A token sale refers to the initial offering of a cryptocurrency token to a private pool of investors before it officially goes on the market.
What is a token sale?
Token sales are a very important mechanic in the early stages of all new cryptocurrencies. As the abundance of tokens on the market grows, token sales allow developers to introduce investors to their projects early on. Not only that, token sales are the most popular way for new projects to secure the funding they need to keep on developing their product.
As more and more altcoins make it to the market, token sales also serve as a tool for investors to weed out what cryptocurrencies they want to invest in. Throughout the duration of a token sale, developers spend a lot of time on marketing and educational sessions in order to introduce their product to a select pool of investors. Some cryptocurrency projects have also tried to use their token sales as a marketing tool by only inviting certain people to participate in the initial stages of investment.
As token sales happen at the very early stages of development for cryptocurrency projects, they are a great way to judge whether a project will be successful or not. Because of that, in the early years of cryptocurrencies, especially in 2017 and 2018, there was a boom in token sales on the market. Investors became overwhelmed with the number of new tokens thrown at them, leading to a crisis on the market.
Nowadays, however, token sales serve as a good way to get a feel for a new token and possibly get the chance to become an early adopter and reap better rewards.