crowdsale

A crowdsale is a fundraising mechanism in which a project raises capital by selling tokens or equity to a large number of individual investors, often via the internet. In the context of blockchain and cryptocurrencies, a crowdsale typically involves exchanging cryptocurrency or fiat for newly issued tokens that grant some rights within a project, such as access to a product, governance influence, or a stake in the venture. Crowdsales aim to mobilize broad participation and distribute ownership or utility more widely than traditional funding rounds.

A crowdsale is usually structured in stages, including a private or pre-sale for early backers and a main sale open to the public. Common terms include soft cap (the minimum amount the project aims to raise), hard cap (the maximum target), and vesting or lock-up periods to prevent rapid token dumping. Early contributors may receive discounts or bonus tokens. Funds collected are typically held in a treasury or smart contract, and tokens are distributed to participants upon completion of the sale, with some projects offering refunds if the soft cap is not reached.

Process and mechanics often involve a white paper or project documentation, a defined delivery timeline, and technical or legal disclosures. In crypto contexts, participants send cryptocurrency to a designated contract address and receive tokens in return. Afterward, token trading on exchanges or use within the platform may follow. Crowdsales carry regulatory and investment risk considerations, including compliance with securities laws and the potential for scams, making due diligence essential. Related formats include initial coin offerings (ICOs), initial exchange offerings (IEOs), and security token offerings (STOs).