WHAT IS AN ILO?
Initial Liquidity Offering is a new type of fundraiser mechanism where projects and startups raise funds by selling tokens on DeFi based decentralized mechanisms without involving the process of ICO(Initial Coin Offering). ILO has started to take the cryptocurrency world to the next level.ILO has become a popular platform to launch new tokens in which it has overtaken ICO by a significant value. Since the arrival of ILO, Initial Coin Offering and Initial Exchange Offering has been forced to change their approach towards the fundraising platform.
WHY ILO HAVE OVERTAKEN THE OTHER FUNDRAISING MECHANISMS:
In order for a token to be successful, it needs to be liquid(i.e, it needs buyers and sellers when it is released in an exchange).In a normal centralized exchange, the buyers and sellers need to wait for a long time to sell a newly released token. In order to eliminate the wait, Decentralized Exchanges with Automated Market makers are introduced.
Automated Market Maker (AMM):
AMM is a type of Decentralized Exchange (DEX) protocol that relies on mathematical formulas instead of an order book like a traditional exchange. In AMM, assets are priced according to the pricing algorithm.
In a decentralized exchange with AMM, there is always a ready market for tokens in the form of computer programs that are ready to pay for the price of a newly released token. In order to pay for the price of the token, AMM must be backed by a wealth store called Liquid Pool. Liquid pools are represented in the form of stable coins. In ILO, new tokens are offered to buyers who agree to contribute to the liquid pool which ensures the tokens are attractive to the new buyers and AMM can function effectively.
HOW DO ILO FUNCTIONS?
Initial Liquidity Offering is a new fundraising strategy through which the buyer sells his/her’s own capital in return to gain profits. The buyers receive a share of financial outcomes based on Initial Public Offering(IPO).In ILO, the liquidity contributors receive tokens in exchange for the contribution to the liquid pools for the AMM to function for the new tokens. Liquid contributors take a high risk to buy a new token and in return, they are provided with bonuses called yield. The contribution of liquidity is in the form of stable coins. If the token holders sell a lot of new tokens through AMM, the liquid pool for new tokens becomes skewed, as the token holder receives stable coins that are held in the pool.
Initial Liquidity Offering is the best and effective way of fundraising through the release of new tokens, as it ensures the release of tokens into the world where the market is ready to buy/sell tokens.
BENEFITS OF INITIAL LIQUIDITY OFFERING:
These are the benefits of Initial Liquidity Offering (ILO).
FASTER SALE:
The primary benefit of ILO is the processing speed of the token sale, as the new tokens are being released in the decentralized exchange with AMM mechanism, there is no need to wait for the buying and selling of the tokens since the sale of the new tokens occur immediately with the help of the computer programs generated by AMM.
IMMEDIATE LIQUIDITY:
Since ILO is carried under the DeFi based DEX exchanges or DEX with AMM mechanisms, the liquidity to newly introduced tokens is gained immediately, since AMM itself pays for the price of the token without depending on the buyers
LOWER COST:
The modelling of the ILO consumes less cost when compared to the other fundraising mechanisms such as ICO and IEO.
OPEN FUNDRAISING:
When the new tokens are released in the decentralized exchange platform, it does not require anyone to kickoff or reject the fundraising. Since it is open-source, it does not require anyone to list or sell the new tokens in the decentralized exchange platform.
DEVELOPMENT OF INITIAL LIQUIDITY OFFERING (ILO):
Initial Liquidity Offering, briefly known as ILO, is the latest and effective fundraising mechanism for entrepreneurs whose businesses revolve around the field of cryptocurrency and the blockchain space. In order to develop an Initial Liquidity Offering, the user should have extensive knowledge about the fundraising processes such as ICO, STO and IDO. When the knowledge of the fundraising processes have been gained, the user should look out for ILO development companies that are among the best Initial Liquidity Offering service providers and excels in delivering the best possible desired outcome for the customer.
WHY IS THE BLOCKCHAIN APP FACTORY CONSIDERED AS BEST IN INITIAL LIQUIDITY OFFERING DEVELOPMENT?
Blockchain App Factory, being a Liquid Pool Creation company among the earliest and consists of a team of developers with solid experience and encyclopedic knowledge. We have gained mastery over helping several clients across the globe to launch their Liquidity Pool Creation successfully and raise significant capital for the ventures. Our experienced and optimized r team helps you to succeed and stay ahead of the competition in the market.
