Crypto crowdfunding is a fundraising technique that uses cryptocurrencies. Projects using this technique must develop their crypto tokens on various blockchains, such as Ethereum, Tron, and Binance Smartchain. Here, we explore the tips and hacks for conducting a winning crypto crowdfunding campaign.
What are the perks of Crypto Crowdfunding?
Traditional crowdfunding apps have multiple challenges, such as a lack of transparency, and come with a high cost. Blockchain Technology helps to overcome these challenges by providing the following benefits:
Decentralization: an essential attribute of Blockchain Technology is that it’s decentralized. This quality is critical for projects as it allows transparency and reduces transaction fees. Blockchain Crowdfunding platforms remove third parties in financial settlements. Furthermore, you can quickly start a campaign because of minimum legal limitations.
Tokenization: tokenization improves the equity technique of crowdfunding. Tokens allow investors to own a stake in the business they finance.
Openness and security: Crypto crowdfunding platforms are secure and transparent. This is especially critical in the crowdfunding industry, that’s known for being secretive. Donors and project funders want to understand how their funds are utilized. Blockchain Technology has an open and secure record of all the transactions, allowing investors to see how projects spend their funds.
Use of smart contracts: digital contracts allow concerned parties to see each transaction, reducing the incidents of fraud. Furthermore, smart contracts enable prompt and errorless transactions.
Forms of Crypto Crowdfunding
Crypto Crowdfunding has become a trendy technique for raising capital in the blockchain industry. Here are the main types of blockchain crowdfunding techniques for blockchain-based businesses:
Initial Coin Offering (ICO)
The early-stage businesses using this crypto crowdfunding technique sell tokens to investors and use the cash to complete their projects. During an ICO presale, investors purchase the tokens at discounted prices and sell them later at huge rates during a public sale. Once they buy the coins, investors hope the tokens’ value will increase over time and sell them at handsome rates.
ICOs have various advantages for businesses. For starters, the method is convenient for startups because it has minimal legal hurdles. Also, ICOs can appeal to many investors across the globe due to Blockchain Technology. The decentralized ledgers allow anybody to participate. Furthermore, conducting an ICO campaign is cost-effective for many startups as the technique eliminates transaction intermediaries.
Initial Exchange Offering (IEO)
An IEO is a fundraising technique controlled by a specific exchange. IEOs emerged to surmount the challenges of ICOs. Although ICOs were successful, some encountered multiple issues like fraud, manipulation, and deceit. IEO added a layer of trust in Crypto Crowdfunding by allowing exchanges to scrutinize projects that want to participate.
The exchange vets each project and allows those that meet the set standards to sell their coins. Projects using this technique leverage the popularity of the exchange to sell their coins. Also, projects can enjoy a high level of exposure through this method.
Security Token Offering (STO)
STOs allow investors to buy asset-supported tokens offered by early-stage projects. An STO project must follow the specific laws of the country where the business operates. STOs are virtual depictions of tangible properties, such as shares and bonds. The coins are equivalent to share certificates issued after buying stocks in a company. However, a distinguishing feature between the two is that STOs are registered on a decentralized ledger.
Initial DEX Offering (IDO)
An IDO is a crowdsale method that enables blockchain startups to introduce their tokens via a decentralized liquidity exchange. It’s an innovative approach, helping projects to raise funds quickly.
Tips for conducting a successful blockchain crowdfunding campaign
Launching a winning Crypto Crowdfunding can be a tough job for many. Because this marks a crucial step in your project’s life cycle, it’s critical to ensure everything goes as anticipated. Here are the tips and tricks to help you deploy a successful campaign:
1. Define your goals
A project must clearly define the objectives it wants to attain through the Crypto Crowdfunding approach. Investors want to understand what you want to achieve after raising funds. Also, your goals should be realistic. Remember, unrealistic objectives might create doubts in potential investors.
So, the best approach to document your goals is via a whitepaper and roadmap. These documents should be ready before you start your campaign.
2. Hire the right team
The team working on your project can attract or drive away investors. Investors wish to see a team whose members are experienced in their areas of specialization. It’s crucial to avoid using an anonymous team or one that lacks experience. Investors want to see the faces of your team members and even their LinkedIn profiles.
Some projects might lack high-profile team members but still win investors’ trust if they incorporate professional advisors.
When the campaign is ongoing, it’s advisable to avoid major team changes as it leads to the erosion of investor confidence.
3. Clearly define investors’ terms.
A winning crypto crowdfunding campaign should incentivize early investors via discounted tokens. Also, a project should have an escrow wallet for easy refunding of money if the project hits a snag.
4. Leverage Crypto crowdfunding platforms
Crypto crowdfunding platforms allow people to donate cryptocurrencies to support unique ideas. Some Crypto crowdfunding platforms include Wefunder, Brickblock, and QuiverX.
5. Market your Blockchain Crowdfunding launch
Once you launch your project, you must popularize it with your target audience. Projects can use various techniques to market their tokens. Here are some notable strategies for promoting your crypto crowdfunding:
Social media platforms
Many blockchain fans hang out on various social media platforms, such as Twitter, Facebook, Reddit, and Discord. So, you need to do some intensive marketing on these platforms.
Create a community
A community can help you spread the word about your project. You should engage your community by educating it about your project. Also, it’s important to incentivize your community via various strategies, such as airdrops and giveaways.
Use appropriate hashtags
Hashtags can help potential investors find your project. So, when messaging on social media, it’s essential to use the right hashtags.
Conclusion
Blockchain Crowdfunding is a popular method of raising funds for your startup. The technique can help you access funds quickly if you understand how to launch it properly. Here, we’ve explored unique tips and tricks for launching a successful Crypto Crowdfunding campaign.
