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Bybit Learn
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Jul 7, 2022

Initial Game Offering (IGO)

An initial game offering (IGO) is a pre-purchase option for buying the NFTs related to a GameFi project. Buying these tokens ahead of time gives investors a way to ensure their participation in the video game.

What Is an Initial Game Offering (IGO)?

In an initial game offering (IGO), a blockchain gaming project sells the tokens used within the video game during the development stage of the project. The IGO benefits the game developers by allowing them to raise considerable capital in earlier stages. Buyers, meanwhile, gain access to the NFTs they’ll need to participate in the project.

To understand IGOs, you need some background knowledge of GameFi (a combination of the words “game” and “finance”). The gamification of finance has become a central component of the crypto world. GameFi refers to blockchain gaming projects in which participants receive tokens for actions they take within the video game. The tokens specific to the video game act like chips in a game of poker, and you can’t participate without them. That’s why IGOs have become such an important phenomenon.

IGOs are similar to initial coin offerings (ICOs), which have existed for years and are familiar to most crypto investors. In an ICO, a project launches itself by selling tokens on the crypto marketplace. This is the approach that Ethereum took when it launched in 2014. IGOs take that same concept and apply it to the world of GameFi.

How Does an IGO Work?

IGOs are generally released on an IGO launchpad. Popular launchpads include TrustSwap and Enjinstarter. To participate, aspiring buyers need to prove they have enough cryptocurrency in their wallets. Once they’re approved, they can wait for the day of the IGO and then purchase the associated tokens.

After buyers have purchased their tokens, they must lock them with a pool before using them. The project will then award the buyers project-specific NFTs. Projects can also use IGOs to sell in-game assets beyond simple tokens. Common items for sale include characters, weapons and mystery boxes. For the player, acquiring these assets ahead of time provides a competitive advantage that could translate into future profits.

How to Participate in an IGO

Participating in an IGO is relatively simple for traders who already have crypto wallets and own cryptocurrency. Each IGO launchpad has its own set of specific rules, but the general procedure remains the same.

The first step is to look for IGOs on the various launchpads, taking into account the development stage of the related projects. Phase 1 projects are just beginning to develop, and they generally need to raise funds. This means it should be cheaper to buy game-related tokens. Phase 2 projects have already raised considerable capital and may enjoy the backing of reputable companies. This gives the project greater stability, but it also increases the price of the related tokens.

Deciding which phase you’d prefer for your investment will depend on how you weigh the associated risks and costs. If you want to gain early access at low cost, then a project in the first phase is ideal. If you’re willing to pay more to participate in a video game that’s likely to remain strong and popular, then you may want to focus on second-stage projects.

Once you’ve decided on an IGO, you’ll need to follow the platform’s specific procedures. Some will force you to pass through different investment tiers. All will ask you to prove that you’ve got enough cryptocurrency in your crypto wallet. After demonstrating your eligibility to participate, you’ll be ready to buy tokens during the upcoming IGO.

Benefits and Risks of an IGO

Participating in an IGO is a great way to get into an exciting project during the early stages of development. It’s also a risky endeavor that could bring zero return on your investment.

Understanding the risks and rewards of an undertaking is vital. Getting involved with an activity you don’t understand is a recipe for disaster. If, on the other hand, you know exactly what you’re getting into, you can consider the prospects of an investment and act accordingly. There’s nothing wrong with a calculated risk. You just want to make sure you do the calculations before jumping into a decision.

Benefits of an IGO

Blockchain gaming projects can be fun, informative and lucrative. You’ll likely enjoy playing your favorite types of video games within the crypto environment. In addition, you’ll learn a lot about the world of decentralized finance (DeFi) in a gamified setting, and you might even earn significant returns while you’re at it.

IGOs represent the most cost-effective way to enter the world of GameFi. Instead of having to buy your way into popular video games, you can catch a project in its earliest stage of development when tokens are still cheap. Game developers offer the tokens for low prices because they need the money. If the project pans out, you could become a major player in a highly popular video game. Enjoying this type of clout in the gamified universe of the project could produce a significant financial windfall.

Every investor dreams of buying low and selling high. When you get into a video game early, you’re sure to be buying low. If the video game explodes in popularity, you could go on to sell your stake for considerable amounts of cryptocurrency.

Risks of an IGO

The earlier you enter a project, the greater the risk of failure. In the world of startups, investors know they’re taking a chance when they fund a brand-new company. In the GameFi world, players must accept the risks involved with participating in an IGO for a video game that’s just being developed.

Some video games never get off the ground. Others struggle along without gaining any popularity. If you’ve participated in the IGO for a project that fails, there’s no chance of getting your money back. You assumed the risk when you bought the tokens, and the money you invested will disappear along with the project.