The crypto fundraising landscape has been continuously evolving, with the introduction of new mechanisms to raise capital or invest in promising opportunities.
After ICO, IEO, and IDO, Initial NFT Offerings (INO) are the latest addition to this space. In this article, we will explore what an INO is, how it works, the benefits of INOs, and their importance.
What is an INO?
An Initial NFT Offering (INO) is a crypto crowdfunding mechanism that involves offering a limited set of NFTs for sale on launchpads or marketplaces to public investors. NFTs or Non-Fungible Tokens are unique digital assets that represent ownership of a particular piece of content, such as artwork, music, or collectibles.
INOs use the same fundamental concept as ICOs, IEOs, and IDOs, but with the added benefit of offering limited-edition NFTs.
INOs enable creators to sell their unique digital assets, such as music, artwork, or collectibles, directly to their fans, cutting out intermediaries and creating a more direct and personal connection.
INOs also allow investors to invest in promising projects early on and potentially earn a significant return on investment if the project succeeds.
How Does an INO Work?
Companies or individuals who want to raise capital for their project can create a set of NFTs that represent ownership of a specific piece of their project.
These NFTs are then offered for sale on a launchpad or a marketplace, and interested investors can purchase them with cryptocurrency.
The value of the NFTs may increase if the project succeeds, providing investors with a potential return on investment.
Benefits of INOs
Lower Entry Barriers
Compared to launching fungible tokens, the entry barriers for INOs are relatively lower. This allows projects with big and small ideas to be recognized by a wider range of audiences. With lower listing costs and easier access to instant liquidity, even smaller projects can raise the necessary funds to kickstart their ventures.
Strong Sense of Community
NFTs promote a strong sense of community as owning one of a verifiably scarce NFT of a collection puts holders into a close circle. It is easier to recognize each holder compared to owning a small percentage of a fungible token supply. Thus, NFTs provide a more personal connection to the project and promote a sense of loyalty and support.
Holders Become Project Advocates
Each NFT can only be owned by one wallet address, and ownership verification is built into the NFT itself. As a result, each holder becomes an advocate of the project since most perceive NFT ownership as a ‘bragging right’, especially when used as PFPs (profile pictures).