A crowdsale (crowdsale) is a form of collective funding for a cryptocurrency project in which the team sells its own tokens to a wide range of participants. In essence it is a kind of crowdfunding: instead of a reward or a share in the company, the buyer receives digital tokens that may grant access to the project's product, service, or ecosystem.
Most often a crowdsale is held as part of an initial coin offering (ICO) and through other similar mechanisms. The team publishes the terms in advance: the total emission volume, the token price, the accepted currencies, the timeline, and the distribution of the funds raised. There are frequently stages with different prices — early participants may receive tokens on more favorable terms.
What participants pay attention to
- The transparency of the team and the thoroughness of the technical documentation.
- A clear description of the token's purpose and its role in the project.
- The terms for distributing and locking up tokens after the sale.
A crowdsale carries a high risk: a significant share of such projects fail to reach their stated goals. That is why it is customary to approach participation with careful independent research and an understanding that the investment may lose all of its value.
