Initial Options Offering (IOO) is a new funding concept brought to you by Hedgey. With IOOs, projects have an easy, yet trustworthy, method for selling tokens and rewarding their investors and community in addition to liquidity offerings.
The idea is simple — projects write Hedgey Calls to sell their tokens at predetermined price milestones.
Using Hedgey, any project can deploy a call contract for their ERC20 / BEP20 token as long as their token has an ETH / BNB pair on Uniswap or PancakeSwap. An IOO is a great tool to bring on early investors and build a community around the token and project. It is truly a win-win for both token projects and investors!
Benefits for the Project
An Initial Options Offering is a powerful way for projects to generate initial funding through premiums paid by call purchasers (investors), which can be used by the project for working capital and development. The big benefit is that the project can sell tokens at the strike prices that are set in the calls — organically selling tokens to investors at predetermined prices. Best of all — selling tokens via calls does not distort the market price! This means projects don’t have to sell all their tokens at a price that is too low to get their necessary funding.
To summarize, a project can benefit from an IOO in multiple ways:
- Collecting up-front premiums from the calls sold
- Selling tokens at different price points (assuming the calls end in the money)
a) helps the project not give away too much of their tokens too soon
b) helps the project calculate and generate a funding strategies with development goals based on token price milestones
c) no market price distortion from selling - A call is a buy order set in the future at a set price. Community members that own a call have high interest in helping the project succeed to increase token value
- By combining an IOO with an ILO you give investors two powerful ways to invest in your project that can be combined
Benefits for Investors & Community
As investors have become wearier of rug pulls, scams, and other fraudulent or even just underperforming projects, they are not likely to invest in projects early on without real promise. With an IOO, investors can use significantly less capital to still participate in and get more exposure to new projects and tokens launching, than by simply buying tokens from a liquidity pool. The benefit is simple — you put up fractional amounts of ETH / BNB to purchase a call, if the project succeeds — then you get to buy the tokens at a discount price compared to what they are in the market — and boom you have your tokens of a winning project! If the project fails, then you have risked significantly less capital upfront. This means that instead of using 1 eth to purchase just one token, you can use that to buy calls on many tokens — thus getting greater exposure, with more upside, and higher potential earnings — while diversifying your portfolio. Finally, if you do invest in projects by providing liquidity to their LPs, purchasing a call on that token is a natural hedge against impermanent loss. In the case where you invest in liquidity pools, and the price of your token increases dramatically, you lose out on that upside with the impermanent loss — however if you had purchased a call you can use the additional ETH from your new weighted pool tokens to purchase the tokens with your call and make yourself whole!
As an investor using IOOs you get:
- Exposure to great amounts of a new project’s tokens for a fraction of the price, without worrying too much about the project not succeeding
- If a project combines a traditional token issuance with an IOO, you get to choose your risk: You can accept the risk and go all-in, choose for a balanced strategy by buying calls, or choose a safe position with IOOs
- Purchasing Calls on a token you provide liquidity for is a natural hedge against impermanent loss
For Projects looking to take the next step:
Visit hedgey.finance and load the application (use Hedgey button). If your token call pair already exists, then you can start putting calls at various strike prices for various premiums. If your call pair doesn’t exist, simply generate a new contract with the easy button on the Hedgey app (just input your token address and let her rip!). Once the contract is launched it will automatically appear in the Hedgey app and you can now start to write your calls. Let your community know about your IOO and get them involved. They will love it, and so will you!