ILO vs ICO
Key Differences Between ILO and ICO
Definitions
ILO Short for Initial Loan Offering or Initial Liquidity Offering.
ICO Short for Initial Coin Offering, a fundraising model for blockchain projects.
1. Issuance Objectives
ILO
If Initial Loan Offering: Project teams raise funds by issuing loan tokens. Participants who purchase these tokens gain rights to project profits.
If Initial Liquidity Offering: Aims to add liquidity to decentralized exchanges (DEXs). Projects typically lock a certain number of tokens in liquidity pools to facilitate trading on DEX platforms.
ICO A financing method for blockchain projects. Project teams issue digital tokens, which investors buy to fund project development and operations. Investors expect profits from token appreciation as the project succeeds.
2. Issuance Methods
ILO
For Initial Liquidity Offering: Tokens are listed on DEXs, allowing free trading. Investors can directly buy or sell tokens on exchanges, ensuring relatively high liquidity.
ICO Project teams sell tokens directly to investors via official websites or specific fundraising platforms, not necessarily relying on DEXs. Tokens gradually go live on exchanges after the ICO concludes.
3. Regulatory Landscape
ILO Typically conducted in regulated environments, choosing reputable platforms (e.g., Binance Launchpad, Huobi Prime), and subject to platform rules and regulatory constraints.
ICO
Early stages: Largely unregulated, lacking clear legal norms, leading to numerous fraudulent projects.
Later stages: Strictly regulated by many countries, with enhanced compliance requirements. Historically, ICOs faced looser oversight compared to ILOs.
4. Token Utilities
ILO Tokens are primarily designed for specific project functions, such as serving as loan vouchers for profit distribution or as rewards for liquidity providers, closely tied to the project’s business scenarios.
ICO Tokens have diverse uses:
Circulating currency within the project.
Governance tokens for participating in decision-making.
Equity vouchers representing project ownership or future profit rights, depending on the project team’s design.
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