What is IBCO?
What is IBCO ?
IBCO stands for Initial Bonding Curve Offering, which is a method of crowdfunding using cryptocurrencies similar to ICO (Initial Coin Offering) and IDO (Initial DEX Offering).
Similar to ICOs or fundraising through bonds, IBCO is used to raise funds and sponsor new projects. However, it addresses some of the classic issues associated with ICOs, such as the lack of responsibility from project teams, token liquidity, and unreasonable token pricing mechanisms.
Funding any project, especially in its early stages, involves a high level of risk. In reality, the success rate of investment in such projects is very low. Particularly for ICOs, the price of the digital token is arbitrarily set by project developers, and until the market launch, we cannot determine the true value of the token. This makes it akin to gambling. Moreover, not all funds raised through ICOs are genuinely used to develop the project as intended by the contributors.
Advantages of IBCO
IBCO is created to address these issues by utilizing bonding curves from decentralized exchanges (DEX) such as Bancor or Uniswap.
(The concept of a bonding curve is quite simple: The price of a token is determined by its supply. The more tokens are distributed, the higher the price.)
In practice, a project can now issue tokens directly on a DEX, creating a market by providing collateral for a group of bonding curves. Simply by issuing tokens through creating a trading pair on a DEX or deploying a custom bonding curve.
In fact, these are Initial DEX Offerings (IDO) or IBCO, and have been used multiple times by projects based on DAOs, which are decentralized, owner-controlled organizations.
Tokens are not all pre-minted before being released on the market, as with ICOs. They are minted and burned based on demand, where tokens will only be created if someone buys them at the market price, and they will be burned if sold back to the bonding curve, reducing supply and price.
In this way, the token price is not arbitrarily set from the beginning by anyone but is determined by the market itself. It still has an initial price, but it is only used to initiate transactions, and the price thereafter will depend on the actual supply and demand.
