What is Initial Stake Pool Offering (ISPO) and Why Should You Know About It?

For you crypto enthusiasts, may be familiar with various existing fundraising methods, such as Initial Coin Offering (ICO), Initial Exchange Offering (IEO), Initial DEX Offering (IDO), and others. However, did you know that there is a new fundraising model on the waybooming in the Cardano ecosystem, namely the Initial Stake Pool Offering (ISPO)?

ISPO is an innovative way for crypto project developers to raise funds without compromising the security and flexibility of investors. With ISPO, you don't need to buy new tokens to support the projects you love. However, you can simply use the ADA tokens that you already have to stake in the project's staking pool.

ISPO offers many advantages compared to other fundraising models, both for developers and investors. Here are some reasons why you should know about ISPO and how to participate in it.

ISPO Benefits for Project Developers

One of the biggest challenges for crypto project developers is obtaining sufficient funds to finance the development, marketing, and operations of their projects. Traditional fundraising models such as ICOs and IEOs often involve high costs, strict requirements, and substantial risks, such as fraud, hacking, or regulation.

ISPO provides an easier and cheaper solution for project developers to raise funds. With ISPO, project developers do not need to create new tokens, but only need to create a staking pool on the Cardano network. Staking pools are groups of nodes that work together to stake ADA tokens and earn rewards from the network.

Project developers can set a variable margin for their staking pool, which is a percentage of the rewards that the staking pool operator will receive. This margin can be used as a source of funding for the project. The more people who stake ADA in a project's staking pool, the more funds the project developer will get.

In addition, project developers can also pay delegators (people who stake) with their project's native token. Native tokens are tokens created on top of the Cardano network, without the need for smart contracts. Native tokens have the same functionality and features as ERC-20 tokens on Ethereum, but with lower transaction fees and higher speeds.

By providing native tokens to delegators, project developers can increase adoption and demand for their tokens. Native tokens can be used to access services or products offered by the project, or traded on crypto exchanges.

ISPO Benefits for Investors

For investors, ISPO also offers many advantages compared to other fundraising models. One of them is lower risk. With ISPO, you don't have to spend money to buy new tokens, which may not have much value or liquidity. You also don't have to worry about fraud, hacking, or losing access to your tokens.

With ISPO, you only need to use the ADA tokens you already own to stake in the staking pool of the project you choose. You do not need to send your tokens to a third party or custodial wallet, but keep them in your personal, non-custodial wallet. You can also withdraw your tokens at any time, without any lock-in periods or restrictions.

By staking ADA, you will earn rewards in the form of the project's native tokens. These native tokens can have huge growth potential, depending on the quality and popularity of the project. You can also use these native tokens to access services or products offered by the project, or sell them on crypto exchanges.

Additionally, by staking ADA, you also contribute to the security and decentralization of the Cardano network. You help select validator nodes that will verify transactions and generate new blocks. You also support the development of innovative projects that can increase the value and functionality of the Cardano network.

How to Participate in ISPO?

If you are interested in participating in ISPO, you only need to have ADA tokens and a wallet that supports Cardano staking. Some recommended wallets are Yoroi, Daedalus, or Adalite. You also need to know the projects that are conducting ISPO, and the staking pools they have created.

You can search for information about ISPO projects in various sources, such as social media, forums, blogs or the project's official website. You can also use tools like PoolTool or AdaPools to see a list of available staking pools, along with their margins, rewards, and reputation.

Once you have selected your desired project and staking pool, you can stake your ADA by following these steps:

• Open your wallet and select the staking or delegate menu.
• Search for the staking pool you want using the name or pool ID.
• Enter the amount of ADA you want to stake, and confirm the transaction.
• Wait until the next epoch (five days on Cardano) to start receiving rewards.

The rewards you receive will be the project's native tokens, which will be sent to your wallet automatically. You can view your token balance in your wallet, or on the project website. You can also check your staking status in your wallet, or in tools like PoolTool or AdaPools.

Read also:

What is a Liquidity Pool?

What is a Liquidity Pool in Defi?

What is a Dark Pool? A Transaction That Doesn't Involve Names?

What is a Decentralized Exchange (DEX)?

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.