ICO – Initial Coin Offering

As opposed to the emissions model of awarding tokens to miners or stakers in Proof of Work or Proof of Stake protocols. Initial Coin Offerings (ICOs) are a distribution model were the core team of a cryptoasset project sells a portion of the token supply upfront to fund future development.

Typically

• The team will retain a portion of the tokens to reward their efforts
• A foundation will be established and awarded a portion of the supply to fund the projects further development and the ecosystem that surrounds it.
• A portion is set aside for early investors, advisors, and contributors to the project

A red flag for ICO investors is if the portion of tokens set aside for these purposes represents an outsized percentage of the total supply.

Historically, Ethereum has been the most popular way to reach the marketplace with ICOs. Ethereum’s ERC-20 token standard was intentionally designed for ICOs and has proven an efficient way to conduct them over time.

Further ICO Reading

What Is ERC-20 and What Does It Mean for Ethereum?