ICO Presale or also known as Pre-ICO, is the token sale event that Blockchain enterprises run before the official crowdsale or ICO campaign goes live. The fund-raising targets for Pre-ICOs are often lower as compared to that of the main ICO and tokens are usually sold cheaper.
For the purposes of prudence, Pre-ICOs ideally make use of separate smart contracts from the main ICO event – This is informed by the need to avoid a mixture of Pre-ICO funds with the main ICO to enable proper and easy account reconciliation and audit.
Some projects run Pre-ICOs as a way to accrue funds to cater for the expenses incurred on the way to launching the main ICO. Some of the expenses include paid promo ads, strategic recruitment and meet-up costs to help whip up investor interests.
Downsides Of Investing In Pre-ICOs
One unpleasant side-effect of ICO presales however is that early investors or adopters tend to dump tokens as soon as they become tradeable on exchanges. They often sell the tokens at ICO price when in fact they got the tokens for less than the price of the main ICO. This way, they make substantial profits whiles the value of the project token subsequently takes a downward hit.
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