There are many ways in which investors can get access to new tokens in the cryptocurrency market. We have all heard about Initial Coin Offerings (ICOs) and how they became very popular throughout 2017 and 2018.
Nowadays, there are new methods for investors to buy new tokens and get exposure to the cryptocurrency market. One of these methods is by using Initial Farm Offerings (IFOs). If you do not know what IFOs are and how they work, we tell you about them in this guide.
What is an Initial Farm Offering (IFO)?
An Initial Farm Offering (IFO) works as a fundraising mechanism for projects to release their tokens to the market and gather funds from investors from all around the world. This can be done using different decentralized finance (DeFi) projects such as swapping platforms or decentralized exchanges (DEXs).
Initial Farm Offerings became very popular in the cryptocurrency market over the last year. This is especially true for the Binance Smart Chain (BSC) platform, which grew as an alternative to Ethereum (ETH). There has been a large number of DeFi platforms that offered users the possibility to buy IFO tokens, Moreover, they allowed projects to offer these coins to investors.
While it was possible to get access to different new tokens through ICOs, investors preferred to get access to digital currencies using Initial Farm Offerings. Let’s not forget that before IFOs, there were also Initial Exchange Offerings (IEOs).
Basically, through IEOs, cryptocurrency exchanges selected some digital currencies from projects that wanted to release them to the market and allowed users to purchase them through the exchange itself. Nonetheless, not everyone was able to buy these tokens, as it was necessary for users to hold the native currency of the exchange and be lucky enough to receive permission to buy these tokens.
Instead, Initial Farm Offerings rely their solutions on decentralized platforms. Investors are able to get their coins by relying on these platforms rather than on centralized exchanges. In this way, they know they would be able to get the tokens they want and they would be immediately published on the DeFi platform. Take into consideration that you will not be able to farm Bitcoin! This virtual currency can only be mined.
What is Farming?
There are different ways for users to receive Initial Farm Offerings’ tokens. Indeed, we are talking about farming. Farming is a type of investment that is conducted in different DeFi platforms to get rewarded with tokens and digital currencies. In order to do so, you are basically blocking funds in a smart contract to receive specific rewards.
In some farming platforms, you will receive the token of the platform in which you are stalking your coins. However, you can also receive other tokens such as those offered by crypto projects. For example, you can deposit BNB tokens in a smart contract offered by a DEX and receive tokens from a project that is just releasing their coins to the market.
Popular Initial Farm Offerings’ Platforms
At the moment, there are different Initial Farm Offerings platforms available. One of the most popular is PancakeSwap. Another platform that has been used to release and launch IFOs is ApeSwap. As you can see, these are platforms that do not only work as IFOs but also as decentralized exchanges on the Binance Smart Chain network.
PancakeSwap is the most popular decentralized exchange on the Binance Smart Chain blockchain network. This cryptocurrency exchange has been growing in popularity as a way for users to engage in different trading activities with tokens on the BSC blockchain.
Moreover, PancakeSwap became a very popular platform for projects to release their IFOs. In addition, PancakeSwap lets users engage in different investing activities linked to the cryptocurrency market (DeFi). For example, users can deposit two coins and start earning rewards for providing liquidity to a specific trading pair.
This is how the platform became very popular and how it was able to attract a large number of users. Now, with Initial Farm Offerings, it is also a good way to invest in projects that might not be so popular but that could eventually become large players in the crypto ecosystem. In order to participate in different Initial Farm Offerings, you will have to buy CAKE and use it in exchange for tokens of the projects that are releasing their coins.
We also have another platform that is called ApeSwap and that is not as popular as PancakeSwap. However, this cryptocurrency decentralized exchange is also releasing a wide range of new tokens to the market.
ApeSwap is also a digital asset project that is running on top of the BSC platform, in the same way as PancakeSwap. This is because the BSC is cheap, fast and easy to use.
Thanks to its wide range of services, ApeSwap became a strong competitor to PancakeSwap. Nowadays, you can use the BANANA token (the native token of the ApeSwap platform) to gain exposure to different IFOs that are released through this swapping platform.
In the future, new tokens and digital currencies are expected to be released in both ApeSwap and PancakeSwap. Each of them would have different Initial Farm Offerings options that would let you get access to some of the newest tokens in the crypto market.
Over the last months, ApeSwap has lost users and its coin has been falling in price. There are many reasons related to this situation, however, this remains one of the most popular platforms for IFO projects that want to release their tokens on the Binance Smart Chain blockchain network.
Is Crypto Yield Farming Safe?
Yield farming is a very popular activity in the cryptocurrency market. This is why there are several investors that are now searching for different ways to interact with different projects related to yield farming.
However, you should understand which are the risks of using yield farming solutions offered by these projects. As we mentioned before, you will be receiving tokens from a crypto project that could succeed or that could simply fall.
One of the risks related to yield farming is linked to the possibility of the project not being able to succeed. This could create a situation in which you blocked your coins in a smart contract but you were not able to get any benefit from it. Basically, you lost your valuable time that could be used to receive rewards using other projects or investing these coins in other things.
Now, there is also another risk. We are talking about smart contract risk. This risk is linked to the possibility of losing your funds due to a bug in the smart contract. This is more common than what many people and investors think. Moreover, there could be projects that leave exploits in the smart contracts in order to exploit them in the future and steal users’ funds.
This is why it is very important to analyze which projects we want to work with. Before sending our funds to a smart contract that we do not know, the best thing that we can do is analyze the project and make sure that we are using a trustworthy platform.
Taking these risks out of the analysis, we can say that crypto yield farming is quite safe if the platform offering these solutions has been operating for several years and it has a good reputation. There are great investment opportunities for users that start searching for crypto yield farming opportunities.
Initial Farm Offerings for NFTs
We have also heard about non-fungible tokens (NFTs) and how they became one of the latest trends in the cryptocurrency market. NFTs are digital assets that cannot be duplicated, copied, or destroyed because they are shared digitally. They can only be bought and sold on a digital platform where every NFT is unique.
NFTs are always linked to a particular digital platform and cannot be detached. They are not fungible, which means they cannot be exchanged for another identical asset.
NFTs can also be customised to represent ownership of something like crypto-art, crypto-collectibles (CryptoKitties), crowdfunded commodities like solar panels or gold bars, or they can represent ownership of another cryptocurrency (ERC721 non-fungible tokens).
NFTs can be useful to track ownership and transactions in the financial world, they can also represent a ‘smart property’ where the NFT is linked to something physical like a home or car. There have been some interesting ideas where you can easily track what your NFT is representing.
NFTs are useful because they improve on existing technology like blockchain and smart contracts. There are more benefits of NFTs than just decentralization of ownership and trust between parties deciding to transact on a blockchain-based platform.
Users can also start farming NFTs. For example, some NFT collections can easily be farmed by depositing and blocking funds in a smart contract. Rather than giving investors the possibility to receive tokens from projects, users will get NFTs from special collections.
The main difference with tokens is that each NFT is unique. That means that you will also have the possibility to receive very rare NFTs and make a large sum of money. However, this would depend on the type of sale and Initial Farm Offerings that you are using and participating in.
Pros and Cons of Initial Farm Offerings
There are some positive and negative aspects of Initial Farm Offerings. This would depend on your needs and the platform that you are using. However, we have decided to create a list of some of the most common pros and cons of initial farm offerings.
Pros of Initial Farm Offerings
- Initial Farm Offerings are an innovative way to distribute tokens
- It works as a way to incentivize liquidity in specific trading pairs
- Users receive rewards for the tokens that they block in the smart contract
- Some of these projects could offer great long-term rewards for investors
- It is easy to participate in IFO for those users that already handle virtual currencies
- Users can be rewarded with digital currencies or NFTs depending on the project
- IFOs can be held on different decentralized platforms
Cons of Initial Farm Offerings
- IFOs might not be very safe if they are promoted on relatively new platforms
- There are risks related to smart contracts and their security
- Some coins might be worthless in the future
There are also many other things that are worth taking into consideration. The platform that you are using, the project that you are engaging with and the funds that you block would all define these pros and cons.
Is Farming Worth in Crypto?
Here’s a comprehensive analysis of the various benefits and drawbacks associated with the practice. Pros & Advantages
There are plenty of advantages associated with crypto farming. Here are some of the major ones you should know about.
1. It’s a low-risk, high-reward investment practice
Even if you’re a newbie when it comes to this kind of farming, there’s a good chance that you’ll never have to worry about lost investments. (Make sure you know where you are blocking your funds in).
2. You can farm from anywhere.
The good thing about digital farming is that you don’t have to be in a specific area or location for you to reap the benefits of digital currency farming. You just need to know how to connect to the internet and get everything started. This can be very helpful for people who travel a lot because they can still get their profits even if they’re away from home.
3. It’s free and easy to start.
You can easily get started with cryptocurrency farming by following a few simple steps, it is much easier.
4. You can manage your risks and losses with crypto farms as well.
You need to know that when you invest in digital farming, you have the ability to monitor the price of your tokens in the market, thus you can be in full control at all times while still achieving a very good profit margin.
Final Words About Initial Farm Offerings
We have seen the expansion of the cryptocurrency market over the last few years. There is a large number of new projects and initiatives that run on decentralized platforms. Moreover, there has been a trend in which users can get rewarded with different virtual currencies and NFTs simply by blocking their funds in different smart contracts.
Initial Farm Offerings became a clear solution for investors that were trying to receive coins and get rewarded with them. In some cases, users will be able to participate in these Initial Farm Offerings using a wide range of online DEXs and DeFi solutions. In the future, IFOs could become a clear alternative to traditional ICOs or IEOs.