Features and benefits from ICO and IEO
Today we’ll talk about Initial Futures Offering (IFO). This is the latest method for crypto companies and investors to unite in accordance with well-known concepts such as ICO and IEO. Are futures a suitable solution for blockchain projects? What are the characteristics of these futures and will investors want to invest in tokens that do not yet exist? We will discuss all this today.
What is the initial futures offer
In the field of cryptocurrencies, new concepts are constantly appearing for traders and investors. First, there was an initial offer of ICO coins – a form of attracting investments in the form of selling to investors a fixed number of new units of cryptocurrencies received by a single or accelerated issue.
For ICO, 2017 was especially successful, and after the hype around it significantly decreased. This was mainly influenced by official rules and strict controls.
But blockchain projects needed a way to raise new funds and put tokens into circulation. Therefore, then the time came for IEO – the primary exchange offerings that reduced the number of scam projects. Many trading exchanges still use this method, but recently an even more interesting concept has appeared – the initial offer of futures (IFO).
As the name of the futures suggests, we are talking about tokens that do not even exist at the time of purchase. These are financial contracts that oblige parties to trade an asset with a fixed future date and price.
Benefits of an Initial Futures Offer
IFO has many advantages. Some of the strongest arguments in favor of the initial futures offer:
- Traders gain access to a large number of instruments. This opens up opportunities for wider portfolio diversification.
- Since the recommendations for KYC and AML are less stringent and the purchase price is lower, the IFO is also open to small investors.
- Futures have high liquidity and reduced commissions.
- The leverage effect, available in forward transactions, makes it possible to increase profits many times. This is because guarantee coverage is often much lower than the cost of the underlying asset.
- Futures offer a more realistic pricing for the token, so they give a better idea of the progress and success of the corresponding blockchain.
However, there remains some risk, as with any form of trading. The leverage effect can also lead to large losses. In general, margin trading is a double-edged sword.
It will be interesting to see how the IFO concept is popularized in the near future. Since this is still very new, it is still unknown how well it will be accepted by crypto exchanges and investors. The initial offer of futures, at least, could be the next big revolution in the cryptocurrency sector.