As GameFi gains prominence, the concept of Initial Game Offering (IGO) is becoming increasingly popular within the cryptocurrency investment community. IGO provides the opportunity for investors to make advance purchases of NFTs (Non-Fungible Tokens) or tokens associated with a blockchain-based game during its initial development phase.
GameFi, which combines gaming and decentralized finance (DeFi), is a growing trend where blockchain games offer financial incentives and rewards to players. IGO takes advantage of this trend by allowing investors to get in early on a game’s development. By participating in an IGO, investors can secure NFTs or tokens that may have future value within the game’s ecosystem. This early access can potentially lead to significant returns if the game becomes successful, making IGOs an appealing option for crypto investors seeking opportunities in the gaming space.
Introduction
Initial Game Offerings (IGOs) are frequently orchestrated through launchpad platforms. In these scenarios, participants typically commit to locking the platform’s native token for a predetermined period. As a result, participants may gain the privilege of early access to the game’s tokens or NFTs, depending on the specific project.
Launchpad platforms are intermediaries that facilitate IGOs, allowing crypto enthusiasts to support upcoming blockchain games. To participate, individuals often lock in a certain amount of the platform’s native cryptocurrency as a form of commitment. In return, they receive the opportunity to obtain tokens or NFTs from the game before its official release.
What sets IGOs apart is that the acquired tokens and NFTs can sometimes be traded on decentralized exchanges and NFT marketplaces that operate independently of the game’s ecosystem. This means investors may have the option to buy, sell, or trade these assets outside of the gaming world, potentially adding to their value and liquidity.
What is the Working Method of IGO?Â
The Initial Game Offering (IGO) functions as a fundraising method within the realm of blockchain gaming projects, similar in concept to the Initial Coin Offering (ICO). What sets IGO apart is its unique offering to participants: not only cryptocurrency tokens but also early access to in-game assets, all in support of the game’s early development. These IGO assets often include a variety of items such as mystery boxes, characters, skins, accessories, weapons, and more, many of which are Non-Fungible Tokens (NFTs) essential for game access or enhancing gameplay.
Currently, a range of IGO launchpads is available, such as Binance NFT, BSCPad, TrustSwap, and EnjinStarter. While each launchpad may have its specific procedures for conducting an IGO, a common requirement is for investors to acquire the launchpad’s native token to participate. For instance, to take part in Binance NTFS IGOs, investors typically need to hold a specified amount of Binance Coin (BNB) in their Binance Wallet to become eligible participants.
After acquiring the required tokens, participants proceed by locking these tokens into a designated pool for a predetermined period. The distribution of the project’s tokens or NFTs to participants relies on an allocation algorithm, often taking into account the quantity of tokens they have committed.
For instance, Binance NFT utilizes a subscription system to impartially determine recipients of rewards, guaranteeing that every participant enjoys an equitable chance to obtain NFT assets through the IGO. In certain cases, participants may have a requirement to retain or stake the gaming tokens or NFTs they’ve purchased for a specific duration before they can engage in trading them on the market.
Why are IGO, ICO, IEO, and IDO Different from Each Other?
In the realm of cryptocurrency, various fundraising methods exist. Among the more well-known ones are Initial Coin Offerings (ICO), Initial Exchange Offerings (IEO), and Initial DEX Offerings (IDO). While these methods all share similarities as crowdfunding approaches, they do exhibit distinct operational differences.
Initial Coin Offreing (ICO)
(ICO) Initial Coin Offering marked the inaugural fundraising method within the cryptocurrency arena. It empowered blockchain-based project teams to procure funds through the utilization of cryptocurrencies. The adoption of ICOs surged when Ethereum employed this strategy in 2014, maintaining its status as a widely embraced crowdfunding mechanism until early 2018. These ICO events served as an effective avenue for projects to secure financial support during their initial stages of development.
Initial Exchange Offering (IEO)
The fundamental distinction between an Initial Exchange Offering (IEO) and alternative fundraising methods is that an IEO unfolds within a cryptocurrency exchange, rather than being independently managed by the project’s team. Collaborating with established crypto exchanges holds advantages for both the project and participants in the IEO. Typically, projects undergo rigorous scrutiny before being granted a hosting opportunity on an exchange. Moreover, the team behind the IEO can broaden its outreach to the exchange’s user community. An illustrative instance of an IEO platform is the Binance Launchpad.
Initial Dex Offering (IDO)
The Initial Dex Offering (IDO) represents an ICO hosted on a decentralized exchange (DEX). IDOs were conceived to address the limitations of both ICO and IEO models. Notably, since a project’s token is launched on a DEX, the associated costs for listing are typically lower than those of IEOs. Moreover, IDOs offer immediate token liquidity, enabling tokens to be listed almost immediately after the IDO’s completion.
However, it’s important to note that because IDOs operate on DEXes, they may not always undergo a rigorous due diligence process. This can elevate overall risks, as some IDO projects might have lower quality or questionable reputations. Caution is advised, especially regarding potential rug pulls, as some IDOs have turned out to be scams, leading to the misappropriation of investors’ funds.
How to Engage Effectively in IGOs
Just like any investment, there’s no assurance of profitability with IGOs. It’s essential to conduct your research (DYOR) and carefully assess potential risks before participating.
For instance, you can examine the gaming project’s website or social media channels to ascertain whether it offers a well-defined plan or development roadmap. Additionally, it’s advisable to check for any reputable investors or established partners supporting the project.
Read Also: What is IGO Valuation and How Does it Work with NFT?
When considering an IGO investment, due diligence is vital. By reviewing the project’s website and roadmap, you can gauge the clarity of their vision and their commitment to development. Furthermore, the presence of well-known investors or partners can enhance the project’s credibility and reduce certain risks associated with lesser-known ventures.
The Bottom LineÂ
To conclude, IGOs offer an innovative means for game developers to fund their projects through blockchain technology. While they present an attractive avenue for investors to support nascent gaming endeavors, it’s vital to recognize the considerable financial risks associated with them. Therefore, conducting thorough due diligence before investing is of utmost importance.
IGOs are a modern financing method in the gaming industry, leveraging blockchain. While they can be appealing for early-stage project support, potential investors must be aware of the financial risks involved. Prioritizing due diligence, which means conducting comprehensive research and assessment, is a critical step to making informed investment decisions in this space.
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