Crowdfunding is a process where an organization raises funds for their project by asking the public directly instead of going to institutional investors.
Crowdfunding is a process where an organization raises funds for their project by asking the public directly instead of going to institutional investors. When it comes to the cryptocurrency market, crowdfunding has grown to become one of the most important parts of the ecosystem.
Crowdfunding in the crypto space started in 2013, with the first Initial Coin Offering (ICO) for Mastercoin. Later ICOs gave birth to projects that include Ethereum, Polkadot, and Polygon. NFT mints are another form of fundraising where project owners raise funds by allowing users to mint NFTs in exchange for a fee.
Below we’ll look at crowdfunding and how it relates to the crypto market.
Crowdfunding has a lower barrier to entry for project founders
Crypto projects trying to get off the ground and raise seed money may not have the resources to devote to seeking conventional sources of funding. Crowdfunding enables founders to get their project in front of the appropriate people and is more efficient and effective than trying to acquire a loan or find investors on your own. Founders can crowdfund directly on their site via an ICO or use a platform to run an ICO or Initial Exchange Offering (IEO).
Founders can convey their projects’ narrative, offer incentives for early investors (i.e lower token prices shorter lockup periods, etc.), and if using a crowdfunding platform they can benefit from having everything in one centralized area where their project can be easily discovered.
Projects can use social channels to kickstart their communities
Crypto projects usually create Discord and Telegram communities where prospective investors can speak with the founders, stay up to date with the latest news and discuss the project with each other. To develop social proof for their projects,…