ICO, IEO, IDO & Co.

Now it gets exciting! There are several ways projects can launch their tokens:

ICO – Initial Coin Offering

The ICO is the classic, "original" model. The project launches its sale via its own website or a generic launchpad – without intermediaries.

Advantages: Maximum flexibility, low fees
Disadvantages: Little security and oversight – many historical scams come from this
Target Audience: Experienced, globally dispersed crypto users
Rule of Thumb: ⚠️ Requires significant personal responsibility and due diligence

IEO – Initial Exchange Offering

An IEO runs through a centralized exchange like Binance, Kraken, or KuCoin. The exchange handles KYC (Know Your Customer), marketing, and direct listing.

Advantages: Higher security standards, immediate listing, marketing by the exchange
Disadvantages: Higher fees, stricter requirements for projects
Target Audience: Beginners who trust an established exchange
Rule of Thumb: 🛡️ Significantly safer than ICO, but costs more

IDO – Initial DEX Offering

The IDO is the DeFi version: Via decentralized exchange launchpads (like Polkastarter, Seedify, or similar), the token is sold automatically via smart contracts – with direct liquidity on the DEX.

Advantages: Immediate trading after sale, permissionless (everyone can participate), fast
Disadvantages: Higher rug-pull risk, technically more complex
Target Audience: DeFi enthusiasts, experienced traders
Rule of Thumb: 🚀 Fast and direct, but: "Not your keys, not your coins" – only trust what you understand

IFO – Initial Farm Offering

The IFO combines token sales with yield farming. Users stake or provide liquidity and receive token allocation rights in return – often via platforms like PancakeSwap.

Advantages: Incentivizes liquidity, users earn during the sale
Disadvantages: Higher complexity, DeFi risks
Target Audience: Experienced yield farmers

The Special Models

STO – Security Token Offering

The STO is for "real" securities – stocks, bonds, or revenue-sharing tokens. Here, real financial law applies, with KYC/AML and compliance.

Important: These are highly regulated and costly – more for professional investors.

LBP – Liquidity Bootstrapping Pool

An LBP works like an automated auction. The price starts high, then falls over time – but rises if many people buy. This is meant to promote fairness and prevent whales from dominating the market.

Rule of Thumb: Exciting, but price volatility is possible.

SHO – Strong Holder Offering

The SHO rewards loyal community members. Those who already hold a certain token for a long time or use it actively get access to new sales – often with a discount.

The Idea: Long-term supporters > short-term flippers

INO – Initial NFT Offering

Analogous to ICO, but for NFTs. Projects sell NFT collections or mystery boxes as early access to games, communities, or further rewards.

How Do I Choose the Right Phase to Invest?

Phase	Risk	Potential	For Whom?
Seed/Private	🔴 Very High	🟢 Very High	VCs, experienced angels
Presale	🟠 High	🟡 High	Early community
Public Sale (IDO/IEO)	🟡 Medium	🟡 Medium	Beginners to semi-pros
After Listing (DEX/CEX)	🟢 Lower	🟡 Lower	Casual traders

Important Protection Tips

✅ Do Your Homework: Read the whitepaper, check the team for credibility
✅ Use Established Platforms: IEOs on top exchanges or IDOs on known launchpads are safer
✅ Beware of FOMO: "Fear of Missing Out" is scammers' best friend
✅ Understand Vesting: A token that becomes 100% liquid immediately has higher dump risk
✅ Only Invest What You Can Afford to Lose: Crypto is volatile and speculative

Conclusion

The world of token sales can seem overwhelming, but the basic idea is simple: new projects need capital, and investors look for early opportunities. Each model – from ICO to STO – has its place and targets different audiences.

As a beginner, I'd start with IEOs or IDOs on established platforms. They offer a good mix of security, transparency, and potential. Over time, you'll learn to feel more confident navigating the more complex models.

Good luck exploring the crypto world!

Pre-SalesToken Sales & Fundraising Models