Solana’s Surge Fueled by Meme Coin Rally and Innovative Crypto Mining Project
August 7, 2024
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Solana’s price has seen a notable increase, rising by double…
Innovations in Cryptocurrency Asset Issuance: A Comprehensive Guide to Mechanisms and Opportunities
In our industry, despite various technological and application scenario innovations, Wall Street elites and financial institution magnates see the greatest value in our sector as the innovative methods of asset issuance. This is not a trivial matter. Each update in the way assets are issued brings about a wave of wealth effects. Today, let’s explore the different asset issuance methods and their respective trading opportunities. Note that we won’t be discussing stock issuances today; that’s old play.
Proof of Work (POW)
First, let’s talk about the POW (Proof of Work) mechanism, the linchpin of cryptocurrency, pioneered by Bitcoin. Bitcoin’s issuance method, Proof of Work, means that bitcoins are not simply issued at will; they are awarded as a ‘medal’ for work, given to miners who provide computational power to the network. As long as someone works for me, I reward them with bitcoins. The advantage of this issuance method is that anyone, regardless of their identity, can participate as long as they meet the unified standards of the Bitcoin network.
The second common method in our industry is private placement, which has been operational in traditional sectors for many years. The essence of private placements in the crypto industry isn’t fundamentally different from traditional ones. Here, investors and project initiators agree on terms privately. Most crypto projects undertake private placements at a very early stage, often before the tokens are issued, generally following equity private placement logic, eventually evolving into SAFT (Simple Agreement for Future Tokens). This method is highly regulated, and mainstream projects now use this for fundraising, mainly suitable for professional financial investors and institutions, not so much for retail investors.
Initial Coin Offering (ICO)
The third method, which encompasses various forms like ICO, IDO, and IEO, extends from the Initial Coin Offering (ICO). Originating from the traditional IPO, an ICO is essentially the first public offering of tokens instead of stocks. However, following massive participation in 2017 and 2018, ICOs fell out of favor until recently, when a resurgence occurred with projects simplifying the issuance to just leaving a wallet address on Twitter for participation.
Next, there’s the airdrop method, a direct distribution of tokens to users to stimulate community activity. However, airdrops often lead to conflicts between project initiators and users, as many users tend to sell their tokens immediately, fearing the price might drop if they hold on too long.
Another method gaining popularity in 2023 is ‘fair launch,’ where project initiators and retail investors vie for tokens on an equal footing. This seems fair on the surface as everyone mints tokens together, but technical players often end up grabbing a significant share, turning it into a competition dominated by technical superiority.
Node sales have become increasingly prominent in 2024, favored for enabling project initiators to raise funds while users can contribute to and benefit from the network by setting up nodes. This method could potentially become a mainstream choice for more crypto projects due to its benefits compared to previous methods.
In summary, from Proof of Work to node sales, our industry has seen a variety of asset issuance methods. Each comes with its own pros and cons, impacting how projects are funded and how participants can engage and profit. As we continue to explore and refine these methods, the landscape of cryptocurrency issuance continues to evolve, offering new opportunities and challenges.
Source coming from YouTube
