What is an Initial Farm Offering (IFO)?

You may be familiar with the terms Initial Coin Offering (ICO), Initial Exchange Offering (IEO), or Initial DEX Offering (IDO). However, have you ever heard of an Initial Farm Offering (IFO)?

IFO is an innovative funding model used by DeFi (Decentralized Finance) projects to raise funds using the farming features offered by decentralized exchanges (DEX). With IFO, you can earn new tokens by exchanging other tokens you own, such as BNB or CAKE. Additionally, you can also earn rewards from the projects you support. How does it work? Check out the following explanation.

What is IFO?

IFO is an abbreviation for Initial Farm Offering, which is a method of raising funds carried out by new DeFi projects by selling their tokens to investors through pre-sale events held by DEX. IFO is similar to ICO, but with a focus on projects that use farming features, which is a process where users can provide liquidity for projects and get rewards in the form of tokens. 

IFO is usually carried out by projects that have passed strict selection by the DEX team, so they are expected to have good potential and quality.

What are examples of IFO?

One of the DEX platforms that holds IFOs most frequently is PancakeSwap, which is one of the largest DeFi platforms on the Binance Smart Chain. Some examples of projects that have carried out IFOs on PancakeSwap are Helmet (HELMET), Ditto (DITTO), and Blink (BLINK).

How to Participate in IFO?

There are several things you must prepare beforehand participate in IFO. The following are preparations before you participate in IFO:

• Create an account on a DEX that hosts IFOs, for example PancakeSwap. You also need to activate your PancakeSwap profile by paying a fee of 1.2 CAKE.
• Own the tokens required to participate in the IFO, for example BNB or CAKE. You also need to store the tokens in a DEX-compatible wallet, such as MetaMask or Trust Wallet.
• Follow the schedule and conditions of the IFO you choose. You need to know when the IFO starts and ends, what price and number of tokens are sold, and what allocations and time limits are set.
• Deposit the tokens you own to the address specified by the DEX. You need to send tokens according to the amount you want to participate in the IFO. You also need to ensure that you have sufficient token balance to pay transaction fees.
• Waiting for the results of the IFO that you participated in. You need to monitor developments and announcements from DEX. You also need to wait until the tokens you purchased are sent to your wallet.

What are the risks of IFO?

Like other investments, IFO also has risks that you need to be aware of, including:

Price volatility 

The price of the tokens you purchase via IFO may rise or fall drastically after the project is launched on the market. This is influenced by various factors, such as demand, supply, competition, sentiment, and others.

Project failure 

Projects you support through IFO may fail to achieve promised goals or expectations. This can be caused by various things, such as technical, legal, security or competition issues.

Fraud or scam 

Some projects that hold IFOs can commit fraud or scam by collecting funds from investors and then disappearing without a trace. This can occur due to lack of regulation and supervision from the relevant authorities.

Before participating in IFO, you need to first know the pluses and minuses of a project. This is to anticipate the risks mentioned previously.

Read also:

THORChain (RUNE): DEX Platform for Swap Assets Cross-Chain

What Is an Initial Exchange Offering (IEO)?

What is GameFi?

What is Play-to-Earn?

DISCLAIMER: This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.