- Today, investors struggle with the possibility of becoming a victim to DeFi exploits
- To overcome these struggles, companies need to amp their efforts
- To start, they need to address a few important issues regarding security, regulation, and choose the right platform.
Blockchain technology, with its smart contract features, has simplified funding for companies and amplified accessibility to investors. But still, a majority of token offerings plummet in a short period. They either fall short in attracting more investors or end up being a victim to one of many DeFi exploits.
To overcome these struggles, companies need to amp up their efforts in securing smart contracts and gaining investor confidence. It starts with addressing a few important issues regarding security, regulation, and choosing the right platform.
Need for Pre-ICO Audit of Smart Contracts
Moreover, as a smart contract is only deemed effective when it has a robust design with zero vulnerabilities in the code, the need for a pre-ICO audit is more crucial now more than ever.
So to avoid a smart contract hack, among other exploitations during an ICO sale, companies need to go for a third-party review and do a sophisticated audit. By doing this, project owners instill confidence in investors and remove any previous ICO fears.
With the ongoing rise in scams, exploits, and pump and dump schemes, the ICO market is experiencing immense legal tension. Aside from being fully compliant with their respective country’s regulatory laws, companies are encouraged to hire legal advisers to help them address concerns following token sales.
As communities are an integral part of any DeFi project nowadays, the project team needs to help members safely navigate through the buying process. Likewise, owners should clarify the token offering terms to avoid mishaps during the sale event.
The Most Suited DeFi Funding Platform
Decentralized finance has made it possible for retail investors to collectively raise capital for a project in a cost-efficient way. DeFi funding platforms are simplifying the investing process by following an extensive vetting process and showcasing to the right investors in the crypto community.
Therefore, companies need to select the right funding platform to accelerate growth and build a passionate community around the project. A good example would be the milestone-based funding platform Escrow Protocol.
Escrow gives back control to investors and enables start-up companies to thrive with yield farming protocols and NFT identification. So the future of crypto funding will be an intersection between DeFi capital-efficient models and funding platforms like Escrow protocol.
A Realistic Whitepaper
In the crypto crowdfunding market, a whitepaper resembles a funding pitch that companies give to investors. So if one wants to successfully raise capital and build a strong core of early investors, they need to mention the timelines and project milestones in the whitepaper clearly.
However, the project team should also remember to have realistic expectations when launching a token. From an investor’s point of view, it is crucial to know the expected period to start seeing results and returns. So the team should define achievable goals with major emphasis on the long-term potential to attract significant investors to raise sufficient capital.
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